Shouldn't Canada's Judges Know Something About Economics?

Owen Lippert

It is not difficult to conclude that Canada's judges have, over the years, entrenched a great deal of undeserved privilege and rent-seeking. From the 1945 Rand Formula's "closed shop" unionism to the 1997 Delga-muukw's creation of a sui generis aboriginal property right in British Columbia, Canadian judges have appeared to "have steadily succumbed ... to the belief that nothing matters beyond politically desirable results, however achieved," as Robert Bork states of the American judiciary. (footnote 1) Viewing this tendency, Canadians should ask: "To what degree should judges hold strictly to formal reasoning—the application of existing legal concepts and doctrine—and to what degree should they refer to political or social considerations?" There is also another question, "To what degree should they pay attention to economic considerations and, if so, how?"

It is beyond the scope of this article to attempt to provide any answer to the role political and social considerations should play in the decision-making of judges. (Whatever the answer, it will be one of degree because, as Professors Patrick Atiyah and Robert Summers outline in Form and Substance in Anglo-American Law, (footnote 2) formal and substantive reasoning co-exist in our legal system, often uneasily, yet often, too, productively.) Yet, if judges take into account other factors, should not one of them be the economic impact of their decisions? To date, that has not been the case.

In the 1976 Anti-Inflation case, the Supreme Court of Canada pointedly dismissed the concerns of 39 leading economists. In a majority decision, Chief Justice Bora Laskin ruled that a 10 percent inflation rate justified the federal government's emergency imposition of wage and price controls. Do judges understand economics any better today?

The taxpayers of Ontario might not think so. In September 1997, Judge Denis O'Leary added $418 million to the provincial budget. He ruled that female workers still face "gender-based systematic wage discrimination," even if there are no male workers in a profession with whom to compare salaries. (footnote 3)

This is just one example. In the 1992 Schacter case, the Supreme Court ruled that fathers could receive Unemployment Insurance benefits for staying home with new-born children, a decision that cost the federal government $600 million.

Should we expect more O'Leary-style judgments as client groups fight federal and provincial efforts to cut spending? The Globe and Mail reports "groups head to the courts because they feel that with the Charter of Rights and Freedoms, an increasingly activist judiciary, they at least have a chance of reversing the government's actions." (footnote 4)  It is important to remember that Canadian courts are still adjusting to the establishment of the Charter of Rights and Freedoms that gave them substantial new powers to supervise public policy. Also new areas of conduct, such as labour relations and human rights, came under the scrutiny of the Charter. As a result, a variety of individuals and groups are now seeking compensation for alleged injuries, and are often paid by Ottawa to do so. (footnote 5)

Largely as a result of the Charter, the concept of "justice," according to many contemporary law scholars, has now expanded beyond its traditional meaning rooted in procedural fairness. It now envelops a definition of equity (or fairness) in which individuals not only have equality of opportunity, but also consistent access to some level of income and influence. (footnote 6)  This trend in Canadian law comes directly from American civil rights law. Features include: the redefinition of "equality" from equal treatment to equal outcomes; the notion that rights are inherent not in individuals but in groups; and that government should guarantee equality through entitlements rather than through equal access to opportunities.

Professor Peter Russell wrote prophetically of the Charter in 1983,

The danger here is not so much that non-elected judges will impose their own will on a democratic majority, but that questions of social and political justice will be transformed into technical legal questions and the bulk of the citizenry who are not judges and lawyers will abdicate their responsibility for working out reasonable and mutually acceptable resolutions of the issues which divide them. (footnote 7)

If Russell is correct, and social and political issues are becoming legal questions, and Canada's legal elite are advancing their own notions of "social justice," they should also be constrained by another extra-judicial factor —economic consequences. Would Judge O'Leary have decided differently if he knew that the resulting budget cuts and increased taxes will reduce the number of jobs for women both in and out of the Ontario government? If the law is politics, according to the modern law professor, should it not pay more attention to economics, the study of choices?

To be sure, economic thinking has inched some way into the theory and practice of law in Canada. As a result of the Law and Economics movement, most law schools now offer at least one economics course. Judges in their rulings will, on occasion, refer to economists. Yet economic analysis remains largely segregated to corporate law and the estimation of awards. However, the main branches of Canadian law—the Constitution, the Charter of Rights and Freedoms, and most sub-branches, e.g., labour, family and, in particular, aboriginal law—have been placed off limits. Canadian law professors and judges may accept economic analysis in business law, but reject its use in public policy and social issues. Dean Hutchinson in attacking Law and Economics scholars as "reductionist," "ethically bankrupt," and "self-serving" insists they should be "content with offering a partial insight into the operation of law and society." (footnote 8)

Despite the opposition from the law faculties, what can be done to make economic considerations more of a substantive consideration for Canadian judges without violating the necessary tenets of judicial independence? At the end of the day, the most effective means lies in the public and opinion-makers creating a new intellectual environment which judges must consider as seriously as they do any political or social factor. The thinking public must convey to judges the message that judicial intrusions into both private agreements and public policy must be fully justified. In the words of University of Chicago law professor Richard Epstein: "under the dominant constraint of scarcity, insist that every new legal wrinkle pay its way by some improvement in the allocation of social resources. All too often today's law does just the opposite: it makes more complex rules that hamper the productive efficiency of the society they regulate." (footnote 9)

To be sure, judges are not solely to blame for inefficient complexity. At one time, Canadian courts and juries examined contracts and judged their fulfilment against these clear and fundamental rules. Now judges increasingly must contend with the conditions laid out in a voluminous and painfully obscure body of statute law and the even larger and more obscure accompanying body of regulations. Thus, there is a need for intellectual and public pressure not just on judges, but also on legislators and administrators to simplify and clarify the law.

The point is that the law ultimately belongs not to judges and lawyers, but to all of us. Though Canadians do not really need to know every new twist in the law, they should, nonetheless, be able with some certainty to anticipate how the law might affect their lives. As the law belongs to the public, we all have a responsibility to pay more attention and respond to judicial rulings. In turn, judges should write more clearly and communicate more broadly their judgments. Information about court decisions is the best means to hold judges and tribunal members accountable. Jeremy Bentham once wrote:

In the darkness of secrecy, sinister interest and evil in every shape have full swing. Only in proportion as publicity has place can any of the checks applicable to judicial injustice operate. Where there is no publicity there is no justice. Publicity is the very soul of justice. It is the keenest spur to exertion and sheerest of all guards against improbity. It keeps the judge himself while trying under trial. The security of securities is publicity. (footnote 10)

Judicial accountability is often misunderstood. Though the independence of the judiciary is a key safeguard of the Rule of Law in a democracy, it was never intended to place judges above scrutiny. The public should have the information to assess judicial performance. As importantly, the public should have a means to signal its own interests, particularly given that so many judgments claim to serve "the public interest." Greater judicial accountability, even if only exercised by "voice," could serve economic efficiency in two ways. (footnote 11)   Increased scrutiny of the judiciary will reduce the opportunities for possible "producer capture." As the public choice literature shows, legislatures and bureaucracies often end up serving the interests of influential interest groups at the expense of an unaware public. It is a critical question whether the courts and regulatory tribunals have at times fallen victim to "client politics." The danger of the courts promoting special interests is no less than if the bureaucracy does so. A truly independent judiciary is no less important than a truly independent central bank.

Still, the dilemma may exist that judges lack a sufficient knowledge of economics to enable them to understand the economic arguments put forward in the public forum. Judges are now required to attend sensitivity seminars on issues of gender and race. Perhaps a class or two on basic microeconomics should also be on judges' professional development curriculum. Better yet, closer attention should be paid to appointing judges with at least a modicum of economic knowledge. Perhaps newly-appointed judges could benefit from receiving a copy of The Fraser Institute's What Everyone should know about Economics and Prosperity.

Footnotes

1. Robert Bork, The Tempting of America: The Political Seduction of the Law (New York: Free Press, 1990), Introduction.  Back to paragraph 1
2. Oxford: Clarendon Press, 1991.   Back to paragraph 2
3. Carolyn Abraham, "Ontario owes female staff $400 million," Ottawa Citizen, September 9, 1997, page A1.   Back to paragraph 4
4. James Rusk, "Court cases don't hamper Harris government," The Globe and Mail, September 10, 1997, p. A4.   Back to paragraph 6
5. The federal government's re-constituted Court Challenges Program underwrites Charter litigation launched by "equality-seeking" groups; see F.L. Morton and R. Knopff, Charter Politics, Calgary: University of Calgary Press, 1992, and F.L. Morton, "The Charter Revolution and the Court Party," Osgoode Hall Law Review, 30, 1992, pp. 501-546.   Back to paragraph 6
6. Joel Bakan, Just Words: Constitutional Rights and Social Wrongs, Toronto: University of Toronto Press, 1997, pp. 9-10.   Back to paragraph 7
7. Peter Russell, "The Political Process of the Canadian Charter of Rights and Freedoms," Canadian Bar Association 61 (1983), p. 52.    Back to paragraph 8
8. Allan C. Hutchinson and Pam Marshall, The Law School Book: Succeeding at Law School, Concord, Ontario: Irwin Law, 1996, p. 27.   Back to paragraph 10
9. Richard Epstein, Simple Rules for a Complex World, Cambridge, Mass.: Harvard University Press, 1995, p. 307.   Back to paragraph 11
10. Cited by Gerald Gall, The Canadian Legal System, 4th ed., Toronto: Carswell, 1995, p. 152.   Back to paragraph 14
11. See Albert O. Hirschmann's Exit, Voice and Loyalty, Harvard University Press, 1965.   Back to paragraph 15

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