Venezuelan Bakers Needs Lochnerism

March 17th, 2017

While today most economic liberty cases are civil in nature, the grandaddy of them all, Lochner v. the People of New York, was a criminal case. As Justice Peckham recounted, after a trial, Lochner “was convicted of misdemeanor, second offense, as indicted, and sentenced to pay a fine of $50 and to stand committed until paid, not to exceed fifty days in the Oneida County jail.” Yes, the punishment for violating the hour law was a $50 fine, and if he refused up to 50 days in jail!

In 2017, the idea of throwing bakers in jail for running an effective business may seem like the subplot of an Ayn Rand novel. Alas, in Venezuela, truth is stranger than fiction.

Facing a bread shortage that is spawning massive lines and souring the national mood, the Venezuelan government is responding this week by detaining bakers and seizing establishments. In a press release, the National Superintendent for the Defense of Socioeconomic Rights said it had charged four people and temporarily seized two bakeries as the socialist administration accused bakers of being part of a broad “economic war” aimed at destabilizing the country.

In a statement, the government said the bakers had been selling underweight bread and were using price-regulated flour to illegally make specialty items, like sweet rolls and croissants. The government said bakeries are only allowed to produce French bread and white loaves, or pan canilla, with government-imported flour. However, in a tweet on Thursday, price control czar William Contreras said only 90 percent of baked goods had to be price-controlled products. Two bakeries were also seized for 90 days for breaking a number of rules, including selling overpriced bread.

Throwing people in jail for selling “underweight bread!” How dystopian! While most lawyers know about Lochner, few know about a related bakery case, Jay Burns Baking Co v. Nebraska. In that case, the Cornhusker State criminalized selling underweight bread!

An act of the Legislature of Nebraska, approved March 31, 1921 (Laws 1921, c. 2, p. 56)1 provides that every loaf of bread made for the purpose of sale, or offered for sale, or sold, shall be one-half pound, one pound, a pound and a half, or exact multiples of one pound, and prohibits loaves of other weights. It allows a tolerance in excess of the specified standard weights at the rate of two ounces per pound and no more, and requires that the specified weight shall be the average weight of not less than 25 loaves, and that such average shall not be more than the maximum nor less than the minimum prescribed. Violations of the act are punishable by a fine or imprisonment.

Plaintiffs challenged the law as “unnecessary, unreasonable and arbitrary.” The Court, finding that the permitted tolerance–only half an ounce or say–was unreasonable, and unconstitutional:

For the reasons stated, we conclude that the provision, that the average weights shall not exceed the maximums fixed, is not necessary for the protection of purchasers against imposition and fraud by short weights and is not calculated to effectuate that purpose, and that it subjects bakers and sellers of bread to restrictions which are essentially unreasonable and arbitrary, and is therefore repugnant to the Fourteenth Amendment.

Though similar to Lochner in facts, the case was not cited.

Justice Brandeis, joined by Justice Holmes, dissented. They would have upheld the criminal prohibition.

Venezuela could certainly use some Lochnerism!