"Takings" as a moral issue

By James V. DeLong
web posted June 1997

A leading spokesperson for the Liberal Establishment (Meg Greenfield, Editorial Page Editor of the Washington Post) has suggested that liberals stop contesting with their fantasy version of Newt Gingrich, who they dismiss as a demon incapable of real thought.  Instead, they must recognize the serious intellectual and emotional power of many conservative ideas, and contest them on the merits.

A good place to start this process would be with Property Rights, which is the shorthand term for the claims of owners of private property against those who support imposing limits on its use in the name of wetlands protection, preservation of species, historic landmarks, bicycle paths, control over neighborhood character and density, or other community benefits.

The Property Rights issue is dismissed by liberals as an anti-environmental crusade by antediluvian conservatives sponsored by large corporations who want only the freedom to despoil the land.  In this view, it can be ignored and allowed to burn itself out, as extremism always does in this country.  In actuality, Property Rights involves issues of great moral and intellectual complexity, and it is not going to go away.  It is one of the powder keg issues that has blown the Democrats out of their Congressional majority and may blow them out of the White House. Liberals had better start taking it seriously.

In early December 1994, unnoticed amidst the focus on leadership battles, and uncovered by the Post, Congress gave a preview of one of the coming attractions of the next session in the form of a "Roundtable on Property Rights."  The host was not a Congressional Committee but a couple of informal legislative caucuses and the Republican National Policy Forum, so the event had minimal official status.  Nonetheless, the substance was absorbing.

The Roundtable featured some thoughtful experts on the law and history of the issue.  The focus, though, was reserved for people called by retiring Wyoming Senator Malcolm Wallop, who chaired the session, "the victims."  The group included:

  • 77-year-old Grace Heck of New Jersey, who read a letter from her sick 81-year-old husband. The Hecks invested their retirement savings in develop-able property some years ago, only to find it recently transmogrofied into protected wetland. Stripped of liquid assets, salable land, income, and dignity, they live with a married daughter in a small house.
  • Margaret Rector, another elderly woman whose land in Austin, Texas, is now the happy home of an endangered warbler. Ms. Rector might be able to get a permit to build, but such things require heavy money for ecological studies and lawyers, and the market value has gone from $830,000 to $30,000.
  • Cindy Domenigoni of California, who lost part of her family's ranch to the Kangaroo Rat, also because of the Endangered Species Act. Eventually, because the owners could not disturb the rat's habitat, the underbrush grew so impenetrable that the creatures all left. Nobody knew this until a fire, fueled by the uncut brush, destroyed the habitat, along with 29 nearby homes.
  • David Lucas, who lost the right to build on two lots purchased for $1 million to a change in state rules on coastal protection.  Lucas is the Superhero of the Property Rights protection movement because he actually beat the bastards and got paid.

At the extremes, the issues presented by these situations are clear.  If the government takes your land to build a park, then the Constitution requires payment.  The Fifth Amendment says "nor shall private property be taken for public use, without just compensation."  At the other end, generalized regulation that affects the value of property is not a "taking."  When the government outlaws crack you cannot collect compensation because your investment in a crack house is made worthless.  Similarly, the essence of zoning -- the idea that cities can separate incompatible land uses -- is not subject to serious attack, nor is the right of the government to keep property owners from inflicting nuisances, such as pollutants and odors, on their neighbors.      

The problem lies in-between.  What if the government says that you cannot grow crops on your farm if doing so disturbs the Kangaroo Rat?  Has your property now been "taken" for the public use of species protection so that you are entitled to payment, or has it just been "regulated," so you are not?  What if the government takes advantage of the formal distinction between "taking" and "regulation" by leaving you with the deed to your land but passing a law that forbids any use of the property except as a public park?  Do you get paid?  What if the government says that you must leave an unbuilt-upon buffer zone at the edge of your property, and adds a requirement that you must dedicate it for use as hiking trail?  Taking, or regulation?  And is there a difference between the two parts of the law?        

Since the Constitutional revolution of the 1930's, when the courts withdrew from the business of providing judicial protection for private property, regulation has almost never been classified as crossing the line into taking.  Until 1987, the Supreme Court had ducked the issue for half a century.  Since then, a few cases have ruled that taking-by-regulation has occurred, but the standard is still stringent; the loss must be close to total, and numerous procedural nits make success improbable and stretch out the process interminably.  Litigation took David Lucas, who had as clear a case as one could hope to find, five years and $575,000, and, he says, "is not for the financially or emotionally faint-hearted."         

It is impossible remain emotionally unmoved while listening to the stories of the Hecks and Rectors.  For policy wonks, though, a crucial question is whether the Roundtable dredged up the only available horror stories or whether this is the tip of the iceberg.         

Some stories do keep recurring in the Property Rights literature, but the fact is that such situations are becoming increasingly common.  While most attention has been paid to the Endangered Species Act and to Wetlands, there are many other programs that seriously affect the value of private property.  The list extends to coastal zone and other watershed management, state land use planning, historic preservation, national parks, surface mining regulation, desert protection, rent control, artists rights, rails-to-trails, and, in EPA's latest initiative, ecosystem protection.  The nitty gritty of local zoning is a perennial and fertile source of conflict.        

Common sense dictates that this many programs, every one of them operated by people who care everything about their particular cause and nothing about landowners, are causing grief. In any event, the pro-regulation forces are in a fork.  If the horror stories are rare, then for heaven's sake pay these people.  If they are common, then regulators are creating a devastating political problem.  At the moment the regulators dither between asserting that the cases are too rare to be worth worrying about and that they are so common that paying property owners would bankrupt the country.       

The claim that takings are not occurring is one of those truths designed to deceive.  Yes, the Supreme Court's legal definition of a taking is so restrictive that formal takings by regulation are rarely found by the courts.  The land belonging to the Hecks' and to Rector has probably not been taken, as a legal matter.  Nonetheless, these people have been pauperized by this non-taking, and they do not seem comforted by knowing that they have only been regulated.  The current debate is the mirror image of the debates over Civil Rights a generation ago, in which the Republicans droned legalisms about States Rights and the Commerce Clause, while Democrats talked of human pain and real victims.  Now the Democrats deliver hair-splitting lectures on the meaning of the Takings Clause while the Republicans wave the bloody shirt.       

The most troubling characteristic of the pro-regulation forces is a certain moral blindness. Reconciling the conflicts between private property rights and the public weal is an exquisitely difficult issue, as a matter of public policy, economics, law, and, above all, morality.  Society cannot be paralyzed by a doctrine requiring compensation for every shift in value that is in some way connected with government action or burdened with the legal and time costs of making an infinite number of fine-spun determinations.  Also, it is characteristic of government subsidies, such as those for agriculture, that their value becomes capitalized into land prices.  Is every termination of a subsidy, however ill-advised in the first place, a "taking"?  A certain amount of "tough luck" is essential for a polity to function. Nor is it unreasonable; people can anticipate that property values will fluctuate somewhat due to changes in government policy, and can take this into account.  Morality does not require that everyone be shielded from every vicissitude, and, indeed, this point is at the heart of much of the conservative critique of liberalism.       

All this said, and also conceding that declaring some property off-limits to development may be necessary, it is still true that casually appropriating property, often bankrupting the owners in the process, raises concerns at which only a moral retard would scoff.  The tendency of environmentalists to dismiss concern over Property Rights as nothing but a part of an "unholy trinity" of specious anti-environmentalist tools (the other two are concern over risk assessment and over unfunded mandates) is morally obtuse.      

The liberal disdain for "mere property" is also ironic.  In most cities, lawyers, journalists, and other residents of upper class neighborhoods are adept at using complex zoning procedures and viscous bureaucracy to abort any intensification of the use of nearby underdeveloped real estate. The cause is always "environmental protection," "historic preservation," "preventing over-congestion" or some other public good.  These contentions often have some merit, but an additional reality is that the value of the underdeveloped land is decreased, and the loss translated into an increase in the price of existing homes.  The residents are always outraged at any suggestion that they have just appropriated others' property for their own benefit or that the long-term economic effects on their city might be unfortunate, but they never offer to transfer any part of their gains to the losers.   As Mrs. Rector commented: "My neighbors are delighted; they get a free park." Moreover, real estate is not truly important property to most people who dismiss the legitimacy of concern over property rights.  They may obsess about the worth of their houses, but their true estate lies in their professional degrees, connections, and civil service job protections, possessions that are shielded from appropriation by governments.  They are poorly equipped to comprehend the fear and anger of people whose economic well-being and very identity is bound up in their real estate.      

Yet that fear and anger, and, increasingly, moral outrage, is real, and politically important out there in the great, unexplored Trans-Beltway.  As Mrs. Heck said, "Our neighbors can't believe what happened.  They think we must have done something wrong, because this simply could not happen in America.  But we didn't."  Legislative proposals are certainly coming soon, and the Democrats as a party will not rejuvenate until they treat the pain of the Hecks, Rectors, Lucases, and Domenigonis of the country with the respect it deserves, and treat Property Rights as a serious problem in need of serious attention.




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