Friday, August 17, 2007

Epstein's Takings (3)

Epstein's foray into political theory at the beginning of his book ends badly. There is nothing appealing about the principle "From each according to his ability to each according to how well he would do in the general prison population." So why did his book cause such a stir? What is there in it that those outside the libertarian ghetto are required to take seriously?

Epstein's great achievement arises out of his ability to use the master's tools to dismantle the master's house (or at least pay the previous owner for it). Epstein takes the intellectual basis for the decline in constitutional respect for property rights in the Progressive Era and the New Deal -- what we could call the "modernist" view of property -- and turns it into a sweeping takings doctrine far more extensive than a conservative, formalist nineteenth century judge would have imagined.

Naively, we tend to think of property as things or land. We may know that there is a species of "intellectual property", but it doesn't quite seem real, which may be why there are far fewer social sanctions for ignoring it. Locke and Blackstone had a more sophisticated view, but they emphasized the naturalness and unity of property. The acquisition, use and disposition of property is pre-political and distinct from coercion. The question of what rights property gives is logically prior to the remedies that the legal system might provide when those rights are violated. Locke and Blackston'es view is a natural fit both with the naive views of non-lawyers and with classical liberalism/libertarianism.

The modernist "bundle-of-sticks" view, on the other hand, was developed by people who thought nineteenth century liberalism was holding back progress. Painting with a broad brush, it holds:

*Remedies define entitlements. In other words, having a property right just is being able to go to court and get an injunction or damages in certain circumstances. As a result, property rights cannot be contrasted with state coercion -- they just are (regularized) state coercion. The distinction between private law and public law breaks down.

*Relatedly, tort and criminal law don't protect things because they are property -- they are property because tort and criminal law protect them. It isn't a trespass because it is an invasion or a nuisance because it is an interference: it's an invasion because it's a trespass and an interference because it's a nuisance.

*While it is perfectly possible for rights of possesion, use and disposition (the ability to sell or give) to belong to a single person, there is no necessity that this be so. Use and disposition rights can be limited and/or divided.

*Contrary to Locke, there is no natural mode of property acquisition. If property is transferred, then it must be in accordance with the rights of disposition that the transferor held (which have already been said to be conventional and mutable). And if property is originally acquired, it must be in accordance with some pre-existing rule. First possession isn't the only such rule.

In general, this modernist conception was used to break down classical liberal ideas and institutions. If both public law and private law are coercive, then the only issue seems to be what will provide the best result for the public as a whole.

Epstein takes ahold of this modernist conception and uses it to reestablish a strict classical liberalism. If property is a bundle, then the removal of any stick becomes a taking. There is no principled difference betwen a tax, a zoning by-law, a change in tort law rules and the occupation of a lot for a post office. If the legislature says that farmland can no longer be developed as anything else, the state now has a restrictive covenant that a neighbour would have to pay for. The value of mere regulation may be less, but it may not.

Moreover, Epstein justifies this rule in consequentialist terms. As David Suzuki will tell you, the way to get firms to respect the environment is to make them pay for environmental harm. If they do that, they will have to internalize the otherwise external environmental costs in their own decision making. Epstein's point is that the same goes for governments. If they don't have to (somehow) compensate those affected by their decisions, their incentives will be all screwed up. Something with overall negative consequences will make sense to the government so long as the losers have less political clout than the winners.

Epstein has no trouble showing the coherence of his approach and the intrinsic difficulties of traditional attempts to make distinctions between "mere" regulation and true takings. The problem is that his approach seems to go too far, and potentially make even positive-sum governmental activity impossible. My next post will try to evaluate how he addresses this.

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