Takings: private property and the power of eminent domain.

Takings: Private Property and the Power of Eminent Domain 

RICHARD A. EPSTEIN, James Parker Hall Professor of Law at the University of Chicago, has published widely on the subject of torts. He is also a defender of libertarian values and policies. In his newest book he combines legal scholarship and libertarian conviction to produce a brief against the destruction of property rights in modern America. One of the best-kept secrets in academic circles (I myself learned of it only at age 44) is that the Founding Fathers were as much concerned about protecting property as they were about freedom of assembly and other "civil liberties.' Up until the twentieth century, few legal scholars would have questioned this. That they do so now, according to Epstein, indicates to what degree partisan zeal has overtaken constitutional studies.

Epstein meticulously examines the Fifth Amendment, which forbids the government's taking of private property "for public use without just compensation.' He persuasively argues that this specific prohibition came from attitudes about property that the authors of the Constitution drew from English common law, William Blackstone's Commentaries, and John Locke's interpretation of natural right. Guided by these sources and others, the Founders believed it was one of government's chief duties to protect private property and private contracts. If some particular public good required the state to take property outright, or to limit its use and disposal, it was to offer just compensation as part of this forced exchange. Neither Locke nor Blackstone nor Epstein suggests that states-- or civil society--can operate without forced exchanges. But their assumption, and the Founding Fathers', is that government exists to protect rather than transfer or redistribute property.

Epstein maintains that the American regime's transformation from a protector to a redistributor of private earnings and possessions did not occur all at once. It involved the establishment of legal precedents, starting with nine-teenth-century judicial decisions regarding torts and interstate commerce and proceeding to cases of workers' compensation around the turn of the century. Basic to this erosion of property rights, says Epstein, was the acceptance of a legal distinction between "taking' and damaging, or controlling the use of, private possessions.

Epstein is particularly critical when he discusses transfer payments in the framework of the modern welfare state. No American government, federal or state, he insists, has the constitutional or moral right to mandate the transfer of fungible property (in this case, money) from one group to another, particularly without demonstrable compensation. He mocks the idea that the rich are receiving "in-kind compensation' by buying off the have-nots. On the contrary, he explains, welfare has actually spawned a growing class that lives off public money. Nor is there any sign that crimes against life and property decline in proportion to the amount of money government redistributes from one class to another.

Epstein denies that the Federal Government's constitutionally mandated function to promote "the general welfare' is an open-ended invitation to tax. Quoting Article I, Section 8, he shows that the taxing power of Congress was tied to the payment of public debts, the maintenance of common defense, and the discharge of ordinary public functions. Even if one can make, as did Federalists and later Whigs, the "general welfare' in Section 8 pertain to such projects as subsidizing road and canal construction and establishing a national bank, the "general welfare' provision is not an infinitely elastic one. And even if, arguendo (and now in fact), the government is allowed to carry out forced transfers of money between two groups of citizens, this does not warrant the imposition of a graduated income tax --a method of taxation that imposes higher rates on some groups than on others without corresponding compensations. Epstein finally opts for a flat tax as the least offensive form of direct taxation, given the Sixteenth Amendment and the unlikelihood of getting rid of the welfare system.

Although Epstein's book is a refreshing challenge to most conventional defenses of the welfare state, it lacks a historical perspective. Such a perspective might enable us to understand, without necessarily justifying, the piecemeal attack on property rights. The watershed cases Epstein examines fall mostly within a forty- to 45-year period, from the 1890s to the coming of the New Deal. This was the period in which mass heavy industry changed America and most of the Western world socially and demographically. Industrialization brought the organization of mass labor forces with increasingly impersonal ties to the owners and managers of the means of production. The financing of industrial enterprise encouraged the development of institutional and economic arrangements (e.g., corporations as legal persons and stocks and credits as forms of private property) that were only partially foreseen by eighteenth-century common-law experts and by America's Founders.

I agree with Epstein that these economic and institutional changes served as an excuse at least as often as they provided a cause for the revision of property rights. Unfortunately, Epstein does not deal explicitly with the ideologies behind changing views of property. For example, he discusses some cases concerning compensation for railroad workers that came before the courts during the Presidency of Woodrow Wilson, particularly the Supreme Court decision in New York Central v. White in 1916.* This decision, which upheld a lower court's judgment in favor of uniform governmentally imposed contracts for railroad workers, was related to Progressivist political thought and to certain reforms endorsed by Congress and the President. It might have been useful if Epstein had treated these cases in the context of the establishment of the Interstate Commerce Commission and of a general shift in the political climate.

* In that case the judges hit upon the unhappy metaphor of a living document to describe the common law: an image that would later be applied by the Warren Court to the Constitution.

Epstein traces the problematic nature of modern property rights to a loss of faith in the social-contract theory of Locke, which he tries to rehabilitate with some modification. Perhaps his inquiry should be given a different methodological focus. A few hundred years ago all the important Anglo-American political thinkers--Blackstone and Burke as well as Locke; Hamilton as well as Jefferson--believed that one of government's chief tasks was to protect property and the right of private contract. Why has this once respected function of government, embodied in the American Constitution, ceased to command widespread assent among politicians and intellectuals? The correct answer might help us to see how liberal societies perish.