It Is Dangerous to Be Right When the Government Is Wrong Read online

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  Justice Sandra Day O’Connor noted this in her dissenting opinion when she said,

  The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory. . . . Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result. “That alone is a just government,” wrote James Madison, “which impartially secures to every man, whatever is his own.”

  Justice Clarence Thomas sounded a jurisprudential fire alarm in his dissent when he said, “Something has gone seriously awry with this Court’s interpretation of the Constitution.” And I do not believe he was only speaking about this specific case either. Justice Thomas, clearly the most faithful to the Natural Law of all current sitting justices, also expressed his concern that the Court permitted the government to value its economic interest above the individual homeowner’s personal values that are protected by the Natural Law. The Natural Law mandates that the choice of personal values (a book or TV, a bicycle or car, early to bed or up all night) is completely immune from government interference unless the exercise of that choice substantially and unfairly interferes with another’s Natural Rights.

  In a bitter twist of fate, on November 9th 2009, Pfizer Corp.—the intended beneficiary of the Kelo cottage—announced that it would leave New London in 2011, moving most of its New London employees to nearby Groton, Connecticut. This proves that the New London City Council is not as intelligent as it originally thought. Apparently, Pfizer was allowed to determine what was best for its property, and it determined it was best to get away from its relationship with the New London government. The “urban village” shopping center was never built, and the lot that was seized remains vacant and barren. So now, the City of New London, which seized the Kelo real estate expecting a real estate tax windfall, collects no taxes on the earth where the Kelo cottage once stood. The government thought this piece of land would better serve the community as a vacant lot, rather than remain the homes of its lawful owners.

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  Government’s Just Power

  Kelo was a case of seizure by the State of Connecticut. States’ appetites for private realty are voracious, and so is the feds’. How can the federal government even make an argument to legitimize any eminent domain power? The Constitution delegated specific powers to the federal government, reserving all other powers to the states, including the police power. Thus, whatever power the federal government has to secure rights is limited to federal territory and is limited to the exercise of one of the federal government’s enumerated powers. Any federal effort to regulate private land for the public good must be accomplished under some other enumerated power. Any such effort to regulate would then be constrained by the Just Compensation Clause; if the private property owners are not compensated for the losses they incur by federal regulations, the costs for the “public benefit” of these regulations fall entirely on the private property owner.4

  Unlike the police power, which is to be restricted to the protection of rights, the eminent domain power is not a just power. A just power is a power possessed by individuals, and delegated in whole or part to the government. No private person would have the right to condemn any of his neighbor’s property, no matter how good the intentions. So, if persons lack this power themselves, how could they delegate it to government? And if not delegated to the government, then the government lacks the power.

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  “We Are the police. Put Down All of Your Weapons and Give Us Your Property.”

  In 1992, a twenty-two-year-old soldier was driving his Honda in downtown Washington, D.C. He was waved to the curb by a woman. It was actually a male police officer in drag who was over six feet tall, weighed 220 pounds, dressed in a black dress, red wig, and red flats. The cop said the soldier said he was looking for a date. The soldier said that the cop offered him sexual services for twenty dollars, to which he responded, “Yeah, okay,” and then he proceeded to drive away. He was later stopped by other police officers and arrested. The police dropped the charge of solicitation of prostitution, for unexplained reasons, but they seized and kept his car, and argued that it was forfeited under a law providing for seizure of vehicles used to solicit prostitution. The “Yeah, okay” (which normal people would interpret as “no way”) was enough to establish probable cause that an offense was committed. Probable cause is all that was needed to justify the forfeiture. On the night that a similar law went into effect in D.C., the police seized three cars and a mountain bike. It just so happens that it is general practice for police officers who seize property to take personal ownership of the property, and either keep it for personal use or sell it at public auction; what is being incentivized here is theft under the guise of law. Where are the courts and lawyers that are supposed to be watching out for our rights?

  Buyer Beware . . . of the Government

  Justice Oliver Wendell Holmes Jr. stated in Pennsylvania Coal v. Mahon (1922) that “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.” And the Fifth Amendment requires the government to pay for takings. How far does a regulation have to go to be considered a taking?

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  In 1996, a small college in Buffalo bought an old rectory. The college planned on tearing the rectory down to make way for a parking lot. Community groups petitioned the City to designate the building as a landmark which would make it untouchable. The preservation board recommended a denial of the petition, but this recommendation was overruled by the Buffalo City Council. The college asked for compensation on the grounds that the City had taken its property. The City refused to pay, and the court upheld the denial based upon the legal fiction that the property was not taken, even if it was now worthless to the college. The local groups now have the benefit of the use of the land without the inconvenience of paying for it, and the college has a worthless building.5 This is a clear injustice and an outrage.

  In 1983, Joan Dawson bought a three-unit brownstone in Harlem. She moved in with her two grown children, two foster children, and a grandchild. Two of the units were renter-occupied and covered by rent control, but the law allowed an owner to take over an apartment for family use. That was precisely what Dawson planned. In 1984, New York City changed its landlord-tenant law so that tenants who lived in an apartment for twenty years could not be evicted under the owner-occupancy rule. Dawson sued, arguing that the change in the law took her property. She lost, and the court arrogantly noted that she should have known better than to rely on existing law since laws can always be changed. In 1994, she had to re-purchase her home by paying the tenants to leave. Apparently, the New York City courts are well aware that property rights, as well as many other rights, can simply be changed at the whim of the legislature. Is this justice?

  Leave My Bundle Alone

  Naturally, there are certain rights that come with property ownership. These rights are the right to use your property however you see fit; the right to exclude anyone, including the government, from trespassing on your property; and the right to alienate, or transfer, any or all of your property interests. It is very important to understand that the word property is not synonymous with land or a house; your land and your house are types of property. Your money, which is earned by the fruits of your labor, is also your property. As well, and most importantly, your natural rights are your property. Assuming that the government’s eminent domain power was legitimate, every time it limited, restricted, or took away any of our rights, it would have to provide us with just compensation. When President Bush signed the
Patriot Act into law, taking away our rights to privacy, due process, habeas corpus, free speech, and freedom from illegal searches and seizures, did any one of us receive any just compensation for these takings?

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  If You Want to Use Your Property, You’re Going to Have to Run It by Us First

  At common law, people were not required to obtain a permit in order to use their property as they wished. Common law limits free use only when a use unfairly invades the property rights of others. The law calls this a nuisance. Tell that to a landowner in Pacific Grove, California, on the Monterey Peninsula. If a landowner there wants to build a house, he or she must get approval of the plans. This approval process requires twenty public hearings and the approval of the Architectural Review Board, the Planning Commission, the City Council, and the California Coastal Commission. The process takes three and a half years and requires more than six hundred thousand dollars for costs, lawyers, and studies. During one hearing, an Architectural Review Board member said, “In my former life as a seagull, I was flying up and down the California coastline and saw your house built shaped as a seashell.” She subsequently voted against approving the plans for a non-seashell-shaped house; so much for that common law standard whereby you were not required to get a permit to use and enjoy your property.

  This common law rule has been challenged on a more philosophical level with calls for immigration reform. As Glenn Jacobs, the wrestler “Kane,” notes, Americans clamor that illegal immigrants are destroying “our” hospitals. However, these hospitals belong solely to their proprietors, not to “us.” We have no ownership rights over them whatsoever, and are wrong to impose reforms that would limit to whom the hospitals’ proprietors can provide services. Although immigration policies may accomplish this result in a more back-door, surreptitious manner, it is still just as antithetical to a Natural Law scheme of private property rights as the state seizing them directly.

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  A New Way to Take Property

  University of Chicago Professor Richard Epstein’s 1985 book, Takings: Private Property and the Power of Eminent Domain, supplied the momentum for a challenge to the regulatory takings. Epstein proposed to challenge the entire New Deal as “inconsistent with the principles of limited government and with the constitutional provisions designed to secure that end.”

  One of the provisions of the New Deal that Epstein called an unconstitutional taking was minimum wage law. Epstein asserted that minimum wage laws are “undoubted partial takings, with all the earmarks of class legislation, which requires their complete constitutional invalidation.” This was the case because employers are forced to pay a statutory minimum wage frequently higher than wages set by the free market. These business owners suffer from a government taking of their property, since they can no longer use their property as intended; because they are forced to spend more of their money, which is their property, on labor.

  Epstein also claimed that collective bargaining was “yet another system in which well-defined markets are displaced by complex common pool devices whose overall wealth effects are in all likelihood negative and whose disproportionate impact, especially on established firms, is enormous.” Epstein raised the question: Who feels the adverse effects of collective bargaining? He then answered this by stating that adverse affects were felt by the owners of the “established firms.” Collective bargaining has increased the economic means of the great majority of working people in the United States by securing decent wages and benefits for union members, and driving wages higher even for the unorganized.6 But it is involuntary (since the government forces it upon business owners), and therefore it violates the Natural Law and the Constitution by compelling the owner of a business to negotiate with all of his employees as if they were one; thus, it produces higher wages, higher costs, higher prices, and theft of property from the businessperson.

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  There are many other regulations that violate property rights as well; in fact almost all regulations violate property rights in some way or another. Tariffs, excise taxes, duties, and sales taxes violate the property rights of the sellers of the goods because the price for their goods is raised, making them less competitive and less profitable; as well, the buyers of these goods are forced into paying higher prices for goods, thus parting with more money than would have been the case had these regulations not been in place.

  Bundle of Sticks

  Not only does property ownership come with a bundle of rights, but each of these rights can be sold or transferred. The owner of a house can transfer his rights of use, possession, and exclusion to a tenant for a defined amount of time, in a lease. An owner can also grant specific uses to another individual via a licensing agreement. Thus, a private agreement, by consent, can restrict use of property. But any governmental regulation that restricts use, possession, or exclusion is an invasion of the property owner’s rights, as it makes the property less valuable. Once again the cost of the regulation that is intended for some public good is thrust upon the property owner. These costs do not require just compensation because courts have adopted a 100 percent standard. This standard states that owners are only entitled to compensation where regulations restrict complete usage of their property, or where their property is rendered completely useless.

  The Story of General Widgets

  If you own a widget-producing factory and the government decides one day that it is going to charge you a widget licensing fee of one hundred thousand dollars per year for the privilege of being allowed to use your land how you wanted to, this not only decreases the value of your factory, since there is a hefty cost imposed on anyone who wishes to use it, but it also is a taking of one hundred thousand dollars of your property every year.

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  Then, let’s say the next year the government decides to pass legislation which requires that all widget producers hire union workers; we will call them the United Widget Workers union or the UWW. Now, to produce widgets you must give workers higher wages, bigger benefit packages, longer vacation times, shorter working hours, and better pensions for retirement. This legislation also forces you to associate with a specific union, giving the union great bargaining power in any collective bargaining agreements in the future, so much bargaining power that you are forced to guarantee that you will never use improved machinery or robots that could produce widgets faster and more efficiently than any of the current union workers because then they would be out of a job. This severely reduces the productive capacity of your factory, which also reduces the value of your business; and it also forces you to pay higher production costs, which is another taking.

  To make matters worse, your main widget-producing competitor from Asia has an unregulated widget factory comprised of only robots that are producing the cheapest and highest quality widgets in the world. Now your business is relegated to bankruptcy. And this is precisely when the government will swoop in to bail out your creditors, kick you out of the management office, purchase your business and factory for pennies on the dollar, and transfer ownership of it to your union workers, the UAW. I mean the UWW.

  Offer, Acceptance, Consideration . . . and Government Approval

  The right to transfer property leads to the right to contract freely. All that is needed for a viable contract is for there to be an offer, an acceptance, and some consideration. For example, I offer to sell you this book for X dollars, and you agree to purchase this book for X dollars; we therefore have a viable contract. My consideration is the amount of money you paid; your consideration is the book you receive. Of course, the government, which has provided no services to either of us in connection with this book sale, forces my publisher to collect a sales tax from you, forces you to pay it, increases the cost of the book beyond the X dollars we agreed upon, and thus takes property from both of us.

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  There are various other ways governments have interfered with the freedom to contract. People who enter into contracts are dictating the law for themsel
ves; the law would be the terms of the contract. The government is constitutionally restrained from interfering unless there is a breach of contract or the essence of the contract is unlawful. One of the greatest assaults on contracts was in Home Building & Loan Association v. Blaisdell (1934). In response to the rise in defaults on mortgages during the Great Depression, Minnesota passed a statute in 1933 which extended the period during which borrowers could reclaim their property from foreclosure by their creditors. The precise question before the Court was whether the law violated the Contracts Clause of the Constitution (Article I, Section 10), which expressly prohibits states from “impairing the Obligation of Contracts”—here, lending agreements. The Court upheld the legislation on the grounds that the Contracts Clause was not intended to be absolute, and consequently a subjective showing of state emergency was sufficient to override the clear text of the Constitution.

  While I am no great defender of U.S. banking interests, I am a great defender of the U.S. Constitution, and the constitutionality of legislation is the only thing that should be considered by the Supreme Court. This was precisely the sentiment expressed by Justice George Sutherland, who wrote one of my all-time favorite dissents:

  Whether the legislation under review is wise or unwise is a matter with which we have nothing to do. Whether it is likely to work well or work ill presents a question entirely irrelevant to the issue. The only legitimate inquiry we can make is whether it is constitutional. If it is not, its virtues, if it have any, cannot save it; if it is, its faults cannot be invoked to accomplish its destruction. If the provisions of the Constitution be not upheld when they pinch as well as when they comfort, they may as well be abandoned. (Emphases added)