Uncompensated Takings: Insurance, Efficiency, and Relational Justice

61 Pages Posted: 28 Aug 2018

Date Written: August 24, 2018

Abstract

The Fifth Amendment requires the government to pay “just compensation” when it takes private property through eminent domain. Prominent scholars, however, have argued that optimally the government would pay nothing for taken property. Treating takings compensation as a form of government-provided insurance, they argue that owners should be left to purchase that insurance from private companies. This fundamental challenge to the conventional understanding of takings law is now common in economically influenced analyses of eminent domain. It routinely appears in leading casebooks, and it has significant practical implications for interpreting the scope of the Takings Clause. This article addresses the anti-compensation challenge on both economic and justice grounds. It makes three main arguments: First, standard justifications for requiring government compensation in fact are ineffective against this anti-compensation challenge. If those established justifications were the only relevant considerations, then the challenge would actually be quite plausible. Second, the challenge nevertheless is unpersuasive. Both the standard justifications for requiring government compensation and the arguments challenging that requirement have overlooked the importance of a distinct form of justice—what this article terms “relational justice.” Recognizing justice’s relational dimension both reveals the fundamental error in considering takings compensation to be a form of government-provided insurance and explains why justice requires that the government pay that compensation. Third, there is no need here to choose between relational justice and economic efficiency, because the efficiency concerns motivating the anti-compensation challenge are illusory. Existing scholarship has failed to consider the size of the inefficiencies that the challenge alleges exist. This article remedies that crucial gap in the literature, showing why any net social efficiency gains from replacing government compensation with private insurance would likely be negligible at best, and possibly negative. Thus, efficiency offers no reason to disregard the requirements of relational justice.

Keywords: takings, eminent domain, insurance, just compensation, Fifth Amendment, relational justice

Suggested Citation

Lee, Brian A., Uncompensated Takings: Insurance, Efficiency, and Relational Justice (August 24, 2018). Texas Law Review, Forthcoming, Brooklyn Law School, Legal Studies Paper No. 564, Available at SSRN: https://ssrn.com/abstract=3238128

Brian A. Lee (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

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