Why I Wouldn't Want to Bet My Home, or My Raw Milk Supply, on the Sanctity of Contract Law

The discussion on my previous post got me wondering: how is it that we seem to be losing the right to eat what we want?

Steve Bemis alludes to Sinclair Lewis and his expose on the meat slaughterhouses. That led fair-minded Americans to demand government involvement, which seemed the only sane way to go at the time. But so tight has the government’s hold become, farmers can’t even slaughter their own animals. And the National Animal Identification System promises to take us to a new level of government regulation.

Around the same time the government took over monitoring slaughterhouses, it also inserted itself into the milk processing situation, as part of an alliance with industry. This was also in response to a crisis—large-scale epidemics that were blamed on raw milk, and no doubt some of them stemmed from contaminated milk. Once again, so tough has the government’s hold become that we find ourselves begging for a 50-coliform standard rather than a 10-coliform limit in California, and other similarly small favors that would give us at least some access to our milk.

A number of people, like Dave Milano and Meg, seem to think that our ultimate fall-back position is America’s sacred trust in contract law. But how sacred is this trust?

It's becoming less sacred all the time. Just consider the crisis of the day—the subprime mortgage mess, which is our current equivalent of the slaughterhouse and raw milk crises of a century ago.

Here we have a situation in which businesses got greedy, at the expense of the general population. So now politicians are calling for changes to the subprime mortgages people took out. Remember, those are private contracts between borrowers and lenders.

Last night in the Democratic debate, I heard Hillary Clinton propose that all those subprime mortgages be frozen at 5%, and people cheered. (Barak Obama said he favored subsidies instead to help people hurt by the mortgage problems, which is much different.) What Hillary was really proposing was that the government step in and void hundreds of thousands of contracts. A number of other pols have come up with variations on this theme, and amazingly, very few have criticized this approach of undermining contract law.

I know lots of people want to help the poor people who took out bad mortgages, but sure as the sun comes up, the precedent of changing those mortgage contracts will come back to bite us in the form of an ever-more-intrusive government. After all, if it can undo mortgages, why can’t it undo herdshares and LLCs?

And then there’s the whole matter of health care insurance, which looks ever more likely to become a government project. Here’s another area that business has screwed up, leaving millions without insurance, so now the government will step in.

What kind of health-related clauses might they insert into our health insurance contracts? Well, I could see the feds deciding that your coverage is voided if you’ve been found to consume raw milk. (I hate to give them ideas.)

The U.S. Constitution states in Article 1, Section 10, that, “No state shall…pass any…Law impairing the Obligation of Contracts…” I asked a good friend of mine who’s now a prominent constitutional law professor his assessment of that clause, and he told me it’s been so bent out of shape by exceptions that it has become essentially toothless. Many of the exceptions have to do with the common good and safety. (You get my drift?)

I was struck during the recent hearing in a New York state court  over the Meadowbrook Dairy LLC that the judge, who seemed to have studied the case and understood the facts, passed up an easy opportunity to back a private contractual arrangement. But he clearly wanted nothing to do with it, and passed it over to another court that is likely to be favorable to the New York Department of Agriculture and Markets.  

Our form of dictatorship will be different than what we see in places like Iran or North Korea. There will be more gentle background music. But people who want to live their lives more healthily will have to work very hard at it. I only hope we don’t wind up completely underground.

Comments

[pete]

Hey look on the bright side, its not every day you get to watch a republic collapse. :)

That reminds me, I was watching a youtube video on the Barefoot Economist shot back in the 90's. There was a section where he was visiting some people whose approach to avoid Pinochet's government was to go back to traditional subsistence lifestyles. Basically if you don't buy and sell to support yourself you're off their radar. Barter takes care of what little you don't make.

Unfortunately I think our government's got an end run around that with NAIS.

[Steve Bemis]

Article I, Section 10 is even less of a protection than it seems. More than one smart lawyer has tried to argue that this language prevents the US government from assessing companies for the past-service liabilities in their (private contract) union pension plans, or alternatively, that the neighboring "no ex post facto law" language prevents the US government from assessing liabilities for things done decades ago relating to pollution. Wrong. The language says, "No STATE...." The federal government can, and does, go right ahead and impair the private rights of contracts and pass ex post facto laws (laws reaching back into the past). This, surely, is a large part of the comment that the language is toothless. It was written that way, although, in an environment when the federal government was relatively very weak compared to the fractious states that had agreed to give up some of their powers to join together. Thus, the language was probably much more significant then, when states were much more powerful. The restriction would then have meant something. Today, the language limiting states is much less helpful with a powerful federal government and one statute after another that uses the Constitution's Commerce Clause as a rationale to regulate every nit and nat that moves in interstate commerce. IF, however, we can get Ron Paul's HR4077 passed, it will remove the federal regulation over raw milk and move the battlefields to the states. Then, I'd give better odds to the contract theories upon which cow shares/herd leases rely, although again, the cited language is most often read to restrict the states' ability RETROACTIVELY to impair the private right of contract. All politics is local, however, and there's at least a better chance to influence outcomes in smaller venues.

[Dave Milano]

No guarantees of course, when government is involved, but the history of official meddling with contracts (at least as far as I know, and I certainly would appreciate appropriate correction) has been very one sided. The common scenario has government stepping in to increase the power of individuals, and decrease the power of business—basically hurting the big fella for the (presumed!) good of the little guy. (Given our current context, that's an interesting twist, eh?)

Also, we should remember that the courts have used contract rights to uphold herdshares in Ohio, then again in Michigan in the Hebron affair. That is, I believe, very significant. It's also significant that if government's contract follies ever go the other way and grant invisible powers to corporations over individuals, clever lawyers everywhere would have a field day breaking minor contracts. The damage from that would be severe, but I believe short-lived. It would beg—no, scream, for legislative correction.

Now don't get me wrong, I generally agree with David's pessimism about the potentials. But if there is a short term silver lining to this long term dark cloud, it is contract protection.

[Tricia Smith]

Missouri update:

http://www.house.mo.gov/billtracking/bills081/biltxt/intro/HB1901I.htm

[Lisa Imerman]

The Missouri law is probably a good thing for now, but in Michigan we have tried to avoid having fresh (raw)milk regulated or codified, as generally it leads to it being regulated to where it is no longer legal. We are happy with our current situation where cow shares/herd leases are ok.

[Sylvia]

With the recent news regarding government monitoring of slaughterhouses,it is obvious they haven't done a good job. I have no doubt that there are many other slaughterhouses undergoing the same treatment as the one on the news.

If I buy a beef from someone who had it registered with the NIAS, does that mean I would have to log all movements? What if... (don't you love 'what if' questions?) What if I slaughtered it for my own use, or bred it, would the gov expect me to let them know? Would they know if I cut out the chip and left it buried in a field or flushed down the toilet?

Subprime mortgages are indeed private contracts between borrowers and lenders. I did not sign on any lines and resent the fact that some feel my tax dollars should bail either party out. If someone loses at the casino, should someone bail those people out too?

Health insurance? The hospitals claim the uninsured have driven the cost up (I would beg to differ, it is never just one issue that is the cause). How about if we bill the country of the illegals who use our health care system? We could decrease in equal dollar amount any taxes/tarrifs/money owed or slated to that country, etc. Healthcare is a business, and the goal is to make money. Cutting corners, decreasing staff, decreased supplies, etc increases that pot for the upper echelon.

Why pick on raw dairy? I do feel ultimately it boils down to money. The big businesses cannot change to produce healthy foods (oragnic, raw dairy) It would cost too much.They slander raw dairy and organics to discourage people, they also have the big bucks to insure that govt officials are in thier pockets. The raw dairy and oragnics movement is growing, people are waking up to the quality of the food they eat, and I would imagine that scares the hell out of the big buisness.

I'm not a lawyer, but do know that contracts can be broken or changed.

[Kirsten]

Recently, Deutsche Bank was denied the right to repossess houses in Ohio because it could not produce the deeds. This is what happens when you get too greedy. Those deeds and thousands of others were rolled all together as an "investment vehicle". The original lender-borrower arrangement was so twisted as to be voided.

[Bob Hayles]

The Feds DO lose occasionally...Wesley Snipes was acquitted of tax fraud yesterday.

[Anna]

See you all at the raw milk "speakeasy" in a few years?

[David Gumpert]

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