prior probability

Subtitle: “A rumble in the takings jungle” (by F. E. Guerra-Pujol)

This post concludes my extended response to Ilya Somin’s pessimistic essay in Reason on the Takings Clause. Thus far, we have carefully reviewed–and have done our best to optimistically rebut–Professor Somin’s first two arguments for why the Takings Clause does not require compensation for coronavirus shutdowns. But as I mentioned at the end of [my previous post], Prof Somin still has an “ace” up his proverbial sleeve–a formidable argument inspired by the “legal realist” school of jurisprudence. According to Somin, “no judge will want to be seen as impeding an effort to save large numbers of lives in the midst of a grave menace to public health.” Boom!

Somin’s legal-realist argument can thus be summed up in four words: “the house always win.” (Shout out to my former law student and fellow libertarian friend Freddie Torres, who coined this evocative and apt phrase to describe legal realism.) Although this is not a “legal” argument per se, I concede it is Somin’s strongest retort, especially from a realpolitik or probabilistic perspective. For a wide variety of reasons, fighting the government is always going to be an uphill battle, whether it be a convicted felon appealing his sentence or a property owner challenging a regulation as a taking. The odds of winning are even smaller during a great crisis. As the great Richard Posner has often repeated, our courts have rarely stood in the way of the government during times of emergencies, whether it be the enormous growth of secret courts and the surveillance state post-9/11 or the internment of innocent and loyal Japanese-Americans during WWII.

But could we not creatively hoist Somin on his own legal-realist petard? After all, President Donald J. Trump has appointed a record number of federal judges during his first few years in office, pro-conservative and pro-libertarian judges who presumably have all been personally vetted by–horror of horrors!–Mr Leonard Leo himself (of Federalist Society fame). In fact, almost one-third of all federal judges are now “Trump/Federalist Society” appointees! According to this entry in Wikipedia, for example, as of March 2020 the Senate has confirmed no less than 51 judges for the U.S. Courts of Appeals as well as 138 judges for the U.S. District Courts. (There are 179 appellate federal judges and 673 district court federal judges in total.) As such, given that so many federal judges are Trump appointees, Prof Somin’s legal realist argument can cut both ways!

To conclude my review of the descriptive part of Ilya Somin’s pessimistic essay, although the house usually wins, the legal argument in favor of extending the Takings Clause to coronavirus shutdowns is a plausible one under existing law, and given the significant number of Trump appointees who are now on the federal bench, this argument has a non-trivial chance of success! Any takers?

Subtitle: “A rumble in the takings jungle” (by F. E. Guerra-Pujol)

In my previous post, we reviewed Ilya Somin’s contention that the police power is generally exempt from the Takings Clause. I quickly rebutted this argument by citing a recent case in which the Takings Clause was, in fact, held to apply to the police power. Here, I shall present (and respond to) Prof Somin’s additional arguments why the Takings Clause does not require compensation for coronavirus shutdowns.

First, according to Somin, even if my rebuttal were correct (i.e. even if coronavirus shutdowns were subject to the Takings Clause in principle), anyone demanding just compensation for being forced to stay at home would lose their case under existing Supreme Court caselaw. Specifically, Prof Somin cites the leading case of Penn Central Transportation Co. vs. New York City. This is a leading takings case because the Supreme Court set forth a three-part test that lower courts must follow to determine whether a government action constitutes a “taking” under the Takings Clause of the Fifth Amendment. Under this three-part test, a government action is a “taking” depending on the following factors: (1) the severity of the economic impact of the action in question; (2) whether and to what extent the owner suffered the loss of “investment-backed expectations” when the government acted; and (3) the “character” of the government action (i.e. did the government physically occupy or damage the property right in question?).

According to Prof Somin, however, coronavirus shutdowns would not pass the Penn Central test as a matter of law, but I respectfully beg to differ. To begin with, the economic impact of a city- or statewide quarantine or “shelter in place” order is, by definition, severe if you lose your job and livelihood as a result of the order. Secondly, such “shelter in place” orders will adversely affect (to the say the least) the expectations of “non-essential” workers and firms subject to the order. Lastly, the third factor is most likely irrelevant, since the interest being deprived is liberty (freedom of movement), not physical property.

To sum up, although I agree with Prof Somin that the Penn Central test (like all balancing tests) “is a mess,” a strong argument can still be made that coronavirus shutdowns are takings under this admittedly messy test. At the same time, however, I have to acknowledge that neither Somin nor myself has yet to score a decisive blow, let alone knock the other down. But Somin still has an “ace” up his proverbial sleeve–a formidable argument inspired by the “legal realist” school of jurisprudence. Stay tuned, I will turn to (and try to refute) Somin’s third and final argument in my next post …

Credit: William W. Wade

Subtitle: “A rumble in the takings jungle” (by F. E. Guerra-Pujol)

As I mentioned in a previous post, my friend and colleague Ilya Somin and I disagree whether the Takings Clause requires the payment of compensation for coronavirus shutdowns. I say “yes”; he says “no.” First and foremost, Professor Somin points out that U.S. Supreme Court has carved out a police power exception to the Takings Clause. According to this line of cases, culminating in Miller vs. Schoene, the exercise of a State’s police power does not qualify as a “taking” under the Fifth Amendment. This is Prof Somin’s best argument by far, so what is my response to Somin’s initial thrust? How about a parry! (See, for example, the image below.)

To begin with, Miller vs. Schoene was decided in 1928–a bygone era in which the police power was more sparingly used. Furthermore, for every case holding x, it does not take much imagination to find a case holding not x. By way of example, in the more recent case of Arkansas Game & Fish Commission vs. U.S. (a 2012 case), a unanimous Supreme Court narrowed this police power exemption. At best, then, the relation between the police power and the Takings Clause is unclear, but my deeper parry stands: “Not all exercises of the police power are exempt from the requirements of the Takings Clause,” as Somin himself concedes in the fourth paragraph of his essay.

Aside from his police power argument, Prof Somin offers two more substantive legal reasons why the Takings Clause of the Fifth Amendment does not require compensation for coronavirus shutdowns under existing law. I will turn to those arguments in my next two blog posts …

“thrust and parry”

I interrupt my reply to Ilya Somin to share this beautiful film clip (hat tip: @kottke) with my loyal followers.

Subtitle: “A rumble in the takings jungle” (by F. E. Guerra-Pujol)

Yo, what’s up? For my part, I recently discovered that my friend and colleague Ilya Somin (pictured below, left), a law professor at George Mason University, wrote up this short essay explaining why, under existing caselaw, the Takings Clause of the Fifth Amendment does not require compensation for coronavirus shutdowns. Given that I have been vigorously arguing that we should apply a takings framework to these state-ordered shutdowns (see here, here, here, and here), some kind of response by yours truly (pictured below, right) is in order. Although Professor Somin is making a descriptive argument (what the law is), while I have been presenting a normative argument (what the law should be), I will nevertheless do my best to reply to Prof Somin’s excellent essay in the next day or two …

Somin vs. Guerra-Pujol

Subtitle: Just compensation for staying at home, part four (by F. E. Guerra-Pujol)

At the end of my previous post, I mentioned that the power to order “non-essential” workers to stay at home arises out of a State’s general police power to protect the health, safety, and welfare of its residents. (Some States, like Florida, have delegated this power to the municipal level; other States, like California, have ordered statewide shutdowns.) But at the same time, we have also been vigorously arguing that this police power is subject to the Takings Clause of the U.S. Constitution. In brief, any State-sponsored deprivation of one’s liberty triggers the obligation to provide just compensation to those persons and firms who have been deprived of their liberty. We must now consider the bottom-line question, “Who pays?”

Since the current “crisis” is a pandemic of global (by definition) proportions, the federal nature of our system in the United States creates a paradox. Although the States retain the general police power to order quarantines, it is the federal government that has the resources to compensate affected individuals and firms. So, why not scrap the entire stimulus bill that is currently being considered by the Congress in favor of block grants for those States that have already ordered total or partial lockdowns? That is, let’s convert the entire 500-page, two trillion dollar package into a simple and straightforward block grant program. These block grants would have strings attached, of course. The most important condition would be this: the States would only be authorized to use their block grants to compensate those “non-essential” persons and firms affected by the shutdown. (If the Congress wants to allocate additional funding to the CDC or to purchase masks or for whatever, it should do that in a separate appropriations bill.)

In short, my proposal not only respects the federal structure of our constitutional system of government; my natural rights or “takings” approach to the pandemic also represents a fair compromise between our need to make significant sacrifices for the common good (by staying at home fora reasonable period of time) and our bedrock moral right to receive some of form of meaningful or just compensation in exchange for the deprivation of our liberty. Right?

Subtitle: Just compensation for staying at home, part three (by F. E. Guerra-Pujol; revised 3/28)

I presented in two previous posts an outline of my natural rights or “takings” approach to the current economic lockdown. (See here and here.) In brief, any State or local decree requiring “non-essential” firms to shut down and “non-essential” workers to stay at home constitutes a taking of one’s liberty under the Fifth Amendment to the U.S. Constitution, so those workers are therefore entitled to just compensation for their economic losses resulting from the lockdown. (I also presented Greg Mankiw’s idea of providing monthly–or better yet, weekly–payments to all affected workers and firms.)

But how much? How much monetary compensation should affected persons and firms receive under my takings framework? Isn’t it obvious by now? Once we frame the economic lockdown as a taking, i.e. as a deprivation of liberty, the answer to my previous questions begins to appear in focus: workers are entitled to their lost wages, while business firms are entitled to lost profits. In addition, one of the advantages of using lost wages and lost profits as our just-compensation metric is that we already have well-developed common law definitions of these economic concepts.

Given the massive scale of the lockdown, however (some, like California’s, are statewide!), my takings approach will present some significant administrative challenges, since a person’s losses will depend on his individual circumstances. But at the same time, if you have lost your job because of the lockdown, a one-time paltry payment of $1200 for most individuals or $2400 for most married couples (as under the current stimulus bill being debated by the Congress) most likely doesn’t even come close to adequate or just compensation for the lockdown. Even Professor Mankiw’s proposal of sending everyone X amount of dollars for N number of weeks or months is a very crude method of providing just compensation. Nevertheless, at least Mankiw’s proposal is much better than the paltry sums in the stimulus package. But what if, instead of a one-size-fits-all periodic payment for all individuals, Mankiw’s X were a range (depending on one’s zip code, e.g. urban or rural) between $1500-$2000 per month or between $300-$500 per week, as the case may be? (As an aside, a potential advantage of setting shutdown compensation so high is that governments will be forced to think twice before taking such a drastic measure.) In the event anyone has losses greater than X, we could allow such persons or firms to file their claims online with the U.S. Court of Federal Claims in Washington, D.C.

Before concluding, there is a legal problem with my framework that I now need to address. The United States is supposed to be a federal system, one in which public power is divided among the States and the national government, and under our constitutional system of federalism, the States retain a general “police power” to protect the health, safety, and welfare of its residents. (For a more detailed legal analysis, check out this helpful blog post by my colleague and friend Dan Farber. Hat tip: Brian Leiter.) As a result, one could argue that it is the States–not the Feds–who have the sole power to order such severe measures as quarantines and lockdowns. Thus as a constitutional or legal matter, it is those States (like California, Florida, and New York) where local or statewide lockdowns are now in effect that are obligated to provide just compensation to affected persons–not the federal government. This important legal principle (the doctrine of federalism) will thus require us to alter the details of our takings framework as well as how the Congress structures its stimulus bill. I will explain how in my next post …

Hello, fellow hobbits! I am once again interrupting my natural rights analysis of the economic shutdown to pose the following irreverent question: Why is it that the same elites (see two flagrant examples pictured below) who are shutting down all those “non-essential” sectors of our economy and advising us to engage in “social distancing” themselves don’t even bother to follow what they preach!

File under: “Do as I say; not as I do.”

Subtitle: Just compensation for staying at home, part two (by F. E. Guerra-Pujol; revised 3/26)

As I mentioned in a previous post, I would apply a “takings” model to the economic shutdown. In other words, any government order requiring non-essential workers to stay at home and non-essential businesses to close down is like a “taking”–a taking of one’s liberty. My argument therefore is that, in exchange for such a drastic restriction of our liberty, the government must provide just compensation to all such “non-essential” persons and firms, including lost wages and lost profits, as the case might be. But this approach to the coronavirus pandemic poses two new practical questions: logistics and how much? That is, how would such a massive payment scheme work in practice, and how much compensation would we actually be entitled to? With regard to the first question (logistics), I shall second an idea by Greg Mankiw (edited by me for clarity):

[The Department of Treasury would] send every [registered taxpayer] a check for X dollars every month [or every week] for the next N months [weeks]. In addition, [the Treasury Dept. would] levy a surtax in 2020 (due in April 2021) equal to N*X*(Y2020/Y2019), where Y2020 is a person’s earnings in 2020 and Y2019 is a person’s earnings in 2019. The surtax would be capped at N*X. Under this plan, a person whose earnings fall to zero this year keeps all of the social insurance payments and does not pay the surtax. A person whose earnings fall by half keeps half of the payments and returns half. A person whose earnings remain the same (or increase) returns everything: They will have just gotten a short-term loan.

Before proceeding, I want to take exception with Professor Mankiw’s “social insurance” terminology. Use of the term “social insurance” makes his proposal sound like just another costly and counterproductive social welfare program. Under my natural rights or “takings” framework, by contrast, these payments are owed to affected persons and firms as a matter of moral right. To repeat–from a moral or natural rights perspective–every worker who is ordered to stay at home, every business firm who is ordered to close its doors, is entitled as a matter of right to just compensation in exchange for the deprivation of their liberty.

Also, notice that my version of Mankiw’s idea would be limited only to registered taxpayers in order to make the system workable as well as fair at the lowest possible administrative cost (#RichardEpstein). After all, the IRS already has a complete database of the names and addresses of every taxpayer, and persons and proprietorships who don’t even bother to file their tax forms when times are good should not be rewarded for their shirking behavior. But in any case, how much compensation should be paid, i.e. what amount should “X” be in Mankiw’s model? I will address this second question in an upcoming blog post.

On behalf of all “non-essential” workers who have lost their jobs due to the current economic shutdown (as well as all “non-essential” business firms that have had to close their doors), I interrupt my “natural rights” analysis of the coronavirus lockdown to share my reaction to the multi-trillion dollar stimulus package still being debated in the Congress: