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Property Rights Cases are Not "Pro-Business" vs. "Anti-Business" Cases:

One of my longstanding peeves is that property rights and economic regulation cases are often depicted as pitting "pro-business" interests against an "anti-business" or pro-consumer camp. Rarely does this frame accurately reflect the real issues at stake.

This recent New York Times article discussing Sonia Sotomayor's rulings in property rights and regulatory cases is just one of many examples of this fallacy. The article analyzes the decisions from the standpoint of trying to determine whether she falls into "a pro- or anti-business camp." In the process, author John Schwartz cites Sotomayor's ruling against property rights in the Didden case as an example of an anti-business ruling, while claiming that her pro-property rights decision in Krimstock v. Kelly cuts the other way.

The pro-business vs. anti-business approach to these cases makes little sense. In Didden, there were business interests on both sides. As I explained in this post, one businessman - politically connected developer Gregory Wasser - used the the threat of condemnation to try to force two other businessmen to pay him $800,000 or give him a 50% stake in their business. When they refused, the local government used the power of eminent domain to transfer their land to Wasser, as the latter demanded. Judge Sotomayor and her Second Circuit panel ruled that this taking was for a permissible "public use" under the Takings Clause of the Fifth Amendment. Since business interests were arrayed on both sides, describing the decision as "pro-business" or "anti-business" is misleading. Rather, the decision involved a clash between property rights and the power of government, which is sometimes exercised on behalf of locally powerful business interests such as Wasser against politically weaker landowners (some of whom are businesses themselves).

The pro-business vs. anti-business frame is even less relevant to Krimstock than Didden. Sotomayor's opinion in Krimstock struck down a New York City law that allowed the government to seize cars belonging to certain criminal defendants and hold them for years at a time without giving the owners any opportunity whatsoever to contest the seizures. I don't see any way in which Sotomayor's decision was somehow "pro-business," except in the trivial sense that some of the car owners might also have been businesspeople. Rather, this case too pitted the power of government against property owners, many of whom might have been poor or politically weak.

More generally, court decisions protecting property rights against government should not be viewed as "pro-business" because the Didden pattern of local government using eminent domain to benefit politically influential business interests is actually quite common. One of the most notorious examples is the 1981 Poletown case, where the City of Detroit used eminent domain to expel some 4000 people from their homes so that the land could be transferred to General Motors. The Supreme Court's famous decision in Kelo v. City of New London is another example, since those condemnations were in large part instigated by the powerful Pfizer Corporation, which expected to derive profit from them. For reasons I discuss in this article, eminent domain is often used to transfer to take the property of the politically weak for the benefit of the powerful (often including influential businesses).

But it would also be a mistake to view pro-property rights decisions as "anti-business." After all, many of the victimized property owners are themselves businesspeople, as was true in Didden, Poletown, Kelo, and many other cases. Small businesses are among the most common targets of Kelo-style "economic development" takings.

What is true for property rights cases is also true for many regulatory decisions, which also often pit different business interests against each other rather than an undifferentiated business class interest against other sectors of society.

I do not mean to be too critical of theTimes piece. To the contrary, I think Schwartz should be commended for making a genuine effort to consult experts from across the political spectrum; and of course I'm grateful that he cited the writings of two Volokh Conspirators, including myself. I also think he did a generally good job of summarizing a large number of cases in a short space. Unfortunately, the article exemplifies the ways in which even a skilled and fair reporter can fall into the error of using this misleading framework for analyzing property rights decisions.

UPDATE: I would like to briefly note two other minor, but unfortunate errors in the Times article. First, the article describes Richard Epstein, perhaps the leading libertarian legal scholar in the country, as a "conservative." Confusing libertarians with conservatives is a common mistake, but still a significant one, especially in an era of Bush-style "big government" conservatism when libertarians and many conservatives often diverge on the kinds of economic issues the article focuses on. Second, the author writes that Sotomayor's Didden ruling "followed" the Supreme Court's decision in Kelo. This is true to an extent, but it ignores the fact that Didden went even farther than Kelo in undermining property rights by allowing government to condemn property even in a situation where the stated rationale for the taking was a blatant "pretext" for the true purpose of benefiting a private party, a scenario the Kelo majority described as unconstitutional. It is possible, however, that Schwartz merely meant to say that Didden "followed" Kelo in the sense that it came later chronologically.

Cornellian (mail):
One of my longstanding peeves is that property rights and economic regulation cases are often depicted as pitting "pro-business" interests against an "anti-business" or pro-consumer camp. Rarely does this frame accurately reflect the real issues at stake.

That's hardly restricted to property rights cases. One of my pet peeves about the media reporting of Supreme Court cases is that nearly every case is reduced to a one line description of either pro-X or anti-X.
5.30.2009 1:07am
Frater Plotter:
This is a hugely important point.

The Bush administration were often described as "pro-business" for supporting their friends' businesses with no-bid contracts. But that's "anti-" any business that isn't run by a Bush crony ... and it's anti-efficiency and anti-market.

Similarly for weakening environmental and health protections. Doing so does nothing for a responsible business; it only helps irresponsible businesses that want to dump crap in the air you breathe, and mistreat their workers. And because being irresponsible is cheaper in the short run, this helps drive responsible competitors out of business.

Those policies aren't "pro-business". They are "pro-bad-business". Really, they are pro-corruption, pro-crime, anti-competition, and anti-responsibility.
5.30.2009 1:21am
secade (mail):
Let's list some framework terminology for the issues raised above:

public-private (business)

person-private

inter-public

inter-private

In general, a Liberal-Democratic constitutional order conduces inherent liberty, except where constraints are necessary to conduce that liberty. That system functions best where politicians are slaves to the Law of Trust: an agent will do everything to the benefit of the Principal (public), and nothing to their detriment. Adherence dictates that Mala Fides engages where other interests are served, for THEIR exclusive benefit.

Breach of Trust is rarely applied in defense of Principals (the general public in criminal issues; persons and private interests in civil matters), because police - most of whom receive less than 8 weeks in training in the elements of law - tend to treat conduct in the breach, as a matter of civil import. Frankly, police parrot "that is a civil matter," without taking legal counsel. That declaration is a rubber stamp for brazen work refusal.

Applying democratic principles, a successful election platform that favors steam-rolling development - in face of, perhaps, environmental or land-use (the classic pioneer who refuses to sell property, etc) detriments - strains reasonable constraint, especially where a State or Federal jurisdiction overlaps. In the late seventies, EJ Mishan - and others - scoped out complex "Cost-Benefit" analytical structures to resolve these conflicts of interest. Current Administrative Law should revive that approach.

Also, I want to close a can of worms that is already open here. Social Conservativism, Liberalism and Libertarianism are not ideologies; they are adjunctive-variants of the ideology of Liberal Democracy. And Liberty is a state where constraint conduces exercise of freedoms, while Tyranny is a state where constraint obstructs exercise of freedoms. Conservatives, Liberals and Libertarians all endorse the former; Communists, Fascists, Religious Statists, etc all promote the latter.
5.30.2009 1:30am
Oren:

Second, the author writes that Sotomayor's Didden decision "followed" the Supreme Court's decision in Kelo. This is true to an extent, but it ignores the fact that Didden went even farther than Kelo in undermining property rights by allowing government to condemn property even in a situation where the stated rationale for the taking was a blatant "pretext" for the true purpose of benefiting a private party, a scenario the Kelo majority described as unconstitutional. It is possible, however, that Schwartz merely meant to say that Didden "followed" Kelo in the sense that it came later chronologically.

As I recall, the Kelo majority stated the pretext rule but also was very clear that the Courts were to take a deferential view towards the stated goals. Stevens writers over and over about deference to the legislature when it comes to the choice of what is to be condemned.

The 2CA would have to come up with serious linguistic gymnastics in order justify evaluating the Didden condemnation at the level of skepticism that you want due to your wholesale rejection of Kelo. That's fine for an academic, but a lower court judge does not have that kind of freedom.
5.30.2009 1:46am
Mahan Atma (mail):
"Confusing libertarians with conservatives is a common mistake..."


Odd, that.

Of course, ask the self-described "libertarians" who they voted for in the last presidential election, and 95% (if they're honest) will have to admit it was a Republican.
5.30.2009 3:16am
Ilya Somin:
Of course, ask the self-described "libertarians" who they voted for in the last presidential election, and 95% (if they're honest) will have to admit it was a Republican.

This is simply false. If you look at libertarians in the general population, a study by the Cato Institute showed that 38% voted for John Kerry in 2004. I don't know of a similar study for 2008, but I would bet Obama got a higher percentage because the Republicans were generally much less popular that year. If you look at prominent libertarian intellectuals, a great many of them endorsed Obama - more than endorsed McCain. I myself thought that McCain was the lesser of the two evils, but that was more a negative judgement on the Democrats and a vote for divided government, than an indication of any great love for the Republicans.
5.30.2009 3:48am
Ilya Somin:
As I recall, the Kelo majority stated the pretext rule but also was very clear that the Courts were to take a deferential view towards the stated goals. Stevens writers over and over about deference to the legislature when it comes to the choice of what is to be condemned.

The majority said that courts are to take a highly deferential approach on the question of whether the stated goals will actually be achieved by the taking and on the type of stated goals that are permissible. But they did not say that such deference applied to the question of whether the stated goals are basically fraudulent pretexts for a benefit to a private party. In any event, if any taking is pretextual under Kelo, it would surely be one like that in Didden, where the property would never have been condemned at all if not for the refusal of the owner to fork over money to another private party. If that isn't a pretextual taking forbidden by Kelo, I don't see what is.
5.30.2009 3:51am
wm13:
Any libertarians who looked at the voting breakdown in Kelo and then voted for a Democratic presidential candidate clearly don't care much about property rights. In fact, large numbers of libertarians are "sex and drugs" libertarians, who mostly care about legalizing prostitution and marijuana and don't find governmental interference with property rights particularly troubling. (Blogospheric examples would be Megan McArdle and Dan Drezner.)

In contrast, other libertarians are very concerned about property rights and reducing governmental interference with private economic activity. It makes perfect sense to refer to this latter group, which includes Richard Epstein, as "conservatives."
5.30.2009 8:40am
Gabriel McCall (mail):
other libertarians are very concerned about property rights and reducing governmental interference with private economic activity. It makes perfect sense to refer to this latter group, which includes Richard Epstein, as "conservatives."

The traditional/stereotypical breakdown of American politics has the "conservatives" who favor economic freedom and social control, and the "liberals" who favor social freedom and economic control. Saying that libertarians are conservative because they favor economic freedom misses half of the picture: you can just as accurately say that they are liberal because they favor social freedom.

The reality, of course, is that both modern liberalism and modern conservatism favor economic AND social control; they just disagree about what to do with that control.
5.30.2009 9:57am
Malvolio:
In fact, large numbers of libertarians are "sex and drugs" libertarians, who mostly care about legalizing prostitution and marijuana and don't find governmental interference with property rights particularly troubling.
That's true, and I don't understand it.

As a practical matter, prostitution and drugs are legal in the US. The laws against them affect the average customer only very slightly. They can obtain whatever they need with little fear of arrest and if arrested, they will be slapped on the wrist. On top of that, the average person doesn't actually wish to consume most currently illegal goods and services even if they were legal.

By comparison, the average person is probably losing 30-40% of his income to property infringement by various governmental entities.

Moreover, conservative politicians claim to be working towards libertarian ends -- reducing taxes, removing regulation, shrinking government generally. Very few liberal candidates promise to end the drug war, legalize prostitution, or certainly not, loosen gun regulation (which mysteriously has become a conservative issue). Instead they trumpet how they will further constrain economic freedom.

The only excuse for a libertarian to vote for Kerry in 2004 was the hope that Kerry was lying in his promises to make things worse coupled with the realization that Bush was lying in his promises to make things better.
5.30.2009 10:14am
Cornellian (mail):
Moreover, conservative politicians claim to be working towards libertarian ends -- reducing taxes, removing regulation, shrinking government generally. Very few liberal candidates promise to end the drug war, legalize prostitution, or certainly not, loosen gun regulation (which mysteriously has become a conservative issue). Instead they trumpet how they will further constrain economic freedom.

One might read that description and come to the conclusion that at least the liberal politicians are honest about their intentions.
5.30.2009 10:31am
DSM:
"The reality, of course, is that both modern liberalism and modern conservatism favor economic AND social control; they just disagree about what to do with that control."

This is completely true. Of course, it's also true of modern libertarianism, which has its own set of preferred economic and social controls. They may differ in scope (so that it's probably easier to commit a criminal act in a conservative or liberal society), but they exist all the same, and it seems to me the fundamental questions relate to how conservatives, liberals, and libertarians choose these controls. Pretending that libertarianism somehow escapes these issues simply muddies the waters, and encourages the unfortunate tendency we all have to assume that anything which isn't easily handled by our own model (in the case of libertarianism, reducing everything to a property rights dispute) is somehow a pseudoproblem.
5.30.2009 10:32am
Cornellian (mail):

The only excuse for a libertarian to vote for Kerry in 2004 was the hope that Kerry was lying in his promises to make things worse coupled with the realization that Bush was lying in his promises to make things better.


There is nothing that prevents a libertarian from placing a higher priority on, for example, resisting an executive power of arbitrary and indefinite detention over a difference in the income tax rate.
5.30.2009 10:36am
ShelbyC:

Of course, ask the self-described "libertarians" who they voted for in the last presidential election, and 95% (if they're honest) will have to admit it was a Republican.


Hell, the Repubs keep making me question whether or not they are really the "party of fiscal responsibility", but then the Dems come along and keep knocking me back to my senses.
5.30.2009 11:05am
Oren:

The majority said that courts are to take a highly deferential approach on the question of whether the stated goals will actually be achieved by the taking and on the type of stated goals that are permissible. But they did not say that such deference applied to the question of whether the stated goals are basically fraudulent pretexts for a benefit to a private party.

I'm going to side with J. Thomas's dissent and describe the Kelo majority as "affording almost insurmountable deference to legislative conclusions that a use serves a "public use."". Many accuse him of being hyperbolic, but in this instance I think he nails it.

If Kennedy had written the opinion, you'd probably be right. Instead, his concurrence tries to limit the opinion of the court -- a practice that I find quit unsavory in its own right.
5.30.2009 11:09am
jackson macintosh (mail):
i've heard richard epstein refer to himself as a conservative...
5.30.2009 12:26pm
BenFranklin (mail):
The reason reporters frame everything in a pro/anti business framework is that they are trained as Marxists and this is how they view the world. Is it conceivable the typical reporter in this day and age could look at it in any other way? Would they ever have been hired and retained if their views were otherwise?
5.30.2009 12:33pm
John T. (mail):
If Kennedy had written the opinion, you'd probably be right. Instead, his concurrence tries to limit the opinion of the court -- a practice that I find quit unsavory in its own right.


Unsavory? What do you think should happen in cases where the court splits akin to 4-1-4, with the 1 willing to concur in judgment but would limit the opinion of the 4 whose judgment he concurs with? Remember that the Court did not have a majority without Kennedy.

I suppose you're arguing that Kennedy should not have joined the majority opinion at all, only concurring in judgment and writing his separate opinion?
5.30.2009 1:45pm
Malvolio:
There is nothing that prevents a libertarian from placing a higher priority on, for example, resisting an executive power of arbitrary and indefinite detention over a difference in the income tax rate.
Nothing at all, but in no US recent election have the two candidate had substantially (as opposed to rhetorically) different positions on the first issue.
5.30.2009 2:37pm
Oren:


Unsavory? What do you think should happen in cases where the court splits akin to 4-1-4, with the 1 willing to concur in judgment but would limit the opinion of the 4 whose judgment he concurs with?

I think if the Court is split, they should adopt the narrowest possible reading that satisfies 5 Justices.


I suppose you're arguing that Kennedy should not have joined the majority opinion at all, only concurring in judgment and writing his separate opinion?


Yes, absolutely. That way, his (much narrower) opinion would be controlling and Ilya could quote things like:

A court confronted with a plausible accusation of impermissible favoritism to private parties should treat the objection as a serious one and review the record to see if it has merit, though with the presumption that the government's actions were reasonable and intended to serve a public purpose. ( AMK, concurring)


To bring it back to the topic, if that were the binding opinion, Sotomayor's opinion in Didden would be absolutely untenable since she did not treat the accusations of favoritism seriously. It's not the binding opinion, however, and I find no justification in the Opinion of the Court for the kind of searching analysis Ilya wants her to perform.

[Aside, as a matter of policy, I'd hope Sotomayor would reject Kelo wholesale. That is not the job of the inferior courts.]
5.30.2009 2:51pm
Floridan:
BenF: "The reason reporters frame everything in a pro/anti business framework is that they are trained as Marxists . . ."

I dare say that if you were to gather together a random sampling of reporters from major American newspapers and quizzed them on the basic tenets of Marxism, the answers would no be much different than found on an episode of "Jaywalking."

The majority of reporters may tend to be liberal, sympathetic to the underdog and even intellectually lazy, but no real Marxist would recognize them as such.
5.30.2009 3:36pm
Cornellian (mail):
There is nothing that prevents a libertarian from placing a higher priority on, for example, resisting an executive power of arbitrary and indefinite detention over a difference in the income tax rate.

Nothing at all, but in no US recent election have the two candidate had substantially (as opposed to rhetorically) different positions on the first issue.


You might well say the same about the issue of fiscal prudence. Anyway, if you think the incumbent is doing a bad job on your issue and you think the challenger might do a better job, it's reasonable to vote for the challenger even while recognizing that's he's probably not going to be as starkly different from his predecessor as his election campaign rhetoric would suggest. That applies to pretty much every election.
5.30.2009 5:20pm
Deanna Troi (mail):
I don't see much empathy in that decision.
5.30.2009 8:50pm
Jagdar (mail):
I thought a Libertarian was a Republican who wanted to smoke dope and get laid.
5.31.2009 1:26am
Ben Franklin (mail):


I dare say that if you were to gather together a random sampling of reporters from major American newspapers and quizzed them on the basic tenets of Marxism, the answers would no be much different than found on an episode of "Jaywalking."

The majority of reporters may tend to be liberal, sympathetic to the underdog and even intellectually lazy, but no real Marxist would recognize them as such.


Let's say I agree with this for the sake of argument. How many of their teachers were Marxists? How many of their classes taught them to see things in terms of class struggle? How were they graded? How is modern liberalism any different than Marxism when we are about to nationalize 25% of the economy and tightly control the rest?

BTW, never heard of "Jaywalking" I will have to look it up.
5.31.2009 1:36am
George Andersen (mail):
All good points in this posting. "Didden" (quotes because I can neither underline nor italicize here) and the other cases discussed are all about property rights. The words "business" and "corporation" as used in the criticized discourse have become mere cyphers used by socialists to set up straw arguments, and we buy into them at our (libertarian) peril. The only other things I would add are that in "Didden" Judge Sotomayor further confused the physical taking with an exaction, which is alarming because it appears, at least to my limited intellect, to sanction extortion by private parties with the same Constitutional rationale as the Supremes have used to sanction what I consider to be extortion by public entities. Clearly the three judge panel in "Didden" did not follow, in the legal sense, "Nollan" and "Dolan", and Judge Sotomayor's agenda as the author of that opinion is to ignore recent precedent and, at least in appearance, find for those she may favor for not purely legal reasons.
5.31.2009 3:59am
traveler496:
So it is possible to have a civil discussion politics in VC. I suspect this is due to Ilya's choice of topic and his treatment of it, both of which tended to filter out the more incendiary among us. OK, back to the discussion..
5.31.2009 11:34am
first history:
Sotomayor's injunction against the baseball owners was definitely an anti-business decision by not allowing the major league owners to declare an impasse in negotiations with the players and implement new work rules.
5.31.2009 3:54pm
MikeS (mail):

Confusing libertarians with conservatives is a common mistake,


Exacerbated by libertarians spending so much of their time repeating GOP talking points, e.g. criticizing Sotomayor for valuing empathy over the letter of the law and at the same time decrying her lack of empathy for Mr. Ricci.
5.31.2009 4:21pm
keypusher64 (mail):
Jagdar :

I thought a Libertarian was a Republican who wanted to smoke dope and get laid.

Republicans want to get laid, I assure you.
5.31.2009 6:46pm

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