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It is strongly recommended that you include your outline in the body of your essay by using the outline as section titles. The headings below are there to remind you how section and subsection titles are formatted. | |
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< | Does the Market Participation Exception Make Sense? (I hate this title, it must change) | >
> | A Distinction Without a Substance: The Market Participation Exception | | | -- By AndrewCascini - 24 Feb 2010 | | | ...but What Does It Signify? | |
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< | Participation versus regulation – a tidy verbal distinction indeed, but how do these two categories of behavior actually differ? The word “participate” has a flavor of passivity. If I run in a race and am awarded a medal for being a “participant,” the strong implication is that I didn’t really affect the outcome in any meaningful way. The word “regulate,” however, has a more active nature. To regulate is to create changes; it implies control and agency. If we accept these notions, the distinct treatment of market participation as opposed to market regulation seems well in step with dormant commerce clause doctrine as a whole, for it is the domain of the federal government to make changes in the realm of interstate commerce and not the states. Directing attention away from the transcendental legal terminology and towards the actual economic effects reveals a categorical breakdown, however. | >
> | Participation versus regulation – a tidy verbal distinction indeed! The word “participate” has a flavor of passivity. If I run in a race and am awarded a medal for being a “participant,” the strong implication is that I didn’t really affect the outcome in any meaningful way. The word “regulate,” however, has a more active nature. To regulate is to create changes; it implies control and agency. If we accept these notions, the distinct treatment of market participation as opposed to market regulation seems well in step with dormant commerce clause doctrine as a whole, for it is the domain of the federal government to make changes in the realm of interstate commerce and not the states. But how do these categories of behavior actually differ in practice? Directing attention away from the transcendental legal terminology and towards the actual economic effects reveals a categorical breakdown. | | | Two Terms, One Effect | |
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< | Imagine that a state decided to pass a law dictating that all state departmental offices may only purchase assets from companies or individuals who had not violated the National Labor Relations Act. Would this be a “regulatory” decision – Constitutionally impermissible – or a simple act of “market participation?” On the one hand, the state can make a claim that it is simply participating in the market as any other economic actor could. Perhaps the state has acknowledged that its employees are happier with products from NLRA-compliant manufacturers, or that products manufactured by NLRA-compliant industries tend to be of higher quality. Either rationale would be an acceptable exercise of market participation for an individual. On the other hand, the legislation could be seen as an attempt to regulate the market by forcing industries across the nation to comply with the NLRA or lose their asset supply contracts with the state. The Court, in Wisconsin Dept. of Labor Relations v Gould, deemed the legislation to be an overreaching attempt to regulate commerce, and struck it down. Suppose, however, that the Wisconsin legislature had never passed the offending statute but had still bought assets from the same manufacturers that it had turned to as a result of the ban on NLRA violators - perhaps because these companies offered their goods at the lowest price. Such a decision would doubtlessly be deemed an exercise in market participation, but the economic effect would have been precisely the same. | >
> | Imagine that a state decided to pass a law dictating that all state departmental offices may only purchase assets from companies or individuals who had not violated the National Labor Relations Act. Would this be a “regulatory” decision – Constitutionally impermissible – or a simple act of “market participation?” On the one hand, the state can make a claim that it is simply participating in the market as any other economic actor could. Perhaps the state has acknowledged that its employees are happier using products from NLRA-compliant manufacturers which boosts their productivity, or that products manufactured by NLRA-compliant industries tend to be of higher quality. Either rationale would seem an acceptable exercise of market participation for an individual. On the other hand, the legislation could be regarded as an attempt to regulate the market by forcing industries across the nation to comply with the NLRA or lose their presumably lucrative asset supply contracts with the state. The Court, in Wisconsin Dept. of Labor Relations v Gould, deemed the legislation to be an overreaching attempt to regulate commerce, and struck it down. Suppose, however, that the Wisconsin legislature had never passed the offending statute but had still bought assets from the same manufacturers that it had turned to as a result of the ban on NLRA violators - perhaps because these companies offered their goods at the lowest price. Such a decision would doubtlessly be deemed an exercise in market participation, but the economic effect would have been precisely the same. | | | Participation as a Label | |
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< | If it is accepted that the latter hypothetical would be deemed mere market participation, two possible conclusions emerge. The first is that the Court simply decided Gould incorrectly. While such a conclusion may indicate that the distinction between market regulation and market participation is much too fuzzy to practically use as a jurisdictional tool, there is otherwise little analytical value in such a conclusion. The second possibility is that the Court is basing their distinction not on the possible effects of the legislation, but rather upon some unspoken assumption about how a reasonable actor will choose to participate in a free market. Perhaps, then, “market participation” is a merely a label for an economic action taken while considering only a particular range of economic considerations. If a state makes a decision based on price or quality of a good, that state is participating in the market. If it is compelled to act by other means, this action will be deemed regulatory. | >
> | If it is accepted that the latter hypothetical would be deemed mere market participation, two possible conclusions emerge. The first is that the Court simply decided Gould incorrectly. While such a conclusion may indicate that the distinction between market regulation and market participation is much too fuzzy to practically use as a jurisdictional tool, there is otherwise little analytical value in such a conclusion. The second possibility is that the Court is basing their distinction not on the economic effects of the legislation, but rather upon some unspoken assumption about how a reasonable actor will choose to participate in a free market. Perhaps, then, “market participation” is a merely a label for an economic action taken while evaluating only a particular range of economic considerations. If a state makes a decision based on price or quality of a good, that state is participating in the market. If it is compelled to act by other means, this action will be deemed regulatory. | | | Final Thoughts |
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