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Thursday, April 2, 2009

Supreme Neglect: How to Revive Constitutional Protection for Private Property

The framers of the Constitution were acutely aware that politics—even in the highly limited democracy they envisioned—could be dangerous to private property. For that reason they added the “takings” clause to the Fifth Amendment: “Nor shall private property be taken for public use without just compensation.” Unfortunately, like so much other constitutional language intended to defeat political attacks on liberty and property, those words have proven inadequate.

That is not to say that if the takings clause had been written differently we would have avoided the widespread destruction of property rights that has taken place. The trouble lies not in its wording but rather in the widespread belief shared by most politicians and judges that property rights must yield to a host of “social concerns.” To address those concerns, the country has been beset with schemes that deprive people of their rights.

No American scholar has invested more time in analyzing the legalities and consequences of the erosion of property rights than University of Chicago law professor Richard Epstein. Oxford chose wisely in asking him to write the book on property rights in their “Inalienable Rights” series.

Supreme Neglect is not a dry legal treatise. Epstein has a serious purpose in mind that a dry treatise would not serve: “to offer a roadmap for the revival of property rights in the United States and for the social improvement that this constitutional change should usher in.” Anyone who wants to understand what is at stake in the war over property rights should start with this book.

Epstein packs a lot into 169 pages. He begins with a general discussion of the benefits of private property, elaborating on the ways it facilitates social and economic progress by encouraging cooperation among people and directing resources to their most beneficial uses. Security in property rights allows people to find the ideal arrangements for the use (and the non-use) of land. With private property the owners reap the benefits of wise decisions and contracts but suffer the losses if they act mistakenly. Throughout the book Epstein contrasts the benefits that flow from private decision-making with the waste and folly of government interference.

The taking of private property through eminent domain is a “signature” issue with Epstein, and he drives home the point that government seizures of real estate for anything other than very narrow public uses ought not to be permitted. He was deeply involved in the 2005 Supreme Court case Kelo v. New London, where a thin majority held that takings for “economic development” were permissible. Epstein argues that rather than looking to government action to catalyze economic growth, especially in depressed areas, Americans should demand more freedom to acquire, invest in, and profit from real estate. The New London project proves a stark lesson in government blundering. Despite the city’s taking of private property that wasn’t even necessary for its grandiose plan, it languishes for want of commercial interest.

Epstein also shows that where government does pay property owners some compensation when it seizes their land or reduces its value, that compensation is usually far from adequate to make them whole. That enables politicians to parade in front of voters as great public benefactors for actions that do little good and for which the people probably wouldn’t pay if they had to make full compensation. Thus hapless property owners are routinely victimized for cheap political stunts. Historic preservation is a good illustration. Heavy costs are imposed on those who own buildings that are designated as “historic,” but how many people really care if some old property is maintained in its original, nineteenth-century condition? Only a few, who probably would not be willing to buy the property so they could preserve it themselves.

What Epstein terms the “exaction game” comes in for sharp criticism too. That is the nasty, extortionate ploy politicians have developed for compelling those who want to use their property to fund other, unrelated public “improvements” as well. Epstein blames the Supreme Court’s “muddy and inconclusive analysis of exactions” for allowing municipal governments to force developers to pay for art museums, low-income housing, daycare centers, and so on. On this issue, like all the others he tackles here, Epstein shows judges the right path to take if they’re interested in getting out of the mud.

Readers who expect to hear praise for such “conservative” justices as William Rehnquist and Antonin Scalia will be surprised to find that Epstein often criticizes them. His rigorous analysis steps on just about all the toes of Supreme Court justices past and present. Honest scholarship requires as much—the Court has been getting property rights cases wrong for a long time.

  • George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

  • Richard Allen Epstein is an American scholar, educator, lawyer, and author, best known for his writings and studies on classical liberalism, libertarianism, torts, and a wide variety of topics in law and economics.