ECONOMY

ichard a. epstein 347
counted as a compelling state interest that justified a departure from the color-blind
rule in Brown.
The equal protection clause has also been applied, but under an intermediate
scrutiny standard, to invalidate a wide range of distinctions between men and women,
including sex-based rules that deal with the ability to serve as administrators of estates
or receive dependent military or social security benefits (Reed v. Reed 1971). But efforts
to attack economic classifications have generally foundered because the court does
not see in these regulations the risk of political domination and oppression that has
been found in more sensitive classifications.
Consistent with the basic effort to prevent rent extraction, there is much to applaud
judicial intervention to protect discrete and isolated minorities. But there is no reason
to withhold that same kind of scrutiny from other forms of regulation that often have
blatant protectionist motives. There is no a priori reason why ordinary businesses,
both large and small, cannot come out on the losing end of political struggles. Thus a
deferential Supreme Court went astray when it rejected an equal protection challenge
to a statutory ban on plastic milk containers at the behest of paper manufacturers
(Minnesota v. Clover Leaf Creamery Co. 1981). The statute looked like naked protectionism
thinly disguised by an appeal to environmental justifications whose weakness
was belied by the widespread use of plastic containers everywhere else.
2 Constitutional Protection of
Contract and Property
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The relaxed attitude of the Supreme Court to equal protection challenges to economic
regulation comes at the end of a long history of judicial action on the topic.
Before the New Deal revolution of 1937, the court gave less protection to social and
political rights, and greater protection to contractual rights, economic liberties, and
private property. Today the protections have flipped. What explains the demotion of
economic interests, and the difference between various classes of rights?
Contracts clause. The court’s foray into economic rights before the Civil War invoked
the contracts clause to limit state action. The court quickly and sensibly held
that the clause limited the state’s ability to discharge individuals from indebtedness
incurred before the passage of law that delayed the creditors’ right to collect on
indebtedness, or to discharge a debt under an insolvency or bankruptcy law that
was passed subsequent to the creation of the debt. But the Supreme court refused
to recognize any individual right to protect a contractual entitlement against an
insolvency statute that was passed before the formation of a contract, which was then
created with reference to the statutory form. The earlier position exhibited hostility
to the retroactive limitation of contract rights but not to their prospective limitation
(Epstein 1984). That split held roughly until the Great Depression when the Supreme