Saturday, November 15, 2003
Britney Spears: Am I the only person who actually feels sorry for Britney Spears? I�m not a fan of hers�never heard one of her songs all the way through, in fact�but I remember being 21. It was only six years ago. And I remember having my heart broken�it was more recently than that. Yet people are acting as though her tears on the 20/20 interview are somehow to be snorted at. It�s impossible to shake the feeling that the lack of compassion in people is due to the fact that she is young, beautiful, talented, and wealthy�things we�re supposed to admire. Apparently she had a boyfriend who has, since their breakup, revealed that he is anything but a gentleman. She�s interviewed about it, begins to cry, and politely asks for the interview to stop because she�s embarrassed. Time was that when a woman was embarrassed in such a way, people would politely look the other direction. But instead, legions of people abuse her and hate her and even wish her dead because of her performances, and she is, apparently, following the same sort of self-destructive pattern that so many matin�e idols have followed before her. But the compassion that�s now politically mandated is nowhere to be found; instead we�re repeatedly shown photos of her crying as though we�re supposed to laugh at a beautiful young woman�s heartbreak. AOL has labeled it one of �this week�s Top 5 TV Moments!� Is it okay to hate her because she wears revealing clothes and kisses Madonna? I swear, people�s moral perversity astounds me sometimes.
Reminds me of a column Ayn Rand wrote about Marilyn Monroe�s death. She quoted an interview with Marilyn: �When you�re famous, you kind of run into human nature in a raw kind of way,� said Marilyn. �It stirs up envy, fame does. People you run into feel that, well, who is she�who does she think she is, Marilyn Monroe? They feel fame gives them some kind of privilege to walk up to you and say anything to you, you know, of any kind of nature�and it won�t hurt your feelings�like it�s happening to your clothing�. I�m afraid there is a lot of envy in this business.� But, as Rand concluded, �it was much worse than envy: it was the profound hatred of life, of success and of all human values, felt by a certain kind of mediocrity�the kind who feels pleasure on hearing about a stranger�s misfortune. It was hatred of the good for being the good�hatred of ability, of beauty, of honesty, of earnestness, of achievement and, above all, of human joy.� Ayn Rand, Through Your Most Grievous Fault, reprinted in The Ayn Rand Column 40-41 (Peter Schwartz, ed. 1991).
Reminds me of a column Ayn Rand wrote about Marilyn Monroe�s death. She quoted an interview with Marilyn: �When you�re famous, you kind of run into human nature in a raw kind of way,� said Marilyn. �It stirs up envy, fame does. People you run into feel that, well, who is she�who does she think she is, Marilyn Monroe? They feel fame gives them some kind of privilege to walk up to you and say anything to you, you know, of any kind of nature�and it won�t hurt your feelings�like it�s happening to your clothing�. I�m afraid there is a lot of envy in this business.� But, as Rand concluded, �it was much worse than envy: it was the profound hatred of life, of success and of all human values, felt by a certain kind of mediocrity�the kind who feels pleasure on hearing about a stranger�s misfortune. It was hatred of the good for being the good�hatred of ability, of beauty, of honesty, of earnestness, of achievement and, above all, of human joy.� Ayn Rand, Through Your Most Grievous Fault, reprinted in The Ayn Rand Column 40-41 (Peter Schwartz, ed. 1991).
Libertarian bookworm: This week, take a look at Karl Popper�s The Open Society And Its Enemies. Published in two volumes, Popper�s book is a defense of freedom against the philosophical influences of three figures in particular: Plato, Hegel, and Marx. (And it�s not as long as it seems: the text is only about 480 pages; the rest is notes.)
Popper�s criticism of Plato meant a lot to me when I first encountered The Open Society And Its Enemies, my senior year in college. I had grown up with prejudiced against Plato because of the writings of Thomas Jefferson, who said of Plato that �[h]is foggy mind is forever presenting the semblances of objects which, half seen through a mist, can be defined neither in form nor dimensions�. [T]housands of volumes have not yet explained the Platonisms engrafted on [Christianity]; and for this obvious reason, that nonsense can never be explained.�
But when I encountered the work of Harry Jaffa and other conservative classicists, I was not sure what to think. Plato seemed to me to be genuinely a defender of tyranny, but according to Jaffa (and, I suppose, other Straussians), Plato was only joking in The Republic�it�s all a big satire on tyranny. These scholars made some intriguing arguments in defense of that position, but I was not convinced. Then I read Popper, and that sealed it: Plato really was a defender of tyranny.
But as Popper reveals, Plato wasn�t what we would call a communist. Communism is essentially forward-looking, at least in its rhetoric. Plato, by contrast, is backward looking: his emphasis is on tradition and seeking for, in Popper�s words, �the return of the Golden Age.� Plato believed �in a general historical tendency towards corruption [of society] and in the possibility that we may stop further corruption in the political field by arresting all political change. This, accordingly, is the aim he strives for. He tries to realize it by the establishment of a state which is free from the evils of all other states because it does not degenerate, because it does not change. The state which is free from the evil of change and corruption is the best, the perfect state. It is the state of the Golden Age which knew no change. It is the arrested state.� Id. at 21.
The Open Society, however, goes much farther than an analysis of Plato. It�s a overall attack on historicism, which Popper defines as �the doctrine that history is controlled by specific historical or evolutionary laws whose discovery would enable us to prophesy the destiny of man.� Id. at 8. Popper finds this notion manifested in many ways, including �Marx�s historical philosophy [which] substitutes�the chosen class, the instrument for the creation of the classless society, and at the same time, the class destined to inherit the earth,� or the racist despots of the Twentieth Century who saw this destiny in �the biological superiority of the blood of the chosen race�.� Id. at 9.
Along the way, Popper scatters insights applicable to all sorts of central planning or authoritarian rule; insights which touch on essential libertarian themes. Libertarianism has long been attached to what Hayek (to whom Popper dedicated one of his books) called spontaneous order, or other forms of design-without-a-designer. The most famous such undesigned designs (other than biological evolution) is the �invisible hand� of Adam Smith fame, but it exists in other things, too, and it is important because it shows that social orders do not need to be set by a central, controlling authority, but can arise through the private bargaining of people exercising their liberty. Popper thought historicism was particularly horrible because it led to the curtailment of freedom in order to accomplish utopia. �The view that society should be like a work of art leads only too easily to violent measures.� Id. at 166.
Three things I�m especially fond of in The Open Society: first, Popper�s critique of conservatism. The conservative�and I mean the real conservative, not the moderate libertarians who call themselves conservative�believes that the just state is the state in which every person knows his or her place; in Popper�s words, �the principle that every class should attend to its own business means, briefly and bluntly, that the state is just if the ruler rules, if the worker works, and if the slave slaves.� Id. at 90. �In other words, Plato�s moral code is strictly utilitarian; it is a code of collectivist or political utilitarianism. The criterion of morality is the interest of the state. Morality is nothing but political hygiene.� Id. at 107. How true this remains for so many conservatives today! It is the creed of modern opponents of change who despise technological innovation or the evolution of social mores on the grounds that these things �alienate� us or deprive us of some essential human thing. Indeed, it is the fundamental principle of what Virginia Postrel calls the �stasist� view. (In fact, those lovely people at the Intercollegiate Review put The Open Society on their list of worst books of the century! As Blake said, said, �Listen to the fool�s reproach! It is a kingly title!�)
Second, I enjoy Popper�s discussion of government-run education. Popper points out that government can hardly be relied upon to teach critical thinking skills, particularly when it comes to politics. Those in authority will at the very least lack any incentives to teach a view which undermines the authority; at the most, government-run schools become mere propaganda mills, as was the case in, say, Russian-dominated Poland at the beginning of the Twentieth Century, dedicated to destroying the native culture and replacing it with a culture more fitting to the authority. But just on a more fundamental level,
Third, I like Popper�s description of what he calls the �paradox of tolerance�: namely, the fact that �[i]f we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend a tolerant society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them.� Id. at 265 n. 4. In an open society, you will encounter those who do not want to play by the rules, but who will then say that you are oppressing them when you force them to stop misbehaving. This illusion must not be allowed to work. Yet those who scream �McCarthyism!� or similar epithets often fail to address this point.
One thing I don�t like about Popper is his explicit rejection of the concept of natural rights. He finds the idea to be a superstition, and attacks the idea head-on. Obviously that�s not something I admire, but I think his views are directed primarily at the natural law theories of folks like Plato, and he does not distinguish between it and the views of classic libertarians like Locke or Jefferson, whose notion of natural law are, I think, far more sophisticated.
I�ve gone on at this length and only discussed the first volume! This is a sign of how much more there is to find in The Open Society And Its Enemies, and I encourage you to check it out, and to learn more about Sir Karl Popper.
Popper�s criticism of Plato meant a lot to me when I first encountered The Open Society And Its Enemies, my senior year in college. I had grown up with prejudiced against Plato because of the writings of Thomas Jefferson, who said of Plato that �[h]is foggy mind is forever presenting the semblances of objects which, half seen through a mist, can be defined neither in form nor dimensions�. [T]housands of volumes have not yet explained the Platonisms engrafted on [Christianity]; and for this obvious reason, that nonsense can never be explained.�
But when I encountered the work of Harry Jaffa and other conservative classicists, I was not sure what to think. Plato seemed to me to be genuinely a defender of tyranny, but according to Jaffa (and, I suppose, other Straussians), Plato was only joking in The Republic�it�s all a big satire on tyranny. These scholars made some intriguing arguments in defense of that position, but I was not convinced. Then I read Popper, and that sealed it: Plato really was a defender of tyranny.
But as Popper reveals, Plato wasn�t what we would call a communist. Communism is essentially forward-looking, at least in its rhetoric. Plato, by contrast, is backward looking: his emphasis is on tradition and seeking for, in Popper�s words, �the return of the Golden Age.� Plato believed �in a general historical tendency towards corruption [of society] and in the possibility that we may stop further corruption in the political field by arresting all political change. This, accordingly, is the aim he strives for. He tries to realize it by the establishment of a state which is free from the evils of all other states because it does not degenerate, because it does not change. The state which is free from the evil of change and corruption is the best, the perfect state. It is the state of the Golden Age which knew no change. It is the arrested state.� Id. at 21.
The Open Society, however, goes much farther than an analysis of Plato. It�s a overall attack on historicism, which Popper defines as �the doctrine that history is controlled by specific historical or evolutionary laws whose discovery would enable us to prophesy the destiny of man.� Id. at 8. Popper finds this notion manifested in many ways, including �Marx�s historical philosophy [which] substitutes�the chosen class, the instrument for the creation of the classless society, and at the same time, the class destined to inherit the earth,� or the racist despots of the Twentieth Century who saw this destiny in �the biological superiority of the blood of the chosen race�.� Id. at 9.
Along the way, Popper scatters insights applicable to all sorts of central planning or authoritarian rule; insights which touch on essential libertarian themes. Libertarianism has long been attached to what Hayek (to whom Popper dedicated one of his books) called spontaneous order, or other forms of design-without-a-designer. The most famous such undesigned designs (other than biological evolution) is the �invisible hand� of Adam Smith fame, but it exists in other things, too, and it is important because it shows that social orders do not need to be set by a central, controlling authority, but can arise through the private bargaining of people exercising their liberty. Popper thought historicism was particularly horrible because it led to the curtailment of freedom in order to accomplish utopia. �The view that society should be like a work of art leads only too easily to violent measures.� Id. at 166.
Three things I�m especially fond of in The Open Society: first, Popper�s critique of conservatism. The conservative�and I mean the real conservative, not the moderate libertarians who call themselves conservative�believes that the just state is the state in which every person knows his or her place; in Popper�s words, �the principle that every class should attend to its own business means, briefly and bluntly, that the state is just if the ruler rules, if the worker works, and if the slave slaves.� Id. at 90. �In other words, Plato�s moral code is strictly utilitarian; it is a code of collectivist or political utilitarianism. The criterion of morality is the interest of the state. Morality is nothing but political hygiene.� Id. at 107. How true this remains for so many conservatives today! It is the creed of modern opponents of change who despise technological innovation or the evolution of social mores on the grounds that these things �alienate� us or deprive us of some essential human thing. Indeed, it is the fundamental principle of what Virginia Postrel calls the �stasist� view. (In fact, those lovely people at the Intercollegiate Review put The Open Society on their list of worst books of the century! As Blake said, said, �Listen to the fool�s reproach! It is a kingly title!�)
Second, I enjoy Popper�s discussion of government-run education. Popper points out that government can hardly be relied upon to teach critical thinking skills, particularly when it comes to politics. Those in authority will at the very least lack any incentives to teach a view which undermines the authority; at the most, government-run schools become mere propaganda mills, as was the case in, say, Russian-dominated Poland at the beginning of the Twentieth Century, dedicated to destroying the native culture and replacing it with a culture more fitting to the authority. But just on a more fundamental level,
the secret of intellectual excellence is the spirit of criticism; it is intellectual independence. And this leads to difficulties [because the]�authoritarian will in general select those who obey, who believe, who respond to influence�. Never can an authority admit that the intellectually courageous, i.e., those who date defy his authority, may be the most valuable type�. Institutional selection�will always tend to eliminate initiative and originality, and, more generally, qualities which are unusual and unexpected.Id. at 135. This is the real reason I abhor public schooling.
Third, I like Popper�s description of what he calls the �paradox of tolerance�: namely, the fact that �[i]f we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend a tolerant society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them.� Id. at 265 n. 4. In an open society, you will encounter those who do not want to play by the rules, but who will then say that you are oppressing them when you force them to stop misbehaving. This illusion must not be allowed to work. Yet those who scream �McCarthyism!� or similar epithets often fail to address this point.
One thing I don�t like about Popper is his explicit rejection of the concept of natural rights. He finds the idea to be a superstition, and attacks the idea head-on. Obviously that�s not something I admire, but I think his views are directed primarily at the natural law theories of folks like Plato, and he does not distinguish between it and the views of classic libertarians like Locke or Jefferson, whose notion of natural law are, I think, far more sophisticated.
I�ve gone on at this length and only discussed the first volume! This is a sign of how much more there is to find in The Open Society And Its Enemies, and I encourage you to check it out, and to learn more about Sir Karl Popper.
Shut up, kids!: How can they print this godawful drek? Didn�t National Review usedta run Florence King?
Updated: Fancy new Chapman Law School website.
Blogger militia: Very interesting idea for combatting scam artists, at Pathetic Earthlings. I mean, the idea is at Pathetic Earthlings, not the scam artists.
Friday, November 14, 2003
My promised post on regulatory takings: First, my apologies for the length of this post. As they say, I had no time to make it shorter. Second, allow me to reiterate that I speak for myself, and not for PLF, and in fact, I don�t regularly work on regulatory takings cases, and haven�t worked on San Remo, so what I say is just my own thought on the matter. And I can�t talk about that case in particular, without violating my personal rule against blogging about current litigation.
Now, in my earlier post I explained that regulatory takings should be understood on the basis of a distinction between two kinds of government power: the police powers (the power to protect the health and safety of the people) and the power to provide public goods (like Post Offices or roads). The former never requires compensation; the latter always do. When the policeman takes the gun away from the murderer, the government does not have to pay the gunman, even though it has obviously taken his property. But when the government passes a regulation requiring you to allow a one-inch thick cable on your property, it must always pay you, even though the effect on your property is practically negligent. See also Paul J. Otterstedt, A Natural Rights Approach to Regulatory Takings, 7 Tex. Rev. L. & Pol. 25, 46 (2002) (�The distinction between state regulation that prevents harm or injury to the community and state action that confers a benefit to the community continues to be of paramount importance in determining whether a takings has occurred.�)
Regulatory takings law comes from an obvious fact: if the government must pay you for taking your property, it ought not to be able to evade the just compensation requirement by passing a law that prohibits you from using the property, but leaves you holding a worthless title. As the Supreme Court of Michigan noted in 1874,
The problem is that there are clearly limits on a person�s use of property. Does the government have to pay you for �inflicting� nuisance law on you? If the government prohibits you from pouring your sewage onto your neighbor�s land, does it have to pay you for that privilege? The answer must be no. But that is a limit on your use of land.
The solution to this problem is that you have no right to use your property in that way to begin with. The �background principles of the State�s law of property and nuisance already place upon land ownership� a limit prohibiting the interference with someone else�s land, under the sic utere principle. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1029 (1992). And this is a useful and clear rule, which, fortunately for us, is consistent with the distinction between police powers and public goods: you may use your property in such a way that doesn�t violate someone else�s use and enjoyment of their land, and if you do violate that, then the government may stop you through nuisance law, and doing so is part of the police power, so it doesn�t have to compensate you. But anything beyond than that�anything, for instance, which requires you to shoulder the burden of some giant public work project�does require just compensation.
Two problems with this approach. (Actually, three, but I�ll get to the third later.) First, that isn�t so clear as it seems, because the legislature can just change the rules, right? What if they simply declare that �from now on, all houses in such-and-such neighborhood are a public nuisance�? Would that absolve them of the duty to pay just compensation when taking those houses? The answer must be no. Why? Because property is not just what the state says it is. To quote the Supreme Court from a slightly different context,
If the just compensation clause is going to mean anything, it must be understood as grounded on a political theory which is precisely the opposite of the �property rights are what the government says they are� theory. In Prof. Epstein�s words, �the Constitution is very much a natural law document. Unlike many modern statutes, the Constitution does not contain a definition section, although there are many terms, including �contract,� that cry out for some definition. To say that the Constitution is a �natural law� document is to say that its terms are to be understood in accord with their use in the general legal culture. Because in general legal usage the term �contract� has a fixed and definite meaning, viewing the Constitution as a natural law document prevents the legislature from nullifying private arrangements by its own redefinition of the critical terms of constitutional discourse.� Richard A. Epstein, Toward A Revitalization of The Contract Clause, 51 U. Chi. L. Rev. 703, 728 (1984) (emphasis added). If the government can simply take your property by declaring it to no longer be property�or can deprive you of your property rights by narrowing the scope of those rights by mere fiat�then property is simply a government permission, rather than something that actually belongs to you. But if that is the case, what are we to make of the Constitution�s requirement of just compensation? Why is it even there, and when would it ever be enforced?
The fact is, the clause is there as a reflection of a fundamental principle of American government which the modern academic establishment has almost totally abandoned: that government has no right to take property from A and give it to B. This was once considered perhaps the most obvious statement of American law. See, e.g.,Wilkinson v. Leland, 27 U.S. (2 Peters.) 627, 658 (1829) (�We know of no case, in which a legislative act to transfer the property of A. to B. without his consent, has ever been held a constitutional exercise of legislative power in any state in the union. On the contrary, it has been constantly resisted as inconsistent with just principles, by every judicial tribunal in which it has been attempted to be enforced.�) Today, of course, such a thing is so routine that the Regulatory Welfare State might be accurately described in the words of Frederic Bastiat: �The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.�
This brings us to the second issue. As Otterstedt has pointed out, we find that the debate over regulatory takings reduces ultimately to �a deep disagreement over the very legitimacy of property rights themselves.� Otterstedt, supra at 67. And it is therefore unsurprising to find that those who believe government may narrow your property rights by fiat without compensating you also tend to place property rights low on their level of priorities. This, as libertarian thinkers from Locke to the present day have repeatedly shown, is a fallacy. Property rights are fundamental to any notion of individual liberty: indeed, all rights may be characterized as property rights, since they are simply a manifestation of your ownership of yourself. The term property �embraces every thing to which a man may attach a value and have a right; and which leaves to every one else the like advantage.� (Incidentally, Prof. Marston wrote that he preferred �history� in addressing this question. It is common for opponents of just compensation for regulatory takings to claim that the notion was somehow alien to the framers of the Fifth Amendment, and was just stuck on there by that nasty old Lochner-era cabal of capitalist cronies. But see Eric R. Claeys, Takings, Regulations, And Natural Property Rights, 88 Cornell L. Rev. 1549 (2003) (describing history of regulatory takings law)).
Although this is a matter on which much can be (and has been) written, consider briefly the argument of those who oppose just compensation for regulatory takings: why, they deprive us of democratic government, and infringe on the power to set public policy. We all would live in a better society if we could regulate what people do with their land, and those who would prevent the government from doing so (or not even prevent it, but simply require it to compensate for doing so), are depriving us of our power to regulate people�s behavior for the common welfare. Yet this is exactly the argument used by the conservatives when they propose to tell you whom to sleep with. We would live in a better society if gays didn�t have the right to sexual privacy, and that nasty old Supreme Court is depriving Texas of its power to regulate other people�s behavior for the common welfare. It is all the same old serpent.
After reading Tahoe-Sierra, it is clear to all honest viewers that this serpent has the Supreme Court, and much of the legal academy, by the toe. There, the Court�s answer to the question of regulatory takings boils down to the simple answer of rewriting the Constitution to accommodate the Regulatory Welfare State. There, Justice Stevens wrote that a clear application of the just compensation requirement would �would apply to numerous �normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like,� as well as to orders temporarily prohibiting access to crime scenes, businesses that violate health codes, fire-damaged buildings, or other areas that we cannot now foresee.� Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 335 (2002) (citations omitted). In other words, we shouldn�t have to pay because we can�t afford it. My approach may be unpalatable to some, but surely they can�t feel nourished on that sort of thin gruel.
Now, the third problem, which is sort of a problem and sort of not. Adopting a principled approach to regulatory takings is out of the question right now because doing so would mean that the Court must understand the proper limits of the police power�and, as Epstein notes, that�s �a large job because it requires an assessment of the legitimate purposes for government action,� and the Court�s been reluctant to do that. Richard A. Epstein, The Ebbs And Flows of Takings Law: Reflections on the Lake Tahoe Case, Cato Supreme Court Review 2001-2002, at 16; See also Nollan v. California Coastal Com., 483 U.S. 825, 834 (1987) (�Our cases have not elaborated on the standards for determining what constitutes a �legitimate state interest��). The tools are there, in the words of the framers of our Constitution, for instance. But they�re just too much for addicts of the Regulatory Welfare State to take. They�ve got strong reasons to avoid constitutional fidelity. One could respect even that, if they admitted that that�s what they�re doing.
But to be fair, there is a genuine problem here: the limits aren�t entirely clear in every case. Government itself is a �public good.� It may be based on our natural rights, but its protection of those rights is a public good subject to the pushes and pulls of �public choice� effects. Does the existence of government itself require just compensation? You may think that�s a silly question, but in fact, ninteenth century courts faced that issue squarely, in the cases that culminated in Loan Association v. Topeka, 87 U.S. (20 Wall.) 655 (1874), which developed the �public benefit� doctrine in tax law. (Not to be confused with the public use requirement in eminent domain.) Taxes were justified on the grounds of (again to use Epstein�s term) �implicit, in-kind compensation.� You already were compensated for your taxes in the form of police protection. See Richard A. Epstein, Takings, c. 14 (1985); See also San Remo Hotel L.P. v. City And County of San Francisco, 27 Cal.4th 643, 701 (2002) (Brown, J., dissenting) (describing implicit, in-kind compensation).
So there�s a solution to that problem, and an answer to the situation of other public goods, like the military draft. But here�s one I don�t have an answer for (yet): public decency laws. Laws against running around naked in the streets. Are they public goods? I mean, I have no natural right to prevent you from running naked in the street, do I? So they can�t be nuisance laws. It does improve property values to stop you from running naked in the street. But surely that doesn�t require compensation...does it?
These are the sorts of things that occupy my swiss-cheese brain.
Update: Prof. Marston has a brief reply here. I think it�s pretty na�ve (to say the least) to say that property rights are too protected in America. The Mississippi case, which Prof. Marston mentions (and in which I submitted an amicus brief supporting IJ), is absolutely typical. Property rights are practically nonexistent in large areas of American life�they exist only so long as the government doesn�t feel like taking your property. That�s not the way it�s supposed to be. Prof. Marston says that I and lawyers like me are trying �to constitutionalize� protection for property rights. Fortunately for us, we don�t have to do that�James Madison and his contemporaries already did that. We didn�t write the Fifth Amendment, which says that �private property [shall not] be taken for public use without just compensation.�
Now, in my earlier post I explained that regulatory takings should be understood on the basis of a distinction between two kinds of government power: the police powers (the power to protect the health and safety of the people) and the power to provide public goods (like Post Offices or roads). The former never requires compensation; the latter always do. When the policeman takes the gun away from the murderer, the government does not have to pay the gunman, even though it has obviously taken his property. But when the government passes a regulation requiring you to allow a one-inch thick cable on your property, it must always pay you, even though the effect on your property is practically negligent. See also Paul J. Otterstedt, A Natural Rights Approach to Regulatory Takings, 7 Tex. Rev. L. & Pol. 25, 46 (2002) (�The distinction between state regulation that prevents harm or injury to the community and state action that confers a benefit to the community continues to be of paramount importance in determining whether a takings has occurred.�)
Regulatory takings law comes from an obvious fact: if the government must pay you for taking your property, it ought not to be able to evade the just compensation requirement by passing a law that prohibits you from using the property, but leaves you holding a worthless title. As the Supreme Court of Michigan noted in 1874,
It is a transparent fallacy to say that this is not a taking of his property, because the land itself is not taken, and he utterly excluded from it, and because the title, nominally, still remains in him, and he is merely deprived of its beneficial use, which is not the property, but simply an incident of property. Such a proposition, though in some instances something very like it has been sanctioned by courts, cannot be rendered sound, nor even respectable, by the authority of great names.... Property does not consist merely of the right to the ultimate particles of matter of which it may be composed,�of which we know nothing,�but of those properties of matter which can be rendered manifest to our senses, and made to contribute to our wants or our enjoyments.Grand Rapids Booming Co. v. Jarvis, 30 Mich. 308, 1874 WL 3540, *5 (Mich. 1874).
The problem is that there are clearly limits on a person�s use of property. Does the government have to pay you for �inflicting� nuisance law on you? If the government prohibits you from pouring your sewage onto your neighbor�s land, does it have to pay you for that privilege? The answer must be no. But that is a limit on your use of land.
The solution to this problem is that you have no right to use your property in that way to begin with. The �background principles of the State�s law of property and nuisance already place upon land ownership� a limit prohibiting the interference with someone else�s land, under the sic utere principle. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1029 (1992). And this is a useful and clear rule, which, fortunately for us, is consistent with the distinction between police powers and public goods: you may use your property in such a way that doesn�t violate someone else�s use and enjoyment of their land, and if you do violate that, then the government may stop you through nuisance law, and doing so is part of the police power, so it doesn�t have to compensate you. But anything beyond than that�anything, for instance, which requires you to shoulder the burden of some giant public work project�does require just compensation.
Two problems with this approach. (Actually, three, but I�ll get to the third later.) First, that isn�t so clear as it seems, because the legislature can just change the rules, right? What if they simply declare that �from now on, all houses in such-and-such neighborhood are a public nuisance�? Would that absolve them of the duty to pay just compensation when taking those houses? The answer must be no. Why? Because property is not just what the state says it is. To quote the Supreme Court from a slightly different context,
The theory underlying the argument...seems to run on these lines: Property rights are created by the State.... So, the argument goes, by prospective legislation the State can shape and define property rights and reasonable investment-backed expectations, and subsequent owners cannot claim any injury from lost value.... The State may not put so potent a Hobbesian stick into the Lockean bundle. The right to improve property, of course, is subject to the reasonable exercise of state authority, including the enforcement of valid zoning and land-use restrictions.... The Takings Clause, however, in certain circumstances allows a landowner to assert that a particular exercise of the State�s regulatory power is so unreasonable or onerous as to compel compensation.... [This theory] would absolve the State of its obligation to defend any action restricting land use, no matter how extreme or unreasonable.Palazzolo v. Rhode Island, 533 U.S. 606, 626-27 (2001).
If the just compensation clause is going to mean anything, it must be understood as grounded on a political theory which is precisely the opposite of the �property rights are what the government says they are� theory. In Prof. Epstein�s words, �the Constitution is very much a natural law document. Unlike many modern statutes, the Constitution does not contain a definition section, although there are many terms, including �contract,� that cry out for some definition. To say that the Constitution is a �natural law� document is to say that its terms are to be understood in accord with their use in the general legal culture. Because in general legal usage the term �contract� has a fixed and definite meaning, viewing the Constitution as a natural law document prevents the legislature from nullifying private arrangements by its own redefinition of the critical terms of constitutional discourse.� Richard A. Epstein, Toward A Revitalization of The Contract Clause, 51 U. Chi. L. Rev. 703, 728 (1984) (emphasis added). If the government can simply take your property by declaring it to no longer be property�or can deprive you of your property rights by narrowing the scope of those rights by mere fiat�then property is simply a government permission, rather than something that actually belongs to you. But if that is the case, what are we to make of the Constitution�s requirement of just compensation? Why is it even there, and when would it ever be enforced?
The fact is, the clause is there as a reflection of a fundamental principle of American government which the modern academic establishment has almost totally abandoned: that government has no right to take property from A and give it to B. This was once considered perhaps the most obvious statement of American law. See, e.g.,Wilkinson v. Leland, 27 U.S. (2 Peters.) 627, 658 (1829) (�We know of no case, in which a legislative act to transfer the property of A. to B. without his consent, has ever been held a constitutional exercise of legislative power in any state in the union. On the contrary, it has been constantly resisted as inconsistent with just principles, by every judicial tribunal in which it has been attempted to be enforced.�) Today, of course, such a thing is so routine that the Regulatory Welfare State might be accurately described in the words of Frederic Bastiat: �The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.�
This brings us to the second issue. As Otterstedt has pointed out, we find that the debate over regulatory takings reduces ultimately to �a deep disagreement over the very legitimacy of property rights themselves.� Otterstedt, supra at 67. And it is therefore unsurprising to find that those who believe government may narrow your property rights by fiat without compensating you also tend to place property rights low on their level of priorities. This, as libertarian thinkers from Locke to the present day have repeatedly shown, is a fallacy. Property rights are fundamental to any notion of individual liberty: indeed, all rights may be characterized as property rights, since they are simply a manifestation of your ownership of yourself. The term property �embraces every thing to which a man may attach a value and have a right; and which leaves to every one else the like advantage.� (Incidentally, Prof. Marston wrote that he preferred �history� in addressing this question. It is common for opponents of just compensation for regulatory takings to claim that the notion was somehow alien to the framers of the Fifth Amendment, and was just stuck on there by that nasty old Lochner-era cabal of capitalist cronies. But see Eric R. Claeys, Takings, Regulations, And Natural Property Rights, 88 Cornell L. Rev. 1549 (2003) (describing history of regulatory takings law)).
Although this is a matter on which much can be (and has been) written, consider briefly the argument of those who oppose just compensation for regulatory takings: why, they deprive us of democratic government, and infringe on the power to set public policy. We all would live in a better society if we could regulate what people do with their land, and those who would prevent the government from doing so (or not even prevent it, but simply require it to compensate for doing so), are depriving us of our power to regulate people�s behavior for the common welfare. Yet this is exactly the argument used by the conservatives when they propose to tell you whom to sleep with. We would live in a better society if gays didn�t have the right to sexual privacy, and that nasty old Supreme Court is depriving Texas of its power to regulate other people�s behavior for the common welfare. It is all the same old serpent.
After reading Tahoe-Sierra, it is clear to all honest viewers that this serpent has the Supreme Court, and much of the legal academy, by the toe. There, the Court�s answer to the question of regulatory takings boils down to the simple answer of rewriting the Constitution to accommodate the Regulatory Welfare State. There, Justice Stevens wrote that a clear application of the just compensation requirement would �would apply to numerous �normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like,� as well as to orders temporarily prohibiting access to crime scenes, businesses that violate health codes, fire-damaged buildings, or other areas that we cannot now foresee.� Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 335 (2002) (citations omitted). In other words, we shouldn�t have to pay because we can�t afford it. My approach may be unpalatable to some, but surely they can�t feel nourished on that sort of thin gruel.
Now, the third problem, which is sort of a problem and sort of not. Adopting a principled approach to regulatory takings is out of the question right now because doing so would mean that the Court must understand the proper limits of the police power�and, as Epstein notes, that�s �a large job because it requires an assessment of the legitimate purposes for government action,� and the Court�s been reluctant to do that. Richard A. Epstein, The Ebbs And Flows of Takings Law: Reflections on the Lake Tahoe Case, Cato Supreme Court Review 2001-2002, at 16; See also Nollan v. California Coastal Com., 483 U.S. 825, 834 (1987) (�Our cases have not elaborated on the standards for determining what constitutes a �legitimate state interest��). The tools are there, in the words of the framers of our Constitution, for instance. But they�re just too much for addicts of the Regulatory Welfare State to take. They�ve got strong reasons to avoid constitutional fidelity. One could respect even that, if they admitted that that�s what they�re doing.
But to be fair, there is a genuine problem here: the limits aren�t entirely clear in every case. Government itself is a �public good.� It may be based on our natural rights, but its protection of those rights is a public good subject to the pushes and pulls of �public choice� effects. Does the existence of government itself require just compensation? You may think that�s a silly question, but in fact, ninteenth century courts faced that issue squarely, in the cases that culminated in Loan Association v. Topeka, 87 U.S. (20 Wall.) 655 (1874), which developed the �public benefit� doctrine in tax law. (Not to be confused with the public use requirement in eminent domain.) Taxes were justified on the grounds of (again to use Epstein�s term) �implicit, in-kind compensation.� You already were compensated for your taxes in the form of police protection. See Richard A. Epstein, Takings, c. 14 (1985); See also San Remo Hotel L.P. v. City And County of San Francisco, 27 Cal.4th 643, 701 (2002) (Brown, J., dissenting) (describing implicit, in-kind compensation).
So there�s a solution to that problem, and an answer to the situation of other public goods, like the military draft. But here�s one I don�t have an answer for (yet): public decency laws. Laws against running around naked in the streets. Are they public goods? I mean, I have no natural right to prevent you from running naked in the street, do I? So they can�t be nuisance laws. It does improve property values to stop you from running naked in the street. But surely that doesn�t require compensation...does it?
These are the sorts of things that occupy my swiss-cheese brain.
Update: Prof. Marston has a brief reply here. I think it�s pretty na�ve (to say the least) to say that property rights are too protected in America. The Mississippi case, which Prof. Marston mentions (and in which I submitted an amicus brief supporting IJ), is absolutely typical. Property rights are practically nonexistent in large areas of American life�they exist only so long as the government doesn�t feel like taking your property. That�s not the way it�s supposed to be. Prof. Marston says that I and lawyers like me are trying �to constitutionalize� protection for property rights. Fortunately for us, we don�t have to do that�James Madison and his contemporaries already did that. We didn�t write the Fifth Amendment, which says that �private property [shall not] be taken for public use without just compensation.�
More on takings: I�ll write the promised post on takings as soon as I get the time. Meanwhile, a Mr. Richard Feder, of Fort Lee, New Jersey, writes, �I enjoyed your post on takings, and particularly the distinction between police powers and public goods. Do you think that the military draft is a taking?�
Well, Mr. Feder, Not only is the draft a taking, but according to the ancient writers, the draft was the first example of eminent domain that the courts recognized. As I noted in a recent law review article,
Check out Pufendorf�s On The Duties of Man And Citizen, Book 2 chapter 7, which discusses eminent domain and military conscription in the same breath. Also, Bynckerhsoek writes in Quaestionum Juris Pulici that
Well, Mr. Feder, Not only is the draft a taking, but according to the ancient writers, the draft was the first example of eminent domain that the courts recognized. As I noted in a recent law review article,
�Early writers explained that the power to expropriate property, which we today call �eminent domain,� was but one aspect of this ultimate power, called �eminent domain,� which included what we would today call the �military draft:� the power not only to take property for public use, but to force individuals into public service in times of national emergency. This understanding of eminent domain is still reflected in some state Constitutions, for instance Tennessee�s, which holds that �no man�s particular services shall be demanded, or property taken, or applied to public use, without the consent of his representatives, or without just compensation being made therefor.� Tenn. Const. art I, � 21.�Timothy Sandefur, A Natural Rights Perspective on Eminent Domain in California: A Rationale for Meaningful Judicial Scrutiny of �Public Use,� 32 Sw. U. L. Rev. 569, 676 n. 68 (2003).
Check out Pufendorf�s On The Duties of Man And Citizen, Book 2 chapter 7, which discusses eminent domain and military conscription in the same breath. Also, Bynckerhsoek writes in Quaestionum Juris Pulici that
�when Seneca spoke of this right [of eminent domain] he employed the word potestas, saying �Kings have potestas over all things, proprietas applies to individuals.� Now this eminent authority extends to the person and the goods of the subjects, and all would readily acknowledge that if it were destroyed, no state could survive. Through this power war is declared, peace made, treaties signed, taxes and duties levied, subjects and their property pledged in part or in whole, and even the property of individuals appropriated if the sovereign see fit.�(Chapt. XV).
Caesar salad: I�m sure Prof. Volokh knows this, but Caesar salad is not named after the Imperator, but after Cesar Cardini, who invented the salad in 1924. So it�s even farther removed from Homer than Julius was!
Tim�s Rules of Life:
1. If you look like you know what you�re doing, people will let you.
2. It�s always easier to get forgiveness than permission.
3. Never trust women.
4. You always become what you most despise.
5. You will never be as competent and as wise as you once believed all adults were.
6. You can�t get rich by breaking things or making people�s jobs illegal.
7. What you don�t know will always be used against you.
8. Lost causes are the only causes worth fighting for.
9. The majority is almost always wrong.
10. Always keep extra paper napkins.
1. If you look like you know what you�re doing, people will let you.
2. It�s always easier to get forgiveness than permission.
3. Never trust women.
4. You always become what you most despise.
5. You will never be as competent and as wise as you once believed all adults were.
6. You can�t get rich by breaking things or making people�s jobs illegal.
7. What you don�t know will always be used against you.
8. Lost causes are the only causes worth fighting for.
9. The majority is almost always wrong.
10. Always keep extra paper napkins.
Thursday, November 13, 2003
You see?: The conservatives told you that Lawrence v. Texas was going to result in mass sexual immorality. And see? They were right!
Teacher malpractice: 75 percent of California�s black fourth-graders and 64 percent of Latino fourth-graders are rated �below basic� in math. Well, that proves it. We should change the test.
The Simpsons: Unfortunately, in my little Unabomber Shack where I live, I don�t have cable, so I don�t get to watch new episodes of The Simpsons anymore. But that didn�t seem like a great loss to me, since I had noticed its slide into slapstick, and am much more a fan of the third, fourth, and fifth seasons. But according to this story, things might be getting better soon.
Ugh: I really, really hate statute of limitations.
And standing.
And standing.
Wednesday, November 12, 2003
Speaking of Dennett: I see he has a response to Dinesh D�Souza�s recent Wall Street Journal article condemning atheism.
Illusion: A very cool optical illusion. (Thanks to Paul for the pointer.) Wonder what Prof. Dennett would think about it.
D�oh!: Simon and Garfunkel have postponed their Sacramento concert, due to Mr. Garfunkel�s illness. But business still crushes. More later.
Oops: Here�s the article I meant to link to below. I�d defend further the proposition that property rights cannot be treated as worth less than other rights, with all my usual brilliance and eloquence, except that, as mentioned, I don�t have the time.
I promise to try to have a more orderly and sensible response to Prof. Marston in the next few days. For now, I will add only this: It is not a valid argument against the Constitutional requirement of just compensation to say �But we can�t afford to pay people for the things we take from them!�
I promise to try to have a more orderly and sensible response to Prof. Marston in the next few days. For now, I will add only this: It is not a valid argument against the Constitutional requirement of just compensation to say �But we can�t afford to pay people for the things we take from them!�
Tuesday, November 11, 2003
Takings: Prof. Marston has a reply to my brief morning post about his response to Justice Brown. It�s a bit difficult to reply specifically, because of my rule that I do not blog about cases in which PLF is participating, and San Remo is currently being litigated, and PLF is appearing as amicus, so I won�t discuss that case specifically.
But on the general point, Prof. Marson writes that �to expand the definition of �taking� to include any effect that government action has on your property right is a kind of humpty-dumpty act.� This may be true, but that�s not what�s going on. Marston is committing the same fallacy that the left constantly makes in the regulatory takings context: failing to distinguish between the police powers (which do not ever require just compensation) and the government�s power to provide public goods (which always require just compensation). Police powers are the powers to protect the rights of individuals. When a policeman takes a gun away from a robber, he does not have to pay just compensation for that, even though the robber may have bought the gun, because the policeman is protecting the individual right not be robbed. Likewise, when government stops you from committing a nuisance, it does not have to pay you just compensation, because you don�t have a right to commit a nuisance. That�s what the Court means when it speaks of �background principles of the State�s law of property and nuisance already place upon land ownership.� Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1029 (1992).
On the other hand, when government is going to provide a public good, like, say, building a new post office on the land where your house is, then it must pay you just compensation. This is because, as the Supreme Court has repeatedly said, the just compensation requirement �was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.� Armstrong v. United States, 364 U.S. 40, 49 (1960). If the government is protecting a person�s rights, then it doesn�t pay compensation. When it�s providing a public good, it must.
I think that only on the basis of this distinction can regulatory takings law make any real sense. What I think is weird is to divorce the takings analysis from any principled basis such as this and to replace it instead with an argument from proportions of monetary value, which is what Prof. Marston seems to do. I acknowledge that my view is not the current state of the law, but I believe the law is wrong.
Why is the law wrong? I think Marston suggests it when he writes �such a judgment on the denominator issue would overburden the courts, and the courts are afraid of this happening.� True, indeed. If we didn�t know this already, it would have been proven by the Supreme Court�s utterly unprincipled holding in Tahoe-Sierra. As Prof. Epstein has noted, that decision simply boils down to this: government can�t owe just compensation, because it would just be too expensive.
Yet that touches on what Prof. Marston calls our deep differences on this issue: namely, whether property rights are a poor relation compared to other individual liberties, and if so, whether there is any constitutional basis for treating them differently. There is none. Prof Marston writes �It seems to me that zoning ordinances and other regulations of property are essentially tied up with the function of government in the modern economy, whereas prohibiting sodomy has no such relation to the functions of government.� But on what principled basis does he make that distinction? Property is the fundamental right. (Here�s an overwrought essay on the subject that I did when I was in law school). What right does the government have to engage in those �functions�? Functions which, it must be kept in mind, consist of taking away the earnings of some people and giving them to others. In Prof. Marston�s view, government has no authority to say whom you may sleep with�but it may take your bed or your bedroom, away and give it to someone else.
But on the general point, Prof. Marson writes that �to expand the definition of �taking� to include any effect that government action has on your property right is a kind of humpty-dumpty act.� This may be true, but that�s not what�s going on. Marston is committing the same fallacy that the left constantly makes in the regulatory takings context: failing to distinguish between the police powers (which do not ever require just compensation) and the government�s power to provide public goods (which always require just compensation). Police powers are the powers to protect the rights of individuals. When a policeman takes a gun away from a robber, he does not have to pay just compensation for that, even though the robber may have bought the gun, because the policeman is protecting the individual right not be robbed. Likewise, when government stops you from committing a nuisance, it does not have to pay you just compensation, because you don�t have a right to commit a nuisance. That�s what the Court means when it speaks of �background principles of the State�s law of property and nuisance already place upon land ownership.� Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1029 (1992).
On the other hand, when government is going to provide a public good, like, say, building a new post office on the land where your house is, then it must pay you just compensation. This is because, as the Supreme Court has repeatedly said, the just compensation requirement �was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.� Armstrong v. United States, 364 U.S. 40, 49 (1960). If the government is protecting a person�s rights, then it doesn�t pay compensation. When it�s providing a public good, it must.
I think that only on the basis of this distinction can regulatory takings law make any real sense. What I think is weird is to divorce the takings analysis from any principled basis such as this and to replace it instead with an argument from proportions of monetary value, which is what Prof. Marston seems to do. I acknowledge that my view is not the current state of the law, but I believe the law is wrong.
Why is the law wrong? I think Marston suggests it when he writes �such a judgment on the denominator issue would overburden the courts, and the courts are afraid of this happening.� True, indeed. If we didn�t know this already, it would have been proven by the Supreme Court�s utterly unprincipled holding in Tahoe-Sierra. As Prof. Epstein has noted, that decision simply boils down to this: government can�t owe just compensation, because it would just be too expensive.
Yet that touches on what Prof. Marston calls our deep differences on this issue: namely, whether property rights are a poor relation compared to other individual liberties, and if so, whether there is any constitutional basis for treating them differently. There is none. Prof Marston writes �It seems to me that zoning ordinances and other regulations of property are essentially tied up with the function of government in the modern economy, whereas prohibiting sodomy has no such relation to the functions of government.� But on what principled basis does he make that distinction? Property is the fundamental right. (Here�s an overwrought essay on the subject that I did when I was in law school). What right does the government have to engage in those �functions�? Functions which, it must be kept in mind, consist of taking away the earnings of some people and giving them to others. In Prof. Marston�s view, government has no authority to say whom you may sleep with�but it may take your bed or your bedroom, away and give it to someone else.
Objectivist pick-up lines: I suppose everyone has seen this already, but just in case....
Light blogging: Quite busy this week. Aside from happily (but very busily) suing bureaucrats, I�m also engaged to see Simon and Garfunkel tomorrow. Very exciting. Attending the concert with me will be my mother (for whom the tickets were a belated Mother�s Day present), so the folks�ll be visiting for a couple days (and meeting the lovely Erin for the first time). That plus a doctor�s appointment means blogging may be lighter than usual for the rest of the week.
Property and freedom: This post at Marstonalia reminded me of a passage from Hayek�s Constitution of Liberty:
Just rephrase Prof. Marston�s post and the issue becomes clear. Imagine that, instead of San Remo, Prof. Marston was describing Lawrence v. Texas. He might have written, �You might not think that the Texas sodomy law is a great way to help alleviate moral crisis in society. You might think that it might be a good idea to try to convince the state to find some other method of doing so. (How about educating people about the dangers of promiscuity?) But to me the idea that this kind of law is unconstitutional and subject to being struck down by courts is dangerous because it will effectively hamstring states as they are trying to determine punishments in their attempt to exercise their authority to provide for the �health, safety and welfare� of all their residents.�
If such a statement is absurd�because government has no authority to deprive us of our rights while protecting (not providing!) the health, safety, and welfare�then you understand that there is no indication in the Constitution that the right to property is to be treated as a poor relation. As the United States Supreme Court has pointed out,
Locke, Adams, Blackstone�Those crazy right wing extremists!
The dangers [of city planning] come largely from the desire of many planners to be released from the necessity of counting all the costs of their schemes. They often plead that if they are made to compensate at market value, the cost of carrying out some improvements becomes prohibitive. Wherever this is the case, it means, however, that the proposed plan should not be carried out. Nothing ought to be treated with more suspicion than arguments used by town planners to justify expropriation below fair market value, arguments regularly based on the false contention that they can thereby reduce the social costs of the scheme. All that such a scheme amounts to is that certain costs will not be taken into account. The planners make it appear advantageous simply by placing some of the costs on the shoulders of private persons and then disregarding them.Id. at 351 (emphasis added).
Just rephrase Prof. Marston�s post and the issue becomes clear. Imagine that, instead of San Remo, Prof. Marston was describing Lawrence v. Texas. He might have written, �You might not think that the Texas sodomy law is a great way to help alleviate moral crisis in society. You might think that it might be a good idea to try to convince the state to find some other method of doing so. (How about educating people about the dangers of promiscuity?) But to me the idea that this kind of law is unconstitutional and subject to being struck down by courts is dangerous because it will effectively hamstring states as they are trying to determine punishments in their attempt to exercise their authority to provide for the �health, safety and welfare� of all their residents.�
If such a statement is absurd�because government has no authority to deprive us of our rights while protecting (not providing!) the health, safety, and welfare�then you understand that there is no indication in the Constitution that the right to property is to be treated as a poor relation. As the United States Supreme Court has pointed out,
Such difficulties indicate that the dichotomy between personal liberties and property rights is a false one. Property does not have rights. People have rights. The right to enjoy property without unlawful deprivation, no less than the right to speak or the right to travel, is in truth, a 'personal' right, whether the 'property' in question be a welfare check, a home, or a savings account. In fact, a fundamental interdependence exists between the personal right to liberty and the personal right in property. Neither could have meaning without the other. That rights in property are basic civil rights has long been recognized. J. Locke, Of Civil Government 82--85 (1924); J. Adams, A Defence of the Constitutions of Government of the United States of America, in F. Coker, Democracy, Liberty, and Property 121-132 (1942); 1 W. Blackstone, Commentaries, *138-140. Congress recognized these rights in 1871 when it enacted the predecessor of �� 1983 and 1343(3). We do no more than reaffirm the judgment of Congress today.Lynch v. Household Finance Corp., 405 U.S. 538, 552 (1972).
Locke, Adams, Blackstone�Those crazy right wing extremists!
Public works: E. passed along this very interesting New York Times story about public works�or, in this case, public not-works.
�United Airlines got $320 million in taxpayer money to build what is by all accounts the most technologically advanced aircraft maintenance center in America� at the Indianapolis Airport, writes Louis Uchitelle. �But six months ago, the company walked away, leaving the city and state governments out all that money, and no new tenant in sight. The shuttered maintenance center is a stark, and unusually vivid, reminder of the risk inherent in gambling public money on corporate ventures.�
That�s exactly right. In the world of private corporations, risks are evaluated by directors, and indirectly, by shareholders, who have a real stake in the business. They have to temper every plan by considerations of loss and customer service. But when the funding comes from the government, those considerations don�t factor in. As Henry Hazlitt puts it in Economics in One Lesson, imagine that there is a canyon with no bridge over it. The government says �We�ll build a bridge here!��now, pause a second and think, Why is there not a bridge here already? Why has no private capitalist built a bridge here? Well, if there were a profit to be made off of it, there would most likely have been a private capitalist willing to construct such a bridge. If government must do it with money coerced from taxpayers, that most likely means that there is no profit to be made�which indicates that the project is economically inefficient.
�United Airlines got $320 million in taxpayer money to build what is by all accounts the most technologically advanced aircraft maintenance center in America� at the Indianapolis Airport, writes Louis Uchitelle. �But six months ago, the company walked away, leaving the city and state governments out all that money, and no new tenant in sight. The shuttered maintenance center is a stark, and unusually vivid, reminder of the risk inherent in gambling public money on corporate ventures.�
That�s exactly right. In the world of private corporations, risks are evaluated by directors, and indirectly, by shareholders, who have a real stake in the business. They have to temper every plan by considerations of loss and customer service. But when the funding comes from the government, those considerations don�t factor in. As Henry Hazlitt puts it in Economics in One Lesson, imagine that there is a canyon with no bridge over it. The government says �We�ll build a bridge here!��now, pause a second and think, Why is there not a bridge here already? Why has no private capitalist built a bridge here? Well, if there were a profit to be made off of it, there would most likely have been a private capitalist willing to construct such a bridge. If government must do it with money coerced from taxpayers, that most likely means that there is no profit to be made�which indicates that the project is economically inefficient.
How exciting!: An interview with my idol, Clint Bolick. I was just talking to him yesterday. Aside from his great contribution to liberty, Bolick is also the nicest man on earth.
Monday, November 10, 2003
Catching on: Another legal opinion on the propriety of supposedly originalist conservatives using the commerce clause to combat abortion.
Mormon blog: My friend Dave has a very interesting and insightful blog focusing on the history and philosophy of Mormonism.
Constitution.org: I�m very fond of the Constitution Society�s library of Constitutional Classics. They�ve got just about everything there, and I use it often in my own research. They�ve just added Losing Liberty Judicially by Thomas James Norton. Writes Jon Roland, editor of the site, �Norton, a lawyer who mainly practiced in the Chicago area..., wrote a number of books.... Losing Liberty Judicially, written in 1928,...captures a moment in constitutional history on the eve of the Depression, the New Deal, and the �Switch in Time that Saved Nine.� Through Norton�s analysis we can see that the groundwork for the �New Deal Revolution� was actually laid years before. For legal historians it provides insight into how constitutional thought was evolving during that critical period, and how few were the voices for fidelity to the Founders.�
Sarah McLachlan: A couple more reviews of the new album. This one from the New York Times has what I think is a real mistake: when McLachlan says �We part the veil on our killer sun,� I think she�s rather obviously speaking of nuclear war. This review, from the Denver Post, is a little overly positive, I think, but mostly right. �Answer� really is the showstopper.
�Times-Square-Shoeshine-Composition� by Maya Angelou
I�m the best that ever done it
(pow pow)
that�s my title and I won it
(pow pow)
I ain�t lying, I�m the best
(pow pow)
Come and put me to the test
(pow pow)
I�ll clean �em til they squeak
(pow pow)
In the middle of next week,
(pow pow)
I�ll shine �em til they whine
(pow pow)
Till they call me master mine
(pow pow)
For a quarter and a dime
(pow pow)
You can get the dee luxe shine
(pow pow)
Say you wanta pay a quarter?
(pow pow)
Then you give that to your daughter
(pow pow)
I ain�t playing dozens mister
(pow pow)
You can give it to your sister
(pow pow)
Any way you want to read it
(pow pow)
Maybe it�s your momma need it.
(pow pow)
Say I�m like a greedy bigot,
(pow pow)
I�m a cap�tilist, can you dig it?
(pow pow)
I�m the best that ever done it
(pow pow)
that�s my title and I won it
(pow pow)
I ain�t lying, I�m the best
(pow pow)
Come and put me to the test
(pow pow)
I�ll clean �em til they squeak
(pow pow)
In the middle of next week,
(pow pow)
I�ll shine �em til they whine
(pow pow)
Till they call me master mine
(pow pow)
For a quarter and a dime
(pow pow)
You can get the dee luxe shine
(pow pow)
Say you wanta pay a quarter?
(pow pow)
Then you give that to your daughter
(pow pow)
I ain�t playing dozens mister
(pow pow)
You can give it to your sister
(pow pow)
Any way you want to read it
(pow pow)
Maybe it�s your momma need it.
(pow pow)
Say I�m like a greedy bigot,
(pow pow)
I�m a cap�tilist, can you dig it?
(pow pow)
Libertarian bookworm: This weekend featured Liberalism by Ludwig von Mises.
Contort: The following is inspired by Johnny Bardine�s prompt over at En Banc, inquiring about the distinction between tort and contract. It�s adapted from my brilliant amicus brief, filed just last week in Robinson Helicopter v. Dana Corporation.
The distinction between tort and contract is a fundamental one. Tort law imposes duties of conduct based on a person�s participation in society, while contract law imposes duties of quality based on the parties� participation in a private agreement. See Robinson Helicopter Co. v. Dana Corp., 129 Cal. Rptr. 2d 682, 691 (2003) rev. granted 68 P.3d 344 (Cal. May 14, 2003). Tort law imposes basic standards of behavior on people living among one another, Lynch v. Warwick, 95 Cal. App. 4th 267, 273 (2002), while contract law recognizes agreements arising from a realm of personal autonomy and free choice. Naify v. Pacific Indem. Co., 11 Cal. 2d 5, 11 (1938). Tort is primarily concerned with maintaining minimum standards of conduct in society, contract is primarily concerned with ensuring that people can reach and rely on agreements between themselves. Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85, 94 (1995); William Powers, Jr., Border Wars, 72 Tex. L. Rev. 1209, 1210-11 (1994). Thus contract law works to settle the rights of the contract�s two consenting parties, and tort protects the rights of unconsenting parties. Catharine Pierce Wells, Tort Law as Corrective Justice: A Pragmatic Justification for Jury Adjudication, 88 Mich. L. Rev. 2348, 2350, 2355 (1990).
This distinction is reflected in the differing nature of remedies available in tort as opposed to contract. Because contract law aims at enforcing the expectancy interests of the parties, contract remedies seek only to make the contracting parties �whole.� See Lon L. Fuller & William R. Perdue, Jr., The Reliance Interest in Contract Damages I, 46 Yale L.J. 52, 53-57 (1936). By contrast, tort remedies primarily compensate for harm done to the victim, and may also punish and deter wrongful conduct in the future; thus punitive damages are available. Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 515-16 (1994). As the California Supreme Court recently noted,
Some torts overlap the two legal universes. These can endanger the realm of personal autonomy protected by freedom of contract. Classically, contract law contains no precept of �fault,� and pursues the efficient allocation of resources, while tort law does precisely the opposite: it seeks to make certain acts costly enough that people will not do them. Harris v. Atlantic Richfield Co., 14 Cal. App. 4th at 77 (�The traditional goal of contract remedies is compensation of the promisee for the loss resulting from the breach, not compulsion of the promisor to perform his promises�). Imposing tort concepts of fault in private contracts endangers freedom to bargain and encourages economic inefficiency.
The threat to freedom of contract arises because tort concepts of fault give courts power to manipulate private agreements to reach policy outcomes the court considers preferable. As Judge Kozinski memorably put it, �[t]he right to enter into contracts...is too easily smothered by government officials eager to tell us what�s best for us. The recent tendency of judges to insinuate tort causes of action into relationships traditionally governed by contract is just such overreaching.� Oki America, Inc. v. Microtech Int�l, Inc., 872 F.2d 312, 316 (9th Cir. 1989). Applying tort rules in the realm of contract would allow judges to enforce their policy concerns in contracts, thus violating the principle of separation of powers. Cf. Moore v. Regents of the University of California, 51 Cal. 3d 120, 147 (1990); Rosen v. State Farm General Ins. Co., 30 Cal. 4th 1070, 1077 (2003). Indeed, �[i]f contracting parties were required pervasively to act reasonably [by tort law], every contract term would be up for grabs. Courts could ask whether the price was reasonable, whether the delivery date was reasonable, and so on.� Powers, supra, at 1217. But while tort law enforces certain social demands on individual behavior, contract law recognizes that, insofar as the performance is concerned, there is a realm of personal choice over which individuals should be free to set their own terms and undertake their own obligations, so long as they cause no harm to third parties. Id. at 1224-25.
Tort law imposes unchosen obligations; contract law allows for freedom of choice. Tort law enforces rules of fairness; contract allows parties to make hard-nosed bargains. Tort law apportions burdens from a socially advantageous perspective; contract law allows parties to bargain for an allocation of risk that they find acceptable. Tort is based on social policy; contract law is based enforcing agreements that private parties find advantageous. If any part of the government has the power to interfere with these private arrangements, it ought to be the Legislature, which has the constitutional authority of determining and enacting the state�s public policy. Dumas v. Cooney, 235 Cal. App. 3d 1593, 1611 (1991) (�Sweeping modifications of tort liability law fall more suitably within the domain of the Legislature, before which all affected interests can be heard and which can enact statutes providing uniform standards and guidelines for the future.� (quoting Rowland v. Christian, 69 Cal. 2d 108, 121 (1968)) (Burke, J., dissenting)); see also Menezes, 21 Cal. 4th at 553; Beck v. American Health Group International, Inc., 211 Cal. App. 3d 1555, 1566 (1989) (�Courts may not revise an agreement or create a contract not made by the parties under the guise of construction�). But where tort law intrudes into contract law, those policies can be set by courts rather than by legislatures. California courts have frequently noted the dangers of imposing social policy in private contractual arrangements through the medium of the courts. See, e.g., Rosen v. State Farm General Ins. Co., 30 Cal. 4th 1070, 1078 (2003) (�[W]e do not rewrite any provision of any contract, including the standard policy underlying any individual policy, for any purpose.�); Jensen v. Traders & General Ins. Co., 52 Cal. 2d 786, 794 (1959) (�[P]ublic policy is an unruly horse, astride of which you are carried into unknown and uncertain paths.... [P]ublic policy requires and encourages the making of contracts by competent parties upon all valid and lawful considerations, and courts so recognizing have allowed parties the widest latitude in this regard....� (quoting Stephens v. Southern Pacific Co., 109 Cal. 86, 89 (1895)).
Inefficiency concerns, too, arise from mixing the two theories, because tort remedies are not limited by the type of predictable rules found in contract law. In contract, damages are restricted to �protect the parties� freedom to bargain over special risks and [these restrictions] promote contract formation by limiting liability to the value of the promise.� Freeman & Mills, 11 Cal. 4th at 98 (quoting Harris, 14 Cal. App. 4th at 77). But judges and juries have vast discretion to impose punitive damages on tort defendants, making it much more difficult to predict and insure against tort claims than against contract claims. See David Hechler, Tenfold Rise in Punitives, National Law Journal, Feb. 3, 2003, at C3 (citing recent examples of extremely large punitive damage awards).
Allowing tort law to reach into the realm of contract is dangerous because it is sometimes difficult to determine what sort of conduct will give rise to tort liability. Much legitimate business practice entails hard bargaining and economic advantage which will seem unfair to those who fail to profit as much as others do, or who feel �taken advantage of.� By framing their (perhaps understandable) complaints about competitors� hard-nosed business tactics as torts, parties can use the law in ways which retard competition and benefit plaintiffs at the expense of the market and consumers. Cf. Gomez v. Acquistapace, 50 Cal. App. 4th 740, 746-47 (1996) (�fair economic competition...would be subverted by imposing liability where the defendant is nothing more than an aggressive business person�). The tort of interference with contract is a prime example: it is one of the most common forms of business litigation, even though many cases arise simply because parties find better deals elsewhere. See Gary D. Wexler, Intentional Interference with Contract: Market Efficiency and Individual Liberty Considerations, 27 Conn. L. Rev. 279, 280 (1994). The California Supreme Court has repeatedly acknowledged that �courts should be careful� when applying tort remedies in contract, because doing so can �discourage commerce.� Freeman & Mills, 11 Cal. 4th at 109 (Mosk, J., concurring in part); Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 1136-37 (1990)
Contracting parties must be able to predict their likely costs in future circumstances so that they can knowledgeably negotiate appropriate prices for goods and services. See Friedrich Hayek, The Constitution of Liberty 208-09 (1960). Parties must insure against uncertainty in some way, and if not through a purchased insurance policy, it will be �virtually insured� by a decrease in economic output and available goods. The indefinite nature of potential tort liability may therefore deter more than just wrongful conduct, which poses a serious harm to consumers. See Paul H. Rubin, et al., BMW v. Gore: Mitigating the Punitive Economics of Punitive Damages, 5 Sup. Ct. Econ. Rev. 179, 184-87 (1997) (describing danger of over-deterrence). As the Freeman & Mills Court noted, �imposing tort duties to deter intentionally harmful acts among contracting parties,� may �overdeter the illegitimate and as a result chill legitimate activities.� 11 Cal. 4th at 109. This can occur in at least two ways. First, the potential of increased liability may simply deter some from entering the market or expanding their current operations. Second, such liability may cause those already engaged in deals to over-invest in monitoring compliance with contracts.
If a party who has breached a contract is subjected to punitive liability for breach of contract, contracting parties will be unable to predict the costs and benefits of future contracts, or of future performance on existing contracts. See Moradi-Shalal v. Fireman�s Fund Ins. Companies, 46 Cal. 3d 287, 296 (1988); Sierra Club v. San Joaquin Local Agency Formation Comm�n, 21 Cal. 4th 489, 503-04 (1999) (among �major objectives of the legal system,� is ensuring �certainty, predictability and stability in the law�). Add to that the fact that liability in tort may be tens of times greater than the value of the contract itself, parties will be less likely to make contracts in the future, thus harming the economy of California. See Matthew J. Barrett, Note, �Contort�: Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing in Noninsurance, Commercial Contracts�Its Existence and Desirability, 60 Notre Dame L. Rev. 510, 526-27 (1985) (�When courts interject tort remedies into commercial contracts they frustrate the contracting parties� expectations because in most cases, the parties anticipate contract damages as the only remedy for purposeful breaches of contract�). The Fourth Circuit Court of Appeals recently reiterated that
Some have argued that punitive damages are necessary in contract law because expectancy damages fail to adequately compensate nonbreaching parties. See Mark Pennington, Punitive Damages for Breach of Contract: A Core Sample from the Decisions of the Last Ten Years, 42 Ark. L. Rev. 31, 35 (1989). But if this happens, the fault lies in a court�s mistaken calculation of compensatory damages. The solution is not to open the door to the greater mischief that can be wrought by allowing punitive damages in breach of contract cases. As even Pennington acknowledges, punitive damages for breach of contract will deter wrongful breaches, but �[a]t some point, punitive damages will deter desirable activity.� Id. at 100.
Allowing indefinitely large tort awards for breach of contract would lead to the problem some commentators describe as over-investing in monitoring compliance with contracts�that is, investing more than they would with an expectation of consequential damages in policing agreements, in hopes that the other party�s breach may result in a large punitive damage payoff. See Michael Dorff, Attaching Tort Claims to Contract Actions: An Economic Analysis of Contort, 28 Seton Hall L. Rev. 390, 405-06 (1997). Such investment is wasteful from a social perspective, but predictable in a regime where parties can use the courts to take disproportionate economic advantage of each other. Basic public-choice economics reveals that any government agency with the power to reward a party with $X worth of benefits will find itself subject to a competition between parties, who find it in their interest to spend up to $X to convince the agency to exercise that power in their favor. See James M. Buchanan & Gordon Tullock, The Calculus of Consent 286 (Ann Arbor Paperbacks 2001) (1962) (�[I]nterest-group activity, measured in terms of organizational costs, is a direct function of the �profits� expected from the political process by functional groups.�). If courts can grant disproportionately large punitive damages awards* to contracting firms, the firms will increasingly invest their energies in exploiting that process by bringing more lawsuits over ever more minor breaches. Such an �increased investment in organization aimed at securing differential gains...is a predictable result� of the mixture of tort and contract. Id. at 287; see also Anthony de Jasay, Justice and Its Surroundings 81 (2002) (noting that parties seeking economic gains will try to alter rules through legal interpretation �to let progressively narrower coalitions despoil ever larger minorities�).
In such a circumstance, the �tort tail� comes to wag the �contract dog.� Story v. City of Bozeman, 791 P.2d 767, 772 (Mont. 1990). This not only rewards firms for nonproductive behavior, and encourages waste; it also increases the burden on the courts. Pennington, supra, at 100 (�[T]he potential availability of punitive damages will lead to more complex litigation. A typical contract case is a good candidate for summary judgment or for a brief trial...[but] tort cases, especially those aimed at ascertaining the defendant�s state of mind, are frequently involved and burdensome.�). See also Mark Gergen, A Cautionary Tale About Contractual Good Faith in Texas, 72 Tex. L. Rev. 1235, 1236 (1994) (�Opening the door to tort claims in contract, with their lure of emotional and exemplary damages, creates a crush of claims as plaintiffs and their lawyers attempt to cash in.�); cf. PPG Industries, Inc. v. Transamerica Ins. Co., 20 Cal. 4th 310, 322 (1999) (opinion of Mosk, J.) (�[I]t is easy to allege oppressive, fraudulent, or malicious conduct. It may indeed be difficult to prove such conduct. But it is also difficult to predict with any confidence what any given trier of fact may find in the premises�). As the court of appeal has noted, allowing tort claims in the contract realm would mean that
Contract and tort ought to remain separate matters to prevent overdeterrence, encourage economic efficiency, and maintain the regularity and predictability that is vital to economic health.
*�The Fourteenth Amendment limits the discretion courts have in awarding punitive damages. State Farm Mut. Auto. Ins. Co. v. Campbell, 123 S. Ct. 1513 (2003). But such limits remain vague, and have not prevented the awarding of extremely large punitive damages awards. See TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 458 n.24 (1993) (�A violation of a state law �reasonableness� requirement would not, however, necessarily establish that the award is so �grossly excessive� as to violate the Federal Constitution.�); Robert A. Levy, The Conservative Split on Punitive Damages, in Cato Supreme Court Review 2002-2003 at 159, 164 (James L. Swanson ed., 2003) (�In the [past] seven years..., punitive awards have continued their upward spiral. The Court�s initial step was not enough�).
The distinction between tort and contract is a fundamental one. Tort law imposes duties of conduct based on a person�s participation in society, while contract law imposes duties of quality based on the parties� participation in a private agreement. See Robinson Helicopter Co. v. Dana Corp., 129 Cal. Rptr. 2d 682, 691 (2003) rev. granted 68 P.3d 344 (Cal. May 14, 2003). Tort law imposes basic standards of behavior on people living among one another, Lynch v. Warwick, 95 Cal. App. 4th 267, 273 (2002), while contract law recognizes agreements arising from a realm of personal autonomy and free choice. Naify v. Pacific Indem. Co., 11 Cal. 2d 5, 11 (1938). Tort is primarily concerned with maintaining minimum standards of conduct in society, contract is primarily concerned with ensuring that people can reach and rely on agreements between themselves. Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal. 4th 85, 94 (1995); William Powers, Jr., Border Wars, 72 Tex. L. Rev. 1209, 1210-11 (1994). Thus contract law works to settle the rights of the contract�s two consenting parties, and tort protects the rights of unconsenting parties. Catharine Pierce Wells, Tort Law as Corrective Justice: A Pragmatic Justification for Jury Adjudication, 88 Mich. L. Rev. 2348, 2350, 2355 (1990).
This distinction is reflected in the differing nature of remedies available in tort as opposed to contract. Because contract law aims at enforcing the expectancy interests of the parties, contract remedies seek only to make the contracting parties �whole.� See Lon L. Fuller & William R. Perdue, Jr., The Reliance Interest in Contract Damages I, 46 Yale L.J. 52, 53-57 (1936). By contrast, tort remedies primarily compensate for harm done to the victim, and may also punish and deter wrongful conduct in the future; thus punitive damages are available. Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 515-16 (1994). As the California Supreme Court recently noted,
the reasons for denying tort recovery in contract breach cases [include]: the different objectives underlying tort and contract breach; the importance of predictability in assuring commercial stability in contractual dealings; the potential for converting every contract breach into a tort, with accompanying punitive damage recovery, and the preference for legislative action in affording appropriate remedies.... Restrictions on contract remedies serve to protect the � �freedom to bargain over special risks and [to] promote contract formation by limiting liability to the value of the promise.� �Erlich v. Menezes, 21 Cal. 4th 543, 553 (1999) (citations omitted).
Some torts overlap the two legal universes. These can endanger the realm of personal autonomy protected by freedom of contract. Classically, contract law contains no precept of �fault,� and pursues the efficient allocation of resources, while tort law does precisely the opposite: it seeks to make certain acts costly enough that people will not do them. Harris v. Atlantic Richfield Co., 14 Cal. App. 4th at 77 (�The traditional goal of contract remedies is compensation of the promisee for the loss resulting from the breach, not compulsion of the promisor to perform his promises�). Imposing tort concepts of fault in private contracts endangers freedom to bargain and encourages economic inefficiency.
The threat to freedom of contract arises because tort concepts of fault give courts power to manipulate private agreements to reach policy outcomes the court considers preferable. As Judge Kozinski memorably put it, �[t]he right to enter into contracts...is too easily smothered by government officials eager to tell us what�s best for us. The recent tendency of judges to insinuate tort causes of action into relationships traditionally governed by contract is just such overreaching.� Oki America, Inc. v. Microtech Int�l, Inc., 872 F.2d 312, 316 (9th Cir. 1989). Applying tort rules in the realm of contract would allow judges to enforce their policy concerns in contracts, thus violating the principle of separation of powers. Cf. Moore v. Regents of the University of California, 51 Cal. 3d 120, 147 (1990); Rosen v. State Farm General Ins. Co., 30 Cal. 4th 1070, 1077 (2003). Indeed, �[i]f contracting parties were required pervasively to act reasonably [by tort law], every contract term would be up for grabs. Courts could ask whether the price was reasonable, whether the delivery date was reasonable, and so on.� Powers, supra, at 1217. But while tort law enforces certain social demands on individual behavior, contract law recognizes that, insofar as the performance is concerned, there is a realm of personal choice over which individuals should be free to set their own terms and undertake their own obligations, so long as they cause no harm to third parties. Id. at 1224-25.
Tort law imposes unchosen obligations; contract law allows for freedom of choice. Tort law enforces rules of fairness; contract allows parties to make hard-nosed bargains. Tort law apportions burdens from a socially advantageous perspective; contract law allows parties to bargain for an allocation of risk that they find acceptable. Tort is based on social policy; contract law is based enforcing agreements that private parties find advantageous. If any part of the government has the power to interfere with these private arrangements, it ought to be the Legislature, which has the constitutional authority of determining and enacting the state�s public policy. Dumas v. Cooney, 235 Cal. App. 3d 1593, 1611 (1991) (�Sweeping modifications of tort liability law fall more suitably within the domain of the Legislature, before which all affected interests can be heard and which can enact statutes providing uniform standards and guidelines for the future.� (quoting Rowland v. Christian, 69 Cal. 2d 108, 121 (1968)) (Burke, J., dissenting)); see also Menezes, 21 Cal. 4th at 553; Beck v. American Health Group International, Inc., 211 Cal. App. 3d 1555, 1566 (1989) (�Courts may not revise an agreement or create a contract not made by the parties under the guise of construction�). But where tort law intrudes into contract law, those policies can be set by courts rather than by legislatures. California courts have frequently noted the dangers of imposing social policy in private contractual arrangements through the medium of the courts. See, e.g., Rosen v. State Farm General Ins. Co., 30 Cal. 4th 1070, 1078 (2003) (�[W]e do not rewrite any provision of any contract, including the standard policy underlying any individual policy, for any purpose.�); Jensen v. Traders & General Ins. Co., 52 Cal. 2d 786, 794 (1959) (�[P]ublic policy is an unruly horse, astride of which you are carried into unknown and uncertain paths.... [P]ublic policy requires and encourages the making of contracts by competent parties upon all valid and lawful considerations, and courts so recognizing have allowed parties the widest latitude in this regard....� (quoting Stephens v. Southern Pacific Co., 109 Cal. 86, 89 (1895)).
Inefficiency concerns, too, arise from mixing the two theories, because tort remedies are not limited by the type of predictable rules found in contract law. In contract, damages are restricted to �protect the parties� freedom to bargain over special risks and [these restrictions] promote contract formation by limiting liability to the value of the promise.� Freeman & Mills, 11 Cal. 4th at 98 (quoting Harris, 14 Cal. App. 4th at 77). But judges and juries have vast discretion to impose punitive damages on tort defendants, making it much more difficult to predict and insure against tort claims than against contract claims. See David Hechler, Tenfold Rise in Punitives, National Law Journal, Feb. 3, 2003, at C3 (citing recent examples of extremely large punitive damage awards).
Allowing tort law to reach into the realm of contract is dangerous because it is sometimes difficult to determine what sort of conduct will give rise to tort liability. Much legitimate business practice entails hard bargaining and economic advantage which will seem unfair to those who fail to profit as much as others do, or who feel �taken advantage of.� By framing their (perhaps understandable) complaints about competitors� hard-nosed business tactics as torts, parties can use the law in ways which retard competition and benefit plaintiffs at the expense of the market and consumers. Cf. Gomez v. Acquistapace, 50 Cal. App. 4th 740, 746-47 (1996) (�fair economic competition...would be subverted by imposing liability where the defendant is nothing more than an aggressive business person�). The tort of interference with contract is a prime example: it is one of the most common forms of business litigation, even though many cases arise simply because parties find better deals elsewhere. See Gary D. Wexler, Intentional Interference with Contract: Market Efficiency and Individual Liberty Considerations, 27 Conn. L. Rev. 279, 280 (1994). The California Supreme Court has repeatedly acknowledged that �courts should be careful� when applying tort remedies in contract, because doing so can �discourage commerce.� Freeman & Mills, 11 Cal. 4th at 109 (Mosk, J., concurring in part); Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 1136-37 (1990)
Contracting parties must be able to predict their likely costs in future circumstances so that they can knowledgeably negotiate appropriate prices for goods and services. See Friedrich Hayek, The Constitution of Liberty 208-09 (1960). Parties must insure against uncertainty in some way, and if not through a purchased insurance policy, it will be �virtually insured� by a decrease in economic output and available goods. The indefinite nature of potential tort liability may therefore deter more than just wrongful conduct, which poses a serious harm to consumers. See Paul H. Rubin, et al., BMW v. Gore: Mitigating the Punitive Economics of Punitive Damages, 5 Sup. Ct. Econ. Rev. 179, 184-87 (1997) (describing danger of over-deterrence). As the Freeman & Mills Court noted, �imposing tort duties to deter intentionally harmful acts among contracting parties,� may �overdeter the illegitimate and as a result chill legitimate activities.� 11 Cal. 4th at 109. This can occur in at least two ways. First, the potential of increased liability may simply deter some from entering the market or expanding their current operations. Second, such liability may cause those already engaged in deals to over-invest in monitoring compliance with contracts.
If a party who has breached a contract is subjected to punitive liability for breach of contract, contracting parties will be unable to predict the costs and benefits of future contracts, or of future performance on existing contracts. See Moradi-Shalal v. Fireman�s Fund Ins. Companies, 46 Cal. 3d 287, 296 (1988); Sierra Club v. San Joaquin Local Agency Formation Comm�n, 21 Cal. 4th 489, 503-04 (1999) (among �major objectives of the legal system,� is ensuring �certainty, predictability and stability in the law�). Add to that the fact that liability in tort may be tens of times greater than the value of the contract itself, parties will be less likely to make contracts in the future, thus harming the economy of California. See Matthew J. Barrett, Note, �Contort�: Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing in Noninsurance, Commercial Contracts�Its Existence and Desirability, 60 Notre Dame L. Rev. 510, 526-27 (1985) (�When courts interject tort remedies into commercial contracts they frustrate the contracting parties� expectations because in most cases, the parties anticipate contract damages as the only remedy for purposeful breaches of contract�). The Fourth Circuit Court of Appeals recently reiterated that
[c]ontract law is simply more restrictive than tort law in awarding damages...[because] tort and contract law serve different goals. Tort law emerges from duties individuals owe generally to other members of society; it is fault based and seeks both to compensate the victim and punish the wrongdoer. Accordingly, punitive awards may be appropriate where the requisite standards of culpability under state law have been met. Contract law, by contrast, arises out of the attempt by private individuals to order relationships among themselves. When such relationships collapse, the law has long recognized that compensating the individual only for actual loss will suffice.... Parties contract partly to minimize their future risks. Importing tort law principles of punishment into contract undermines their ability to do so. Punitive damages, because they depend heavily on an individual jury�s perception of the degree of fault involved, are necessarily uncertain. Their availability would turn every potential contractual relationship into a riskier proposition.Strum v. Exxon Co., U.S.A., 15 F.3d 327, 330 (4th Cir. 1994).
Some have argued that punitive damages are necessary in contract law because expectancy damages fail to adequately compensate nonbreaching parties. See Mark Pennington, Punitive Damages for Breach of Contract: A Core Sample from the Decisions of the Last Ten Years, 42 Ark. L. Rev. 31, 35 (1989). But if this happens, the fault lies in a court�s mistaken calculation of compensatory damages. The solution is not to open the door to the greater mischief that can be wrought by allowing punitive damages in breach of contract cases. As even Pennington acknowledges, punitive damages for breach of contract will deter wrongful breaches, but �[a]t some point, punitive damages will deter desirable activity.� Id. at 100.
Allowing indefinitely large tort awards for breach of contract would lead to the problem some commentators describe as over-investing in monitoring compliance with contracts�that is, investing more than they would with an expectation of consequential damages in policing agreements, in hopes that the other party�s breach may result in a large punitive damage payoff. See Michael Dorff, Attaching Tort Claims to Contract Actions: An Economic Analysis of Contort, 28 Seton Hall L. Rev. 390, 405-06 (1997). Such investment is wasteful from a social perspective, but predictable in a regime where parties can use the courts to take disproportionate economic advantage of each other. Basic public-choice economics reveals that any government agency with the power to reward a party with $X worth of benefits will find itself subject to a competition between parties, who find it in their interest to spend up to $X to convince the agency to exercise that power in their favor. See James M. Buchanan & Gordon Tullock, The Calculus of Consent 286 (Ann Arbor Paperbacks 2001) (1962) (�[I]nterest-group activity, measured in terms of organizational costs, is a direct function of the �profits� expected from the political process by functional groups.�). If courts can grant disproportionately large punitive damages awards* to contracting firms, the firms will increasingly invest their energies in exploiting that process by bringing more lawsuits over ever more minor breaches. Such an �increased investment in organization aimed at securing differential gains...is a predictable result� of the mixture of tort and contract. Id. at 287; see also Anthony de Jasay, Justice and Its Surroundings 81 (2002) (noting that parties seeking economic gains will try to alter rules through legal interpretation �to let progressively narrower coalitions despoil ever larger minorities�).
In such a circumstance, the �tort tail� comes to wag the �contract dog.� Story v. City of Bozeman, 791 P.2d 767, 772 (Mont. 1990). This not only rewards firms for nonproductive behavior, and encourages waste; it also increases the burden on the courts. Pennington, supra, at 100 (�[T]he potential availability of punitive damages will lead to more complex litigation. A typical contract case is a good candidate for summary judgment or for a brief trial...[but] tort cases, especially those aimed at ascertaining the defendant�s state of mind, are frequently involved and burdensome.�). See also Mark Gergen, A Cautionary Tale About Contractual Good Faith in Texas, 72 Tex. L. Rev. 1235, 1236 (1994) (�Opening the door to tort claims in contract, with their lure of emotional and exemplary damages, creates a crush of claims as plaintiffs and their lawyers attempt to cash in.�); cf. PPG Industries, Inc. v. Transamerica Ins. Co., 20 Cal. 4th 310, 322 (1999) (opinion of Mosk, J.) (�[I]t is easy to allege oppressive, fraudulent, or malicious conduct. It may indeed be difficult to prove such conduct. But it is also difficult to predict with any confidence what any given trier of fact may find in the premises�). As the court of appeal has noted, allowing tort claims in the contract realm would mean that
any party attempting to defend a disputed contract claim would risk, at the very least, exposure to the imposition of tort damages and an expensive and time-consuming expansion of the litigation into an inquiry as to the motives and state of mind of the breaching party. The distinction between tort and contract actions, and their purposefully different measures of damages, would be blurred if not erased. The insult to commercial predictability and certainty would only be exceeded by the increased burden on an already overworked judicial system.Dubarry Int�l, Inc. v. Southwest Forest Industries, Inc., 231 Cal. App. 3d 552, 569 (1991). �Because of the numerous uncertainties involved in contract litigation, the strong public policy of permitting free access to the courts may require an allowance of more freedom of action among contracting parties than in noncontractual relationships.� Quigley v. Pet, Inc., 162 Cal. App. 3d 877, 892 (1984).
Contract and tort ought to remain separate matters to prevent overdeterrence, encourage economic efficiency, and maintain the regularity and predictability that is vital to economic health.
*�The Fourteenth Amendment limits the discretion courts have in awarding punitive damages. State Farm Mut. Auto. Ins. Co. v. Campbell, 123 S. Ct. 1513 (2003). But such limits remain vague, and have not prevented the awarding of extremely large punitive damages awards. See TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 458 n.24 (1993) (�A violation of a state law �reasonableness� requirement would not, however, necessarily establish that the award is so �grossly excessive� as to violate the Federal Constitution.�); Robert A. Levy, The Conservative Split on Punitive Damages, in Cato Supreme Court Review 2002-2003 at 159, 164 (James L. Swanson ed., 2003) (�In the [past] seven years..., punitive awards have continued their upward spiral. The Court�s initial step was not enough�).
Corporate responsibility: Tyler Cowen has some comments relevant to my rant on corporations supporting communism.
Sunday, November 09, 2003
Looks like an interesting blog: Life in Armenia. I tell you, the blogosphere is an amazing place.
Cold War anniversary: As users of AOL were reminded today, this is the anniversary of the fall of the Berlin Wall.
Disclaimers: Sweet Sarah Hempel writes that �The views expressed on Freespace are not necessarily those of this blog nor Sarah Hempel.� Yeah, I�ll say. Sarah is a fine artist and a gorgeous woman and a delightful personality�and, to paraphrase Ben Franklin�s description of John Adams, always an honest woman, often a wise one, but sometimes and in some things, absolutely out of her senses.
Taxicabs: Yet another story on legal harassment of taxi drivers. Most major metropolitan areas of the nation have extensive regulations governing taxi drivers. Gotta maintain discipline.
The Drug Raid: Glenn Reynolds is posting about the drug raid at the high school in South Carolina. He links to a writer who describes the principal as obsessed with �maintaining discipline.� Are you surprised? Of all human impulses, the very worst is the obsession with �maintaining discipline.� Remember the Stanley Milgram and Stanford Prison experiments? Absolute power corrupts absolutely, whether it be the dictator of Cambodia or the principal of a high school.
Update: I was talking to my mother on the phone about this incident�she works for a public school in Southern California. �Yes,� she said. �I heard about it. I was talking to one of the teachers about it, and he said �Well, if those kids had just got on the floor like they were told to, the police wouldn�t have had to draw their guns.��
Like I said, schools to be proud of.
Update: I was talking to my mother on the phone about this incident�she works for a public school in Southern California. �Yes,� she said. �I heard about it. I was talking to one of the teachers about it, and he said �Well, if those kids had just got on the floor like they were told to, the police wouldn�t have had to draw their guns.��
Like I said, schools to be proud of.
