By: Rob Natelson
Since Election Day, the stock market has soared. The benchmark Standard and Poor’s 500 index, which reflects the stock price of larger companies, has risen by more than 14 percent. The NASDAQ Composite, which measures a wider sample of stocks, has jumped more than 16 percent.
These stunning results were achieved in less than 100 days. Everyone knows the reason: Investors have laid out hundreds of billions of dollars with the expectation of a more-free-market-oriented Republican president and Congress.
By “investors,” I don’t mean the rich. The vast majority of investments are made on behalf of people of modest means. A single pension fund such as TIAA, which represents public employees, handles more than 10 times the wealth of the richest man in the world (Bill Gates).
This stock market rise is a huge vote of confidence in free-market policies, but it is also a warning. Specifically, it is a warning to those on the left who have abandoned Americans’ post-election honeymoon tradition in an effort to trigger what Mark Levin calls a “silent coup.” If the left is successful in neutering Trump or the GOP Congress, we can expect investors to flee the markets in droves. The result could be economic collapse.
When considering whether to alter direction, it is always wise to consider the extent to which people have relied on current policy. In other contexts, the left purports to understand this. Illustrative is a legal theory liberal academics promote called “super-precedent.”
The theory of super-precedent is the Supreme Court should not overrule certain liberal constitutional cases, even if they were decided incorrectly. This is because people have relied on those cases. Abandoning them would be disruptive.
Promoters of the “super-precedent” theory apply it to cases such as Roe v. Wade, the 1973 decision that upended the abortion laws of all 50 states. They also apply it to the court’s 20th-century constitutional holdings that, on specious constitutional grounds, eroded the Constitution’s limits on federal economic regulation.
Yet few, if any, Supreme Court decisions occasion as much reliance as the results of a national election. If Roe v. Wade were overturned tomorrow, no abortions would be undone. In all probability, no person currently pregnant would be denied an abortion. This is because it would take months, perhaps years, for state legal systems to respond to the change. At most, reversal of Roe v. Wade would affect future pregnancy planning in some states.
Supreme Court cases allowing excessive federal regulation have engendered more reliance than Roe v. Wade, but the amount of reliance can be overstated. In Wickard v. Filburn (1942), the Court misconstrued two clauses of the Constitution to permit direct federal regulation of agriculture. If the Court were to overturn Wickard, it would re-establish some constitutional limits on federal regulation—and many business plans would have to change.
But the Court has ways to contain or eliminate the damage. One is to phase in the change. In fact, this is precisely what the justices did when they reversed Plessy v. Ferguson (1896), the long-standing precedent that authorized state-sponsored racial segregation.
If, on the other hand, the left is successful in delegitimizing the GOP president and Congress, there would be no way to contain the damage. The free-market policies investors were promised and relied upon would not be forthcoming after all. Investors would flee the stock market in panic. Countless smaller business and personal decisions not recorded in the stock market would be unhinged as well.
No doubt some on the left would be perverse enough to welcome this result. But those who mean well should realize they are playing a very dangerous game. For the good of the country, it’s time for them to stop being spoilsports and accept the election results.
Rob Natelson ([email protected]) is a retired constitutional law professor and constitutional historian. He currently serves as a senior fellow in constitutional jurisprudence at The Heartland Institute.