Organizational Values, Neutral Principles, and Economic Power

Dan Crane, again with great eloquence, concludes his insightful and personal post by asking, “So where does it leave us if bargaining over money is an unavoidable aspect of much religious hiring but that rivalry over finances is contrary to the principles and self-understanding of many religious organizations?”  This is indeed a foundational problem in nations (like ours) that do not rely on state support for religious activity, but I respectfully submit that this is not a new problem.  Indeed, as I wrote in my earlier posts, the suggestion that religious and nonprofit organizations pursue non-pecuniary objectives — as they clearly do — has often been invoked to shield them from antitrust and regulatory scrutiny, which has led to both economic harm and legal confusion.

It has also led to a mistaken expansion of First Amendment defenses.  Some commentators have spread the mistaken fear that applying neutral principles of law to religious organizations requires, as Dan suggests, an inquiry into “the values of each organization.” Michael Helfand, a rising star in the field, has called this fear “Establishment Clause creep” and has contributed to a growing immunity for religious organizations from general laws.  The Supreme Court’s endorsement of the Ministerial Exception this past year codified this immunity from employment and other discrimination laws, which is a decision I support (disclosure: I authored an amicus brief for Hosanna Tabor that articulated a position that did not contradict with either the petitioner or the respondent in the case).  But if Dan means to extend this immunity to protection from the antitrust laws, would he also extend it to other economic torts?  Or contract actions?

Without doubt, religious organizations and committed religious individuals do an enormous amount of social good.  Dan’s parents are paradigmatic cases in point.  But there needs to be a realistic appreciation that the road to good intentions often strays from the beneficent path, and the law is designed to protect the parties injured from actions motivated by these otherwise well-intended actions.  If a pastor who signed an employment contract that included a severance package is dismissed (perhaps the pastor’s and the congregation’s ideologies parted ways), the church is obligated to pay severance.  If they refuse and the pastor sues, there is no need for a court to inquire into the values underlying the religious motivations or values of either the congregation or the pastor.  Applying neutral principles, the court should enforce the contract.  If a church becomes so popular that its members, to gain entrance to the church, pass over a neighbor’s yard and cause damage, the church would be subject to a tort and should pay compensation. Again, no need to inquire into the church’s mission.  These situations extend, especially, to intra-denominational disputes between large and small parties.  What if the neighbor to the large church is a small church?  The smaller congregation relies on neutral law for protection, otherwise an expansive First Amendment could allow an “entanglement” defense to preclude a court’s intervention into the trespass dispute.

The same logic applies to the antitrust laws.  Neutral principles can and should take a court a long way to resolving a dispute over what essentially is an economic tort.  It is true that the Rabbinical Assembly’s control over the labor market infringes upon a congregation’s Free Exercise rights, but a court need not inquire into either those rights nor the  Free Exercise interests of the Rabbinical Assembly as it implements its cartel.  Neutral principles works very well here, and a court that proceeds along this path would succeed in not interfering with religious organizational values much better than a court that refuses to intervene.  Refusing to intervene would allow the economically powerful to infringe on the mission of the weak.

Although my primary area of expertise is antitrust, I know enough about the First Amendment and the Religion Clauses to appreciate how central they are to American life and American law.  But if the First Amendment prevents courts from enforcing secular law according to neutral principles, then it can defeat its own mission (see Saving the First Amendment from Itself).  The law should not and cannot be dogmatic in its refusal to adjudicate disputes between religious organizations because that would remove protections from organizations that need and rely on the law. And it would — again, contrary to the best of intentions — enshrine the powerful and undermine the religious values of those without power.

On Productive Disagreements and Theological Harmony

It’s an honor to engage with Dan Crane on this, and I deeply appreciate his kind remarks.  But our very cordial disagreement perfectly illustrates a problem with his reasoning:  unity and harmony is perfectly compatible with disagreement and competition.

Let me first counter one point, a minor one to Dan’s cogent reasoning but a critical one for antitrust-in-action (and the realist question of whether a court would view this cartel to be within antitrust’s domain).  Dan says “Producing and selling food is a commercial transaction; hiring rabbis or pastors is not.”  To quote Harry First, an antitrust giant, a co-author on my amicus brief on this topic, and a former synagogue president, “If you’ve ever negotiated with a rabbi, you’ll know it’s commerce.”  There is an essentially commercial element to the rabbinic market–synagogues work hard to raise funds to pay rabbinic salaries; rabbis sign heavily-negotiated employment contracts with synagogues, often with the aid of advocates; and both synagogues and rabbis are highly aware of market wages.  Yes, rabbis do lots of very good things, but they receive compensation for them — as they should! — and are squarely engaged in commercial transactions with their employing synagogues.

To make a larger point:  lots of professionals are dedicated to the public interest, and some even define “professionals” as those whose careers are designed to advance the public interests — see “A Community Within A Community: The Professions”, a seminal 1957 work in sociology.  Consider a physician’s dedication to health & healing, a lawyer’s commitment to advocacy & justice, and an engineer’s devotion to science & safety.  To be sure, these commitments to public service do a world of good and motivate conduct (charity, research, government service, other) that both markets and governments have difficulty providing. But these aspects of professionalism also make professional cartels particularly pernicious.  Precisely because their conduct is premised on noble spirits, they feel entitled to maintain their market dominance; because their attachment to their fellow professionals is so core to their identity, exit or defection becomes unlikely, making their cartel much more stable than other cartels; because they are motivated by paternalist concerns, they easily justify usurping choice, freedom, and efficiencies from consumers. Although professionals do not need to apologize for seeking compensation for their services, their professional zeal often leads to commercial excesses and abuses, and these excesses and abuses are routinely justified in the language serving the public interest.

But my primary point is my first, that both antitrust the First Amendment — and both pluralism and democracy — are premised on a civil exchange of ideas and the freedom to choose among them.  Just like the virulent debates between osteopaths and allopaths, between Bayesian and non-Bayesian statisticians, and (to use a provincial example) between the Mitnagdim and the Hasidim, there are disagreements among Jewish organizations.  Antitrust readily permits agreements to emerge from a competition of ideas — we call them setting standards — and it applauds osteopaths and allopaths when they achieve harmony and unite around a common course of treatment.  But it appropriately would condemn any agreement that is antithetical to a productive clash of ideas.  The rabbis are welcome to disagree among themselves or disagree with congregational choices, but they are not permitted to impose their will though their collective economic dominance.

Dan hit on a very foundational idea.  There is a deeply-felt inclination among religious communities, and perhaps among all ethnic communities, to avoid visible disputes and to seek theological and political unity.  These inclinations have motivated many of my own co-religionists to urge me not to seek legal action and, more generally, to stop talking about this issue publicly.  To be sure, there is an obvious response to that argument, and I submit that voicing disagreement with legal, economic, and moral reasoning is much more squarely within the American tradition.  Fortunately for me, it is this tradition that supports the Sherman Act and the American legal system.  More generally, there is a long and proud history of theological disagreements in America where the resolution is to permit each community to pursue its own beliefs.  This distinguishes the horrors of religious disagreements expressed through force from the benefits of religious disagreements expressed through reason.

Rabbis Following in Cartel Footsteps of Lawyers, Doctors, Engineers, Many Others

First, I thank the CLR for offering its space for an extended discussion of what I think is a critically important issue to many synagogues in America: the freedom to select and hire the rabbi they want.  I confess, however, that this is not a terribly complicated or difficult legal issue. America’s rabbis implement rules that are squarely illegal and are well outside any reasonable First Amendment protection.

Let me briefly describe the organization of America’s Jewish denominations.  Synagogues are independent congregations, governed like any independent nonprofit and like Baptist, Quaker, or other congregational churches.  synagogues hire rabbis just as they hire secretaries, and they pay a voluntary dues to national associations in affiliating with particular movements.  When a synagogue wants to hire a rabbi, however, it confronts a tightly organized labor market.  Individual rabbis are prohibited from seeking employment independently, and instead are required to apply only for jobs through their professional associations.  If they act independently, they are expelled from their associations. Meanwhile, congregations seeking to hire a rabbi must enlist exclusively through the hiring processes sponsored by the rabbinical associations and can only interview the individuals the association sends their way.  I have written about this system in greater detail here and here.

By organizing their individual members, the rabbinic associations are able to leverage their collective power against individual congregations.  This strategy among professionals is nothing new.  The American Medical Association has a very checkered past of instituting similar practices, and until federal antitrust officials intervened had expelled any individual member who accepted employment or payment from early HMOs. Several Bar Associations considered it “unethical” to charge low prices for certain rudimentary services.  Associations of professional engineers prohibited negotiations on price, associations of dentists prohibited its members from working constructive,y with insurers and mother professionals, and the list goes on.  Three similarities persist throughout this history: first, that the professionals expelled members who misbehaved, thereby enabling the association to leverage the entire market of its professional members; second, the association used thus leverage to exploit patients, purchasers of legal services, and other consumers; and third, courts and antitrust enforcers concluded that these practices violated the Sherman Act.

The rabbis are no different.  Their collective dominance allows them to pursue full-employment policies, extract higher wages than other clergy, and stifle innovation and entry from would-be entrants.  America’s synagogues suffer as a result.  Synagogues are contracting, unable to gather the financial resources necessary to sustain themselves; and American Judaism remains ossified in organizational structures that may have made sense in the 1950s but currently are unable to address contemporary needs.  These are the classic harms from a cartel.

So, the practices are familiar and the consequences are predictable.  This is precisely the conduct the Sherman Act is designed to prohibit.  That also means the solution is easy too.