Regulatory Capture and the Marginalized Majority: The Case for the Constitutional Protection of the Majority’s Disposable Income

Abstract

The constitutional protection of private property is rooted in the notion that individual rights ought to be insulated from the tyranny of the majority. However, as public choice theory teaches us, democratic decision-making suffers from another systemic failure that is no less pernicious, no less ubiquitous, but less transparent: interest groups are capable of steering government to favor their narrow interests at the expense of diffuse citizens and the broad public interest. In this Essay we argue that this ‘capture’ characteristically results in anticompetitive regulatory measures that inflate the prices of products and services above their competitive market price or reduce their quality. Such measures transfer wealth from the many to the few, as they diminish the value of diffuse citizens' disposable income in terms of purchasing power. We propose to conceive of this loss as a potentially unconstitutional taking of the diffuse citizens’ property. Our account challenges the Madisonian assumption, embedded in the Constitution, that constitutions must protect the property rights of the propertied minority against the tyranny of the deprived majority. We argue that the Constitution must also limit another type of taking, effected when a minority solicits anticompetitive government measures that diminish the value of the disposable income of the marginalized majority. Accordingly, anticompetitive regulation catering to special interests will be deemed prima facie unconstitutional unless it is necessary to promote public purposes.