The Supreme Court and the Federal Reserve, twin pillars of the liberal market order, have never been systematically compared. Yet, as elite institutions in a democratic political world, they face parallel problems in carrying out the similar functions of maintaining the precommitments to a stable rule of law and the stable value of money, respectively. Both face a countermajoritarian difficulty of, on occasion, justifying their decisions to go against popular will. In response, both tie themselves to rules in order to cabin their own discretion and to prevent epistemic mistakes common in small groups of insulated decisions makers. Yet as a descriptive matter, in emergencies both transcend rules to keep the republic steady.
The comparison illuminates parallel dilemmas sometimes recognized in the context of one institution yet denied or ignored in the other. For instance, commentators appreciate the epistemic difficulty of small-group decision- making as a major problem for the Federal Reserve (“the Fed”), while this is not often seen as an issue for the Supreme Court. Moreover, the Fed admits it acts differently based on its own evaluation of an emergency, but the Court often does not acknowledge altering its jurisprudence in an emergency. Yet decisions like Bush v. Gore and Wickard v. Filburn are best explained as rooted in emergency judgments similar to the Fed’s. Assuming the Court continues to deploy what is effectively an emergency jurisprudence, more transparent acknowledgment of the decisiveness of such emergent circumstances would make it easier for the Court, like the Fed, to unwind from its prior judgments in nonemergent circumstances.
In addition, the parallel independence of these entities is not only necessary for their purposes but each also faces similar perils in a time of polarization as we are currently experiencing. Today, the central bank is considering whether it should engage in new forms of activism to address such problems as climate change and inequality. The Supreme Court’s history shows the substantial risk that such activism will undermine the diffuse support among elites. That loss of support leads to political movements—like court packing or favoring structural change for the Fed—that make it more difficult for such institutions to preserve their independence and sustain their precommitments.
