The commerce clause of the constitution is not nearly as big a grey area as politicians, especially progressives, would have us believe. Whatever it really means, it’s going to be affected in a major way by the SCOTUS ruling on Obamacare. Once we’re past that, and it should happen tomorrow, we need to have a national debate about what exactly constitutes “interstate commerce.”
I have experience in several industries where that definition plays a major role. Filmed entertainment, retail, trucking and logistics, and even information technology all have major components involved in interstate commerce. In order to get a grip on where the line is between what is currently considered interstate commerce and what is not I’ve developed a couple of scenarios. Just be advised, these are fairly simple examples, but that proverbial line goes all over the place.
First, let’s just take a look at that clause so we’re all on the same page:
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
The context of this is “the congress has authority.” For our purposes here, we will focus on the phrase, “and among the several States.” Keep that idea in mind as you read on, and see if you can figure out a simple definition of what really constitutes interstate commerce.
Tylenol is made by McNeil Laboratories in Fort Washington, Pennsylvania. Walgreen’s is headquartered in Deerfield, Illinois. I’m in Los Angeles California. Now, here’s the question: If I go to the Walgreen’s just down the street from my house and purchase a bottle of Tylenol, am I engaged in interstate commerce? I happen to know that the answer is no, I am not. If I didn’t know that, and only had, say, my trucking experience to go on, and had to decide the questions based on that experience, I’d have to say yes, that is interstate commerce. More on that later. For now, let’s drill down into this transaction a bit and see where it takes us.
How about this: When Walgreen’s purchased the Tylenol from McNiel, was that interstate commerce? Yes, actually, that one is simple. Now, let’s say the financial transaction is complete, and a truck, owned and operated by Walgreen’s, shows up at the McNiel factory to pick up the load of Tylenol and carry it to the distribution center in Moreno Valley, California. Is that part, the shipment of the Tylenol to California, interstate commerce? Remember, it’s Walgreen’s property, in a Walgreen’s truck, going to a Walgreen’s distribution center. The answer is yes, that is considered interstate commerce. In this scenario, all of this actually makes sense, and for several reasons.
The above scenario actually demonstrates the very reason the commerce clause was included in the constitution in the first place. Here you have stuff going all over the country, moving back and forth across several state lines from one end of the country to the other. If any part of this transaction is not considered interstate commerce, a whole lot of states have to get involved individually to figure out how to regulate from one state to the next. It would be easy for one state to make life very difficult, not to mention expensive, for the parties of the transaction, and even for the other states involved. The advantage of the commerce clause is pretty clearly demonstrated in this scenario.
Interestingly, when the workers at the Morena Valley distribution center load the Tylenol on the distribution truck to deliver to my local store here about 70 miles away, that is still interstate commerce. Does that make sense? Well, kind of, but what about this next scenario, this one is really strange.
Lets say I have a truck. Nothing fancy, just a standard class 6 cargo truck not unlike one of those Budget or Ryder rental trucks. Then let’s say I have a client in Chatsworth California that makes BBQ Grills. Now, these guys have sold several dozen of these grills to a company in Houston, Texas. My part of the operation is to pick up six pallets of BBQ Grills and deliver them to a distribution warehouse in Fontana California some 60 miles away. I’m not leaving the state, and I’m only being paid to go from Chatsworth to Fontana. Am I participating in interstate commerce? Keep in mind that I am being paid by the manufacturer in Chatsworth to carry stuff from there to the warehouse. I have no interaction at all with the customer in Texas. Everything about the transaction that I am engaged in is happening entirely in the state of California. Still, the answer is yes, according to federal regulations, in this instance I am engaged in interstate commerce and am subject to federal regulations. This ads a lot to my cost of doing business. Is it me, or does this not make a lot of sense?
Now, for the real hard, or perhaps not so hard, question: How does the concept of healthcare fit into interstate commerce? Well, that depends on how you want to look at it. If you look at healthcare as the interaction between you and your doctor, nurse, lab tech, pharmacist, etc. then no, it can’t be considered interstate commerce, unless you use these services in several different states, which is not likely enough for consideration. If you consider health care as the transaction between you and your health insurance company, then maybe it’s different. Or is it? In the current market, just like it was before Obamacare, you can only buy insurance from within your state. You can not purchase health insurance from a company in another state!
The question now becomes, how the hell can this possibly considered interstate commerce? Well, in my opinion, it can’t. There’s no way in hell healthcare is interstate commerce. Now, if you’re a major medical corporation and California and you purchase an MRI machine built in Texas, then yes, that’s interstate commerce. When you bring that thing online and use it to diagnose a patient who lives three miles away and pays for it with an in-state insurance policy? No, that can not in any way be construed as interstate commerce. According to the Obama administration though, it is. If we’re not careful, he’ll find a way to make everything “interstate commerce” and then take the opportunity to take full and complete control of it. If Barack Obama is anything, he’s a control freak, and I’m being very generous in that comment, very generous indeed.