Free It Is Dangerous to Be Right When the Government Is Wrong by Andrew P. Napolitano Page B

for pennies on the dollar, and transfer ownership of it to your union workers, the UAW. I mean the UWW.
    Offer, Acceptance, Consideration . . . and Government Approval
    The right to transfer property leads to the right to contract freely. All that is needed for a viable contract is for there to be an offer, an acceptance, and some consideration. For example, I offer to sell you this book for X dollars, and you agree to purchase this book for X dollars; we therefore have a viable contract. My consideration is the amount of money you paid; your consideration is the book you receive. Of course, the government, which has provided no services to either of us in connection with this book sale, forces my publisher to collect a sales tax from you, forces you to pay it, increases the cost of the book beyond the X dollars we agreed upon, and thus takes property from both of us.
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    There are various other ways governments have interfered with the freedom to contract. People who enter into contracts are dictating the law for themselves; the law would be the terms of the contract. The government is constitutionally restrained from interfering unless there is a breach of contract or the essence of the contract is unlawful. One of the greatest assaults on contracts was in Home Building & Loan Association v. Blaisdell (1934). In response to the rise in defaults on mortgages during the Great Depression, Minnesota passed a statute in 1933 which extended the period during which borrowers could reclaim their property from foreclosure by their creditors. The precise question before the Court was whether the law violated the Contracts Clause of the Constitution (Article I, Section 10), which expressly prohibits states from “impairing the Obligation of Contracts”—here, lending agreements. The Court upheld the legislation on the grounds that the Contracts Clause was not intended to be absolute, and consequently a subjective showing of state emergency was sufficient to override the clear text of the Constitution.
    While I am no great defender of U.S. banking interests, I am a great defender of the U.S. Constitution, and the constitutionality of legislation is the only thing that should be considered by the Supreme Court. This was precisely the sentiment expressed by Justice George Sutherland, who wrote one of my all-time favorite dissents:
    Whether the legislation under review is wise or unwise is a matter with which we have nothing to do. Whether it is likely to work well or work ill presents a question entirely irrelevant to the issue. The only legitimate inquiry we can make is whether it is constitutional. If it is not, its virtues, if it have any, cannot save it; if it is, its faults cannot be invoked to accomplish its destruction. If the provisions of the Constitution be not upheld when they pinch as well as when they comfort, they may as well be abandoned . (Emphases added)
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    This Game Is Called “Was the Building Bombed or Rent Controlled?”
    Another way government intervenes in the right to contract freely is through rent control. Originally designed during World War II to provide housing to people of lower income in wartime and protect them from war-related housing shortages, rent control is a government-imposed price ceiling on the amount of money a landlord can charge in rent. Today it still exists, however, and is abused by many people who could afford to pay the real going rate for their rental property. Ed Koch, the cantankerous ex-Mayor of New York City, for example, in the early 1980s paid $441.49 for an apartment then worth about $1,200.00 per month. 7
    In a free market, if the demand for rental apartments is greater than the supply, prices will rise to remove the shortage, by both bringing forth new supply from investors who will seek to take advantage of this new profit opportunity, and by reducing the amount demanded.
    When price controls are instituted, a shortage results. First, since the price ceiling