Conservatives,The Police Power and Takings
Rich Julie made a thought-provoking comment on Kelo at VC. (a) Why are conservatives so upset that federal judges are refusing to step in to stop a local government from doing something? (b) Isn’t it interesting that the 5th Amendment is the only one that provides a remedy for a wrong? (c) Doesn’t the literal reading of the Takings Clause allow takings for private use, which shows that adhering to the literal meaning of legal texts is absurd? (d) Why is a railroad or a grist mill, traditional “public uses” more of a public use than a factory? I’ll mix in quotes from Rich Julie as I try to answer the questions. I really should work on auction theory today instead, but hope to come back to this, since these are manifestatons of fundamental constitutional questions relevant to my social regulation project.
(a) Why are conservatives so upset that federal judges are refusing to step in to stop a local government from doing something?
It has been fascinating, in the days since Kelo was decided, to watch so-called conservatives and purported libertarians throw their principals to the wind in orgasms of hyperble and inconsistency. If there is any theme to Justice O’Connor’s decades of swing-voting Supreme Court jurisprudence, it is her constant championing of the rights of states against the encroachment of a federal judiciary and Congress. Now, though, she announces that the sky is falling because a federal court has refused to step in to interfere with the MOST local of matters–urban planning.
The issue here is not federal vs. local at all. A state court could be hearing this case just as easily as a federal court, using a state constitution instead of the federal one.
The issue is executive vs. legislative vs. judicial, but in takings paid for by private parties, it could as easily be executive vs. legislative as executive+legislative vs. judicial. A mayor could get around having to pass a law and get funds appropriated by using a taking instead and using private money for something.
But the fundamental issue is the extent of the reach of government, and, especially, one’s trust in government not to favor special interests. Conservatives like laws, especially local laws, more than libertarians. But both of them generaly favor the rule of law– of regulations that apply to everyone equally– as opposed to the rule of men– unconstrained discretion by the government to help some people and hurt others.
(b) Isn’t it interesting that the 5th Amendment is the only one that provides a remedy for a wrong?
… the issue is whether a fundamental right is being violated at all. The fifth amendment takings clause is one of the very few (the only??) provisions of the bill of rights that contains a remedy right in its text. The fourth amendment exclusionary rule is a pragmatic creation of the courts. The right to a new trial following a violation of the sixth amendment right to counsel is implicit, at best. But the takings clause does not bar the taking of property. The taking of property is simply NOT a violation of a fundamental right. The right guaranteed by the clause is one of “just compensation.” Setting aside the “public use” component, which I’ll come back to in a moment, and so long as the property owner is justly compensated, there is no violation of any right, fundamental or otherwise.
That is an interesting observation, worthy of further thought. It isn’t relevant here, though, because although the remedy of “just compensation” is perfect in theory, in practice it is grossly insufficient. We pay the estimated exchange value to a person (or more, if there is corruption), not the actual use value, and we don’t compensate for transaction costs or adjustment costs. Thus, the victim ordinarily undercompensated. This is inevitable, in an imperfect world.
Something not often noted is that a taking is more likely to occur if the taker can predict that a court will underestimate the exchange value. See my article on Predictable Court Error.
“Predictable and Unpredictable Error in Tort Awards: The Effect of Plaintiff Self Selection and Signalling,” International Review of Law and Economics (September 1995) 15: 323-345. If a tort plaintiff can predict that the court will overestimate damages he is more likely to bring a case, but if the court is aware of this, it may wish to adjust its awards accordingly. In general, court error implies that the court should adjust for regression to the mean, moderating extreme awards whether they be high or low. Predictable error, however, tends to make a downwards adjustment optimal and unpredictable error an upwards adjustment, because of plaintiff selection and signalling. (http://rasmusen.org/pacioli/published/Rasmusen_95IRLE.error.pdf).
(c) Doesn’t the literal reading of the Takings Clause allow takings for private use, which shows that adhering to the literal meaning of legal texts is absurd?
Now, to “public use.” There’s a lot to say about this. I can start with the glib answer: the amendment says that private property may not be taken for “public use, without just compensation.” The logical implication of this statement is that such property can be taken for PRIVATE use WITHOUT just compensation. But I don’t believe that, and don’t expect to convince you of it either. That’s just there to razz those who claim to be textualists or “strict constructionists.”
There are two answers. The standard one, relevant to the Textualist question of jurisprudence, is that the reasonable reader will draw the implication that takings for private use require compensation a fortiori.
The second answer is special to this example. It is that in the background of the Constitution is the idea of the Police Power– that there are limits on what government can do legitimately. It must act to further “the health, safety, morals and general welfare”.
The Bill of Rights might limit the Police Power, or might just be a reaffirmation of certain limitations on it, or might just be a reaffirmation of limitations on it special to the federal government, a question I won’t go into here. Here, let’s assume that the Takings Clause was put there to constrain the police power from doing things it otherwise could do.
Under the police power. it seems reasonable that the state could seize property to, for example, build a city wall to defend against pirates. But the police power does not require compensation. So something like the Takings Clause is necessary if we want to require that.
The police power does not, however, allow government to take from A simply to give to B. This is why much legislation was struck down. It is, I think, the idea deep under Lochner, and I think there are other cases more directly using the idea (that is, cases striking down government action without appealing to the 14th Amendment).
This makes income transfer programs suspect exercises of the police power, but at least those are done using taxes and subsidies that are legislated, not just special cases done by the executive.
In any case, to take property from A to give or sell to B in a way that enriches B and with a weak appeal to “the general welfare” doesn’t seem a valid appeal to the police power. If I am right, then in the absence of the Takings Clause, such takings would still be illegal exercises of the government power. With the Takings Clause, but reading it literally and narrowly, such takings would also be illegal– but the courts would cite not the Takings Clause, but the Police Power.
I don’t know if the case would then have to be heard by a state court instead of a federal court, for a city government taking.
At my office I have a classic treatise on the police power; I’ll have to check on this sometime.
(d) Why is a railroad or a grist mill, traditional “public uses” more of a public use than a factory?
No, the “public use” element of the takings clause has always been understood to mean that there must be some public use, some (dare I say) public purpose for the taking. Now, critics of Kelo say that the taking of rights of way for railroads, or for grist mills, is different from the present case because the recipients of the seized property are (customarily? always? necessarily?) obligated to act as common carriers, accepting all comers. I search the fifth amendment in vain for any mention of common carriers.
This is the hardest question of the four to answer, and I am feeling guilty about neglecting auctions. The Thomas dissent in Kelo is relevant here. He talks about the police power a lot.
Common carriers must be open to the public, and so are very special private users. It is as if they are performing a government function using a special license that has special requirements. A road and a railroad have a lot of similarities, as do a government bridge and a private ferry.
A public utility– which of course in America usually means a private company– is a similar example. It is a natural monopoly which may be private, but requires a special license that constrains it a lot.
The grist mill is the hardest case. I don’t know what kind of takings happened with them–taking of land to flood to get hydro power, probably. If that is it, such a taking does seem just as bad as taking for a factory. Even more than with factories, though, we can at least pull in the economic argument that if there is a hold-out problem it is useful to have the government force trades. That economic argument is just public policy, though, not a good legal argument.