Monday, February 27, 2006

Thought For The Day

Dedicated to Tom Lehman:
Anyone can seize a good, thereby coming to "own" it, provided he compensates its owner. If several people want a good, the first to seize it gets is, until another takes it, paying him full compensation. (Why should this sort of middleman receive anything?) What amount would compensate the original owner if serveral persons wanted a particular good? An owner who knew of this demand might well come to value his good by its market price, and so be places on a lower indifference curve by receiving less...Complicated combinations of subjunctive conditionals and counterfactuals might perhaps succeed in disentangling an owner's preferences from his knowledge of the desires of others and the prices they are willing to pay. But no one yet has actually provided the requisite combinations. A system cannot avoid the charge of unfairness by letting the compensation paid for a border crossing [i.e., violation of rights on the Lockean picture of natural rights as physical boundaries] equal that price that would have been arrived at had a prior negotiation for permission taken place. (Call this compensation "market compensation." It will usually be more than merely full compensation.) The best method to discover this price of course, is to let the negotiations actually take place and see what their upshot is. Any other procedure would be highly inaccurate, as well as incredibly cumbersome.

---Robert Nozick, Anarchy, State, and Utopia

Or just seize homeowners' property and use their efforts to contest the legitimacy of the seizure as an occasion to declare them squatters in debt to the new 'owners.' Unfairness is justice, or injustice is fairness, or justice is injustice. I can't remember how it goes, but you get the idea.


At 1:26 PM, Blogger Tom said...

True Fact: Finnegan refuses to travel via highway or railway in protest of the illegitimate means by which the land to build them was acquired.

Without eminent domain, we'd be fucked.

At 5:42 PM, Blogger Tom said...

A real comment (even though no one will read this):

Dan has been unreceptive to my claims that the efficiency losses concomitant with eliminating eminent domain would be simply too great. I don't think this is a tenable position. Perhaps you don't believe me that we wouldn't have any highways or railroads without eminent domain (even though this is basically the case), but if this were true, it seems clear that eminent domain is necessary in certain cases.

But let's put this aside for a moment. Suppose no argument at all about efficiency can convince you eminent domain is morally acceptable. Consider the following line:

Suppose you own some coastline property valued to you at 2M. The state wants to build a park there, and uses eminent domain to take your land. In your world this is not allowed.

Now, on the other hand, suppose the state wants to prevent coastal erosion. It passes a statute prohibiting you (and other similarly situated landowners) from BUILDING on your property. However, your land's sole value comes from your plan to build a luxury condo there. Your land is now worth $40, but you still own it (phew). How is this different from taking your land? It really isn't. In fact, there is a huge doctrine about so called "regulatory takings" by which the Supreme Court evaluates regulations to see if they go "too far" and require compensation.

The real problem (for you) is that if you don't want eminent domain, whether or not a regulation like the above requires compensation is irrelevant. Presumably you'd want to get rid of ALL REGULATIONS AS WELL. Why? Regulations destroy property rights, they are non-voluntary, and, unlike eminent domain, they are not even compensated.

The point is that there is nothing special about "owning" land, because when you "own" a piece of land, you really own a bundle of property rights, not one big lump. You can sell a "stick" in the form of an easement, but each "stick" is real property in the same way that the title to the land is. If you are against non-voluntary redistribution of property rights, then you are against all regulations, whether they actually take title to the land, or (merely) eliminate all of its economically viable uses.

But why stop here? Presumably non-property related regulations are the same. I.e., I'd be willing to give up a certain amount of property for CT to repeal the statute that makes bars close early. Isn't it then fair to say that CT has "taken" my property (without compensation, mind you) when it forces bars to close early? Any statute that makes me involuntarily worse off destroys my "property" in some sense.

The point is that your theory would allow only Pareto transactions to take place, and therefore would require every decision to be made by unanimity rule. Why is this bad? Well, the same reasons why we need eminent domain in the first place! Holdouts and transaction costs.

Let me put this more clearly: Without transaction costs or holdouts, unanimity rule optimal. Why? If there is a surplus, the winners can compensate the losers and everyone is better off. But sometimes transaction costs borne by members of the community in discovering the set of Pareto-optimal outcomes outweighs the gains to those who are saved from risking exploitation under a majority rule. Without unanimity, someone might be "exploited," but this is justified because the costs everyone bears avoiding this exploitation by adopting unanimity rule are greater than the exploitation.

Likewise, sometimes the transaction costs associated with voluntary exchange are greater than the cost the landowner has to bear when eminent domain is used. If you're against eminent domain in all circumstances, you must be in favor of unanimity rule in all circumstances. It's the only consistent position.


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