Thanks to Barak Richman and Dan Crane

Thanks to Barak Richman and Dan Crane for participating in our first online debate at CLR Forum, “Are Conservative Rabbis a Cartel?” You can follow the posts by scrolling to the “Debates” category over on the right. We’re very grateful for the thoughtful and fun exchange. Come back soon!

Establishment Clause Creep and Antitrust Creep

This will be the end of the line for the back-and-forth between Barak and me, so let me thank Barak for his very thoughtful and cordial correspondence on these interesting questions.  This is not a moment to say “see you in court,” but to hope that our dialogue has furthered our respective understanding of the issues.

In earlier posts, I hinted that application of the antitrust laws to rabbinical or pastoral hiring practices would run afoul of the Establishment Clause, particularly in light of the Supreme Court’s recent decision in Hosanna-Tabor Evangelical Lutheran Church, which recognized a “ministerial exception” to the application of antidiscrimination law to the hiring of religious ministers.  In my view, a fair reading of Hosanna-Tabor would prevent an antitrust suit involving rabbinical hiring.  However, for purposes of this post, I would like to respond more generally to Barak’s claim that “entanglement” concerns lead to “Establishment Clause creep,” insulating from legal review the harmful decisions of religious organizations.

Barak’s concerns over “creep” fall into two categories.  One concerns the externalization of costs from religious organizations to others–his example of people cutting across the neighbor’s lawn to get to church.  This is an easy case for me, because religious organizations should not be allowed to justify externalizing costs onto others in the name of religious independence.   Of course,  one could argue that all purely private activities end up externalizing costs or benefits onto others (i.e., functional families make for happy neighborhoods, dysfunctional ones for unhappy neighborhoods), but I’m confident that sensible lines can be drawn between what is mostly internal and what is significantly external.

What about cases where the harms, if any, are all or mostly internalized within the religious organization or by its members?   Consider two examples:  ritualistic human sacrifice of willing victims and regulations applied to require churches to install wheelchair ramps.  In neither of these cases is the Establishment Clause or free exercise defense plausible.   In the human sacrifice case, the act is  morally abhorrent and the legal prohibition clear.  Any ostensible free exercise interest is outweighed by the state’s legitimate interest in preserving human life and there is no danger of entanglement.  In the wheelchair ramp case, the legal requirement concerns a physical structure far enough removed from the purposes and values of the religious organization that there is little risk that enforcing the building code would require civil authorities to inquire into the existential purposes of the church and their relationship to the civil law.

Not so for antitrust law (and perhaps other business torts as well).  Antitrust is not justified on the grounds that collaboration among rivals is inherently immoral or  injurious.  Rather, it is justified on instrumental grounds–that competition among business firms tends to increase output and decrease prices to the benefit of consumers.  As I said in earlier posts, it’s awkward to apply this assumption wholesale to religious organizations, since many such organizations would resist the idea that they are ordinary economic actors or exist in order to achieve a better deployment of society’s scarce social resources.  And most religious groups would strongly deny that they would function better if they fostered internal economic rivalry.

For example, for mendicant orders like the Franciscans, the “employees” are bound to an oath of poverty.   They are expressly prohibited from being Chicago School “rational profit-maximizers.”  If the Franciscan order put in place rules to prevent local parishes from trying to attract Franciscan monks through promises of higher compensation, that would run counter to the Sherman Act’s assumption that economic rivalry results in an optimal allocation of resources.  But I’m doubtful that the Sherman Act’s assumption generally holds in the religious organization context.  And, even if it sometimes might hold, it would be  troubling to ask courts to sift through the evidence on different religious organizations to determine when it does hold and when it doesn’t–when the existential purposes of a particular sect would be furthered by greater economic rivalry and when they would not.  That, in my view, would raise serious entanglement problems.  Do we want courts deciding what degree of poverty is appropriate for Franciscan monks?

[I’m amending my post from last night to add a further anecdote from the Christian tradition that illustrates the problem.  In the gospel accounts, when Jesus enters the temple he finds merchants engaging in commerce and drives them out with a whip, saying that God’s house should be one of prayer, not of thievery.  Many churches today are reluctant even to sell sermon tapes or Christian books in the church foyer because of this and similar admonitions.  That this is a concern in the Christian tradition does not make it universally a concern, but it does suggest an entanglement problem if courts were to undertake an inquiry into when commercial transactions are permissible, and when not, within a particular religious tradition.]

In short, I’m less concerned about Establishment Clause creep than about antitrust creep.  Economic rivalry is good sometimes, but not always.  Unlike Barak, I wouldn’t start with the assumption that antitrust law should apply universally to all human endeavor unless a special exception is warranted.  I would start with the assumption that antitrust should apply to business and commerce and only extend it to other endeavors if the case for extension were clear and unencumbered by competing religious, social, or moral values.  As to rabbinical collusion, I’m not persuaded that case has been made.

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.

More Thoughts on Harmony and Competition

Thanks, Barak, for very thoughtful and illuminating comments. Our differences are becoming crystallized, and I wonder how much of it has to do with the differences between our respective religious traditions.

It’s interesting that Barak and Harry, who are infinitely more qualified than I am to opine on the issue, understand the hiring of rabbis as a clearly commercial transaction. I can only counter with an idiosyncratic example from my own experience. Until their recent retirement, my parents served their entire adult lives as evangelical Protestant missionaries in Europe. Their income came entirely from money raised from U.S. churches. I think that both they and their supporting churches would have most surprised to hear these transactions described as commercial. The money was incidental to the mission, in the same way that an athlete drinks gatorade incidentally to running a marathon. It may be true that without the gatorade she will collapse, but no one would understand the drinking of the gatorade as the point of the marathon.

This is the major distinction from Barak’s examples from the professions. Doctors, lawyers, teachers, and many other professionals may choose their vocation because of altruistic motivations–the desire to heal, promote justice, or mold young minds. But it is still a vocation–a way to earn a living–that they are choosing. Earning their keep is not incidental to their moral vision. If it were, professional salaries would be far lower than they are.

My point that ordained ministers are differently situated from “the professions” is perhaps as much aspirational as empirical. There are no doubt clergy of all religions who bargain hard to maximize their income based on market factors. But the overall effect is quite different than in the professions. Consider the 2012 Large Church Salary Report conducted by the Leadership Network. The study found that the average salary for a megachurch pastor (one with at least 2,000 attendees) was around $150,000, with an average increase of $8,000 for every 1,000 additional attendees. True, this suggests some market forces at work in setting compensation–pastors who attract more congregants get paid more. But, on the other hand, the effect is very small. The incremental income brought into the church by an additional 1,000 congregants is probably several million dollars. Megachurch pastors are comparable in talent, managerial responsibility, and labor intensity to the top professionals, yet their direct compensation is relatively modest (and yes, indirect compensation would need to be explored as well). In most congregations, it would be considered appalling for a pastor to try to justify his salary based on his value to the church (“I’ve saved thirteen souls this year so I should get a bonus”) as opposed to his needs.

Even conceding that bargaining over money plays a role in the hiring of clergy, there remains the question of fit between the existential purposes of the antitrust laws and the existential purposes of religious groups. When it comes to business firms, we believe that the profit motive is exactly what drives firms to deliver the goods and services we value. As Adam Smith observed, “[i]t is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Competition principles channel this self-interest to maximize our collective well being. But I would not want to attend a church that followed such a principle–one where others gave of their time, money, and friendship only because of self-interest. Although I am of course self-interested (blame original sin), when I participate in my church I aspire to something different–to Jesus’ admonition that it is more blessed to give than to receive, that the widow’s mite was far more valuable than the rich man’s donation.

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? Should courts sift through the evidence on each religious organization, trying to craft antitrust rules that respect the values of each organization while obtaining the benefits of competition where they are warranted? In my view, that would raise serious questions of entanglement between church and state that justify a categorical decision not to apply antitrust law to ministerial hiring–just as the Supreme Court recently declined to apply antidiscrimination law to religious hiring. Barak and I have agreed to debate that issue next.

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.

Price-fixing Rabbis: Is Antitrust Made for this Problem?

Barak has single-handedly provoked a national dialogue over an interesting and important issue about the relationship between antitrust law and religious organizations.  This is scholarly entrepreneurship at its best, so kudos to Barak.  Alas, I’ll have to part company with his position.  Not having the benefit of his expertise on the specifics of  rabbinical hiring, I’ll make more general comments about antitrust and the regulation of religious enterprises.

Modern antitrust law is justified on the assumption that rivalry between firms for the design, manufacture, and distribution of goods and services promotes efficiency by stimulating innovation and lowering prices.  This assumption is true enough as to commercial undertakings that it serves as a useful market ordering principle.  I’m far less confident that the rivalry assumption holds as a general matter as to religious organizations.

On the one hand, competition clearly can be a spur to the performance of religious organizations.  The best empirical evidence for this is the widely different paths of the state-established churches of Europe and the disestablished churches in the United States.  In Europe, the Lutheran, Anglican, Orthodox, and Catholic churches have held near-monopoly positions for hundreds of years.  Funded by the state and granted all manner of valuable privileges and subsidies, they are economically protected—and in north Europe at least almost completely irrelevant.  Secure in its position and unmotivated by competition, the established church had little reason to sharpen its message, adapt to new social realities, or reach new audiences.  By contrast, religion has flourished in America precisely because of its disestablishment.   America has been the most fertile land for development of new religious sects, doctrines, and expressions, in large part because no group could succeed unless it presented an appealing message and worked hard to attract and retain members.  Europeans who often look with a mixture of contempt, amusement, horror, and incredulity at the deep religiosity of the United States would do well to consult economic principles to understand the differences.

On the other hand, it’s far from clear that rivalry between religions is as fundamental to the well-being of society as is rivalry between commercial firms.  I was recently at a conference where someone asked whether the antitrust laws should apply to the Balamand agreement between the Roman Catholic and Eastern Orthodox Church, which ended official Roman Catholic proselytization of the Eastern Orthodox.  The audience laughed.  Given that much of history’s nastiest episodes have come about because of religious rivalry, gestures toward religious conciliation and ecumenicalism are a relief—even if they happen to take the form of market division.

And that’s as to what the antitrust crowd would call “interbrand competition,” rivalry between different religious sects.  If the value of overt rivalry between religious sects is questionable, so much more so for rivalry within religious sects—what the antitrust crowd would call “intrabrand competition.”  Speaking from within just my own tradition—the Christian one—a good bit of the Apostle Paul’s letters to the churches scattered across the Roman world was about the need for unity, the need to avoid internecine strife, the need to stop competing and to be “unified in Christ.”  Since the church was said to be “one body,” the Apostle would likely have found it surprising that social welfare would be maximized if the churches at Ephesus and Corinth competed with each other to attract Timothy as their next pastor.  To put the point rather awkwardly in the language of modern antitrust, in Christian theology the church is a single firm, and a single firm is juridically incapable of conspiring with itself (as the Supreme Court held in Copperweld).  I can’t speak universally, but my sense is that most religions have a similar commitment to internal unity and harmony.

The fundamental problem with applying antitrust law to the non-commercial activities of churches, synagogues, or other religious organizations is that it forces them to adhere to a set of normative commitments that may not be their own.  An ecclesiastical organization may think it’s far more important to ensure order, theological continuity, adherence to tradition, or harmony in allocating its clergy than to secure the optimal short-run deployment of its human capital resources (i.e., its clergy) given the preferences of local congregations.  I don’t know whether or not it is.  But if I were a judge making the decision in an antitrust case, I would be pretty sure that the question wasn’t my call.  Congregational style organizations exist precisely because their members want control over these kinds of decisions; synodic or hierarchical organizations exist precisely because they value order, theological continuity, adherence to tradition, and harmony over local autonomy.

Thus far, my arguments have been purely normative.  Whether modern U.S. antitrust law applies in the rabbinical case Barak has raised is a different question.  I seriously doubt that the framers of the Sherman Act would have contemplated the statute’s application to churches and synagogues.  To be clear, I’m not suggesting that religious organizations are immune from the antitrust laws when they sell goods or services.  If kosher slaughterhouses collude to raise prices for meat, they surely don’t get antitrust immunity just because the collusion is sanctioned by a rabbinical council.  The Supreme Court has held that the antitrust laws apply when “proximate relation to lucre” appears.  Producing and selling food is a commercial transaction; hiring rabbis or pastors is not.  We hope that the core motivation of the transaction has no approximation to lucre whatsoever—that each party to the transaction is maximizing things other than money.  To force the parties to follow the normative goals of the antitrust laws when it comes to ordering their religious activities fails to  respect to the very reasons that churches and synagogues exist.

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.

CLR Forum Debate: Is Conservative Judaism a Cartel?

Back in August, I posted a critique of Duke Professor Barak Richman‘s argument, discussed in an article in the New York Times, that Conservative Judaism’s process for naming rabbis violates the antitrust laws. Barak responded in the comment box, and it occurred to me that it would be a nice idea to host an online debate on the subject. Professor Daniel Crane (Michigan) has kindly agreed to participate. So, for the next couple of days, Barak and Dan will face off here at CLR Forum. We’re very grateful to both of them and look forward to a lively and enlightening exchange. And the com boxes will be open!