ECONOMY

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all persons state supplies of food, clothing, shelter, and housing will degenerate because
the state guarantees will make it impossible for the rules of supply and demand
to determine the quantity and price of ordinary goods. The United States Constitution,
for all its imperfections, rightly starts from the opposite pole. Its implicit
assumption is that government powers are limited and enumerated in large measure
to forestall the deadly operation of faction, or the political competition over resources
that results in social losses. Its major subtext is to sanction public intervention only
where it promises to be a source of net social gain. Obtaining these results through
purely democratic processes is highly improbable because of the perverse way in
which self-interested political factions can undermine the overall advancement of the
public good. Hence the use of judicial review as a check on majoritarian political
processes. To be sure, the United States Constitution was drafted long before any
explicit development of public choice theory (see Buchanan and Tullock 1962), but
the central lessons of public choice theory do much to explain the basic structures
of the US constitutional order. It is convenient to think of the Constitution as a
master agreement that allows the political branches to supply public goods while
discouraging the rent-seeking and factions that rip societies apart.
The achievement of this overarching goal depends not only on the proper objects
of protection—liberty and property, chiefly—but also on the second non-textual
element of constitutional law: choosing the correct standard of judicial review for any
federal or state statute, regulation, or order that is challenged as violating one of these
guarantees. In theory, we might expect some uniform standard of review to govern
all challenges regardless of the clause under which it is made. But from its very outset,
the Supreme Court has operated loosely, if erratically, under three different standards
of review when considering legislation with different origins, which in modern times
have been conceptualized as follows. The first standard of strict scrutiny holds that
a statute passes constitutional muster only if the limitation it poses on a protected
constitutional interest is justified with reference to some compelling state end, and
achieved by the means that are precisely calibrated to that purpose, so that they are
neither overly broad nor under-inclusive. At the other extreme, government actions
under a rational basis standard pass constitutional muster so long as a rational person
would think that some justification for the regulation could be advanced in light of
the history and tradition of the United States, even for laws the court finds foolish or
offensive. That is, find one reason to support the statute, and the court will overlook
the full range of objections raised against it. The standard of intermediate scrutiny
occupies the middle ground, and requires that the state use reasonable means to
achieve a substantial social end. These verbal formulations are of course elusive, but
the bottom line is that the higher the standard of review, the more likely it is that the
statute will be struck down, either on its face or as applied to the particular case. Until
very recently, the implicit rule of thumb was “strict in form but fatal in fact,” while
the rational basis test was tantamount to “proper in form, then valid in effect.” Only
with intermediate scrutiny, which in practice lies closer to strict scrutiny, was there
any real uncertainty as to which way a constitutional challenge would come out. In
all cases, the court engages in some type of “balancing” between the protected private