Friday, June 26, 2015

Versteeg on the Politics of Takings Clauses

Versteeg_130Mila Versteeg (UVa) has posted The Politics of Takings Clauses (Northwestern Law Review) on SSRN.  Here's the abstract:

A long-standing consensus exists that the arbitrary or excessive expropriation of private property by a country hurts its economic growth. Constitutions can potentially play an important role in protecting private property from arbitrary or excessive expropriation by offering a range of mechanisms that make it more difficult for governments to renege on the constitutions’ promises. Despite their potential importance, remarkably little is known about how constitutions actually restrict the power of eminent domain and whether such restrictions are associated with reduced de facto expropriation risks. This Essay fills that gap by presenting original data on the procedural and substantive protections in constitutional takings clauses from 1946 to 2013. Its main finding is that no observable relationship exists between de jure constitutional restrictions on the power of eminent domain and de facto expropriation risks.

This Essay explores two possible explanations for why constitutional restrictions on the power of eminent domain fail to make a difference in practice. The first is that countries adopt disingenuous promises to bolster their international reputation or to attract foreign aid. The second explanation holds that, although takings clauses have the potential to make society as a whole better off, under some circumstances the benefits of secure property rights fall disproportionally upon economic elites, and a majority of citizens benefit more from expropriation than from increased economic growth. As a result of this dynamic, disagreements over the desired level of expropriation might be built into the constitution’s design.

This Essay finds empirical support for the second explanation. Specifically, it finds that real-world constitutional property regimes are often riddled with ambiguities. That is, constitutions often include strong procedural and substantive restrictions on the power of eminent domain but also include “fine print” that can undermine those restrictions, such as provisions that offer a narrow definition of private property, policies that contemplate land reform, provisions that restrict the property rights of foreigners, and clauses that make private property subordinate to the common good. What is more, this Essay finds that when accounting for such fine print, constitutional restrictions on the power of eminent domain do appear to be correlated with reduced expropriation risks. This finding suggests that the effectiveness of takings clauses might depend to a large extent on the politics surrounding their adoption.

https://lawprofessors.typepad.com/property/2015/06/versteeg-on-the-politics-of-takings-clauses.html

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