Taking and giving: police power, public value, and private right.

• Author: Torres, Gerald

"So long as government action constitutes a taking and a giving to the same individuals in the same proportions, all is well."(1)

"Property and law are born together, and die together. Before laws were made there was no property; take away laws, and property ceases."(2) "I cannot count upon the enjoyment of that which I regard as mine, except through the promise of the law which guarantees it to me.... It is only through the protection of law that I am able to inclose a field, and to give myself up to its cultivation with the sure though distant hope of harvest."(3)

1. INTRODUCTION

   The quotations that begin this Lecture summarize the relationship between property as a social artifact and law. I hope that the following discussion will more fully explicate that relationship and why it is misunderstood.

   This lecture is divided into three parts. First, I will outline a critique of efficiency as it has functioned as the metanarrative underlying our basic current understanding of social institutions. A metanarrative is merely a legitimating background story rooted in the claim that it is the "story that can reveal the meaning of all stories."(4) The claim I am making is that the standards of efficiency in common usage have operated in this way in questions of social policy.(5) For government institutions, this is summed up in the popular claim of politicians that they will "run government like a business." The forgotten correlative is, of course, that government decisionmaking always involves issues of fairness as well as efficiency.

   Second, drawing on this analysis, I will illustrate the political technique of the property rights advocates. This technique involves telling a story about property rights that personalizes and humanizes a drama in which the major characters include a big, impersonal government running out of control, and small, relatively powerless owners of private property. I also hope to reveal how this is a story in which the powerful are cast in the unlikely role of victim. Here the story is how the successful, those who win in the market, are ruined by that gang of losers, the government. I will illustrate how this narrative construction defines certain arguments as out-of-bounds by limiting considerations of fairness to the effects of government decisionmaking on the current possessors of property.

   Third, I will review the law on these issues to reveal the sources of the discontent and to examine the extent to which the evolution of the doctrine supports the claims of the property rights advocates. Here I will show that the issues are not trivial and are not just about wealth, but rather go to the heart of who we think we are as a people. That is precisely why this discussion matters.

2. A CRITIQUE OF EFFICIENCY

   The definition of efficiency that dominates policy debate, at least at the nonspecialist level, is too narrow. The definition is too narrow to the extent that a focus on Pareto-optimality(6) or Kaldor-Hicks efficiency(7) excludes other important values. These other values (like species protection or historical preservation, for example) are marginalized or excluded altogether because they cannot be assessed according to the metric that efficiency criteria require.(8) This argument suggests that a debate over how well social institutions function has a narrative structure organized around two norms: the current distribution of wealth and revealed market-based preferences. To criticize these two norms I make two points, one obvious and the other more problematic.

   First, the misnamed property rights revolution is predicated on an effort to freeze in place the existing distribution of wealllth. One way to achieve this goal is to define the existing distribution of rights and liabilities as part of the total wealth held by individuals. Thus, any regulation that rearranges the distribution of rights and liabilities can be understood as a redistribution of wealth. This treats common-law arrangements as entitlements, rather than merely the result of social contests mediated through legal institutions. In the context of the debate over regulatory takings, the ultimate effect of this conception is to frame the police power by common-law nuisance doctrine. Yet this leads the so-called property rights advocates to base their claims "on a radical premise that has never been a part of our law or tradition: that a private property owner has the absolute right to the greatest possible profit from that property, regardless of the consequences of the proposed use on other individuals or the public generally."(9) This point is more or less obvious.

   Second, and less obvious, is the effort to hold public and private institutions to the same standard of narrow efficiency, defined provisionally here as profit maximization. This effort ignores the fundamental differences between governance and production. Property rights advocates want to stop government from acting in ways that promote the general welfare, where welfare cannot be measured as an increase in the dollar value of social relations.(10)

   These two observations lead inexorably to the normative question: What kind of society do we want? Understanding constitutional limitations on the power of the government to regulate private commercial behavior, especially where those regulations frustrate an economic opportunity related to real property, is central to mapping the relationship between the individual, state, and society. The distinction between the state and civil society is old(11) and has come under both recent criticism and renewed support as a descriptive and analytic matter.(12) Recent analyses of the forces that led to the collapse of communism in Eastern and Central Europe(13) clarify the problems associated with confusing the institutions of the state with those of civil society. Yet much of the recent commentary on property rights is notable principally because it mistakenly evaluates public and private institutions using identical criteria. What is worse, much of that same commentary misunderstands the relationship between public and private institutions and thus comes to conclusions about how the state ought to act that are entirely mistaken.

   A constitutional order designed to ensure nothing more than an atomized citizenry can scarcely be said to provide the basis for a representative government. Yet, that is what some of the so-called property rights advocates are seeking to create. The rhetoric of these advocates indicates a willful ignorance of the social function of property: to bind us together as a society and culture, as well as to provide the basis for the maximal individual exclusion of others.(14) To see property's exclusionary role as its principal function is to misunderstand that property rights have always created webs of responsibility between owners and nonowners.(15) At its most basic, this function is described in the Latin phrase sic utere tuo, ut alienum non lacdas (one should so use his property as not to inJure the rights of others). This maxim describes an immediate, substantial, and basic limit on property rights.(16) The absolutism at the heart of the popular expression of the modern property rights movement was never part of the jural relations described by the law of property. The evolution from a precapitalist conception of property rights is the story of the increased commodification of realty and the extension of similar claims to various forms of personally and intangibles, but it is not the story of an enlarging conception of absolute dominium. This story might be understood as an adaptation of the law to changed economic relations and an accommodation to slowly evolving expectations of property owners. But those expectations were always bounded by the expectations of others. The history of property rights in this country reflects this community regarding function(17) but has been largely forgotten or ignored in the current debate.(18)

   Whatever value efficiency criteria have for assessing private institutions, they do not have the same value for public institutions, but instead perform an ideological function aimed at restructuring the idea of governance. Similarly, the claim of the absolute nature of property rights is primarily a claim about the legitimacy of government to act in other than the most narrow and limited way. A decade ago, Professor Richard Epstein provided the philosophical carapace for the political fight(19) which then had the Sagebrush Rebellion as its nom de guerre.(20) Epstein was principally concerned with articulating the constitutional basis for controlling the problem of all majoritarian democratic systems: political domination by the majority and legislative self-dealing. He asked the questions: Has state power been captured and used for ends other than expanding total social wealth? and Is the state using the power to regulate or the power to condemn to add to its own resource base (is it appropriating the surplus of any regulatory scheme)?(21) According to Epstein, yes to either of these questions means the state has exceeded the legitimate boundaries of its authority.(22)

   Many critical reviews of Epstein's book misunderstood its foundational importance.(23) Professor Epstein correctly identified the struggle over property rights as the grounds upon which issues of our social architecture would be fought, much in the way that the Due Process and Equal Protection Clauses provided the grounds for similar struggles a generation earlier.(24) Epstein hinges his theory of takings on the constitutional prerequisites for a theory of limited representative government. At its core, the constitutional theory that legitimizes the government itself also protects property rights by limiting the reach of the doctrine of sovereign immunity. He would, in essence, make every governmental action subject to common-law tort analysis and expand governmental liability to include those...