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Source link: http://archive.mises.org/5972/the-trouble-with-just-compensation/

The Trouble with “Just Compensation”

December 5, 2006 by

So long as the state can steal from one to give to another, writes Anthony Gregory, the capacity for it to do so in a “fair market” manner, or with “just compensation,” is impossible. Once we concede the idea that justice can be realized through the forcible redistribution of property, where do we draw the line? We might regard the whole of the welfare state as some form of just compensation for all the indignities we must endure. There is no end to this: if you take the notion of state-provided compensation far enough, you can establish socialism. FULL ARTICLE

{ 15 comments }

Vicente Barriatos December 5, 2006 at 10:40 am

“Instead of trying to fight Eminent Domain abuse, we must recognize that Eminent Domain is itself an abuse of property rights, one that is totally irreconcilable with the foundational mechanisms of the market and quintessentially compatible with the nature of the state.”

Very nice, Mr. Gregory. I wholeheartedly agree with this article. Perhaps one of the biggest fault within the constitution was the concept of eminent domain. It was one of a few things that left a portal open for big government to triumph over the citizen and to blatantly ignore the bill of rights. In addition, eminent domain and the commerce clause are the biggest contradictions within the same document that guarantees a bill of rights to its citizens…too bad not enough jursits (voluntarily) acknowledge this (esp. the ones on capitol hill)

Stephan Kinsella December 5, 2006 at 10:41 am

Nice piece, Anthony. A comment: you write:

Surely some compensation is fairer than no compensation? Actually, it is not that simple. In the case of private theft, a thief owes his victims some restitution for his crime, and even though compensation does not forgive the immorality of the offense, it at least goes some way toward making the victims whole again. Being compensated by a thief does not eliminate your victimization, but it is better to have as much of your property restored as possible.
This principle of restitution does not apply so cleanly, however, to cases where the state is the aggressor. The state, unlike private criminals, has no assets of its own, has no capacity on its own to generate the income to pay off its victims. Rather, when the state distributes money, even to those who might deserve it for having fallen victim to government action, it obtains that money by confiscating it from other innocent individuals.

Richard Epstein, in his classic book Takings , argues that some takings are efficient b/c they benefit society more than they cost the person compensated; so that society is overall better off, including the taxpayers who have to pay for the takings. For this reason he thinks the state is both justified–since by some takings it can increase the “size of the pie” enough so that some of the increase can be used to pay the victim of a taking; and limited, since ONLY takings that DO increase the size of the pie can be paid for without doing net harm.

This utilitarian reasoning is problematic of course, but he does have an argument for why it’s okay to take from taxpayers in some narrow cases, to compensate the expropriation victim: because the victim is no worse off, as he is compensated; and the taxpayers are even better off, since they get public benefits worth “more” than the taxes they have to pay to get it. It’s a win win win, according to Epstein. One problem with this view is the failure to recognize the subjective nature of value, as well as the moral bankruptcy of utilitarian reasoning. See, e.g., pp. 12-15 of my Against Intellectual Property for a critique of the economics and ethics of such utilitarian arguments.

Chris Meisenzahl December 5, 2006 at 11:15 am

Well-done, thanks.

adi December 5, 2006 at 12:39 pm

I dont think it’s difficult for the state to quickly invent many fictious values found out in “studies” to support its programs if utilitarian arguments are used.

Existence of social welfare function used in interpersonal utility comparisons in welfare economics must be first postulated since it’s ultimately a normative issue. Epstein makes this error if he speaks about utility or welfare of society vs actual individual whose interest is violated by this taking.

Anthony Gregory December 5, 2006 at 1:36 pm

Stephan, you write, “This utilitarian reasoning is problematic of course, but he does have an argument for why it’s okay to take from taxpayers in some narrow cases, to compensate the expropriation victim: because the victim is no worse off, as he is compensated; and the taxpayers are even better off, since they get public benefits worth ‘more’ than the taxes they have to pay to get it.”

The taxpayers would be even better off without being taxed. If the comparison is between eminent domain with and without “just compensation,” it comes down to whether the victim of takings should be the only victim, or whether the costs should be partly redistributed to the taxpayer. If it comes down to whether taxpayers are better off with eminent domain and just compensation than without eminent domain, then the utilitarian argument Epstein gives is simply an argument for limited socialism.

Paul Marks December 5, 2006 at 3:58 pm

Quite so. Economic value(which, of course, should not be confused with other uses of the word “value”) is subjective, so only the owner can know what amount of money (if any) can “compenstate” him for having his property taken away.

And one must consider the factor of “blight”. For example, once some people have been driven from their homes by the government, the remaining homeowners (or other property owners) see the “market value” of the properties fall – as people tend to pay less for a house in the middle of a load of smashed houses, or in the middle of (or next to) a major road (or whatever).

Nor is what is called in Britian “compulsory purchase” really “essential”. For example, when the landowners around and in the English town of Stamford decided they did want to sell their land to the railroad company for the main north-south “East Coast Mainline” (although landowners accepted an east-west branch line) and blocked a forced sale in Parliament this did NOT mean that there was no major north-south railway line – it just went through the town of Peterborough instead.

If some property owners do not want the railroad’s money others will. And only tidy minded administrators (who are rationalistic rather than rational) insist on everything being “according to the plan”.

In a group of people want to stay “stuck in the past” (such as the property owners Stamford England) that is their choice.

“But the cost” – so a different route is followed, was it really more expensive? I doubt it. And even it was – I see no reason why a railroad (or any business) should be allowed to take land that other people do not want to sell, just to keep their costs down.

As for government taking land for its projects – well the only good thing that can be said about this is that at least the words “public use” do actually cover it.

I agree this power in the United States Constitution should not be there. But they are not the worst words – not even the much abused “regulate interstate commerce” are the worst words.

The words turned out to be “general welfare” – sure they were meant to be the PURPOSE of the powers granted to Congress (“the common defense and general welfare”)NOT a power in themselves – but in modern times they have been used as such a power.

They enable the Federal government to “justify” spending money on virutally anything – and thus make the whole concept of the Constitution limiting government a bad joke.

J D December 5, 2006 at 4:35 pm

Why are senators and the judges they appoint protected from real (pecuniary) responsibility for the decisions they make?

greg December 5, 2006 at 6:56 pm

And regarding “general welfare,” it seems to always be the opposite: special welfare. The beneficiaries are always a limited (special) group, not the general populace. The new definition is… General Welfare := Special Interests.

Why are senators and the judges they appoint protected from real (pecuniary) responsibility for the decisions they make?

Because they are mere representatives, representing you and I, the voters. {laughs} But the voters cannot either be made accountable for their choice of representative because the ballots are anonymous. “Ballots are bullets” — (sorta) Spooner. It is an ingenious system. No one but everyone is responsible. So if another nation, group, or individual has a grievance against the US, they can apparently take it out on the general populace (does this remind anyone of any events?), because “The US” is an amorphous blob where no individual decided upon anything. Or that is the line the guvmint hopes to sell me (and you).

averros December 5, 2006 at 8:52 pm

Why are senators and the judges they appoint protected from real (pecuniary) responsibility for the decisions they make?

Because they command people with guns.

And because these people with guns are way too stupid to see beyond their immediate rewards. If soldiers and policemen had anything in their heads other than the bullshit they were fed they’d shoot their masters as their main enemies.

Sam December 5, 2006 at 9:07 pm

With regards to the ‘public validity’ of Eminent Domain. I wonder if a sort of solution would be for the government to announce to the public about such a land seizure. If the public were unconcerned and thought the public interest was greater than the invidual’s rights, it would be argued that the government was indeed acting for the public good. Or the general public has no concern or understanding of property rights.

Also, greg pointed out an interesting thought about the war and democracy, if the people have voted for the war or refuse to do much to protest the war, then from an enemies’ point of view ALL that populance were combatants and such a democracy would have no innocent civilians as everyone would be doing their bit for the ‘war effort’ (including not hampering it!).

Nelson December 6, 2006 at 3:09 pm

I’d rather live in a country with relatively straight roads rather than one in which roads wind all over the place and dead end to avoid properties that are held by those that, for whatever reason, do not wish to sell them.

Joshua Katz December 6, 2006 at 7:33 pm

My lifestyle choices not being exactly secret, I expect none are shocked by the fact that I prefer to live in a world where I have lots of possessions over one where my property acquisitions are blocked by those who, for some odd reason, prefer to keep their own property or exchange it for value. Similarly, I would prefer to live in a world in which I have sex whenever I want to, rather than a world in which my sexual pursuits dead-end at the body of someone who wishes, for whatever reason, to maintain her virginity, or at least her state of not having slept with me. Such a shame – don’t you agree, Nelson? Or did you mean to limit the things that are taken by force to those which other people own and you want?

greg December 6, 2006 at 7:47 pm

I’d rather live in a country with relatively straight thinking rather than one in which thoughts wind all over the place and dead end to avoid argument, and that are held by those that, for whatever reason, do not wish to justify them.

Björn Lundahl December 7, 2006 at 4:26 pm

Nelson

Hitler thought so too.

Björn lundahl

Luke Fitzhugh December 8, 2006 at 2:42 pm

This is a well written argument for contintued pressure on the Supreme Court to reverse its recent (5-4) stance on Eminent Domain and, over a longer term, for all of us to work toward the abolition of the practice.

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