As of this writing Congress cannot agree on a stimulus package to mitigate the economic harm caused by COVID-19. And yet, the economic destruction, which is really a disruption, is in fact due to the decisions made by public officials. The question of whether Americans are in any way entitled to stimulus, is not even a moral one. Rather if one follows the logic of Fifth Amendment Takings Law, it is a constitutional right that we have to be compensated for effective loss of our property, especially when the decline in its value is a function of governmental actions.
That Democrats refuse to agree to a Stimulus package because it is larded with any number of items that have nothing to do with the virus is unconscionable, especially when they invoked the Constitution as a basis for impeachment in the first place. But the Republicans’ assumption that bailouts to corporations without even the slightest requirements that recipients will refrain from laying off their workers is as unconscionable. As we could be headed for a recession, it is absolutely incredible that this issue has become just another day at the office of politics.
There is a constitutional argument to be made for why we are absolutely entitled to this stimulus package. The Fifth Amendment to the Constitution establishes the power of eminent domain as the basis for government to seize one’s property for a public purpose. At the same time, if under the laws of eminent domain property were to be seized, government would be required to compensate the owners at fair market value. That is, property cannot be seized without fair compensation.
Still, there is more to it which merits some unpacking. This part of the Fifth Amendment known as the ‘takings’ clause is wrapped up in the same amendment which covers basic due process, because the law of eminent domain really triggers a set of procedures which ultimately require public justification. When government condemns one’s property under eminent domain, the property owner or owners are entitled to a public hearing where the government has to publically justify its claim that a seizure in this case would be essential to the public interest. That is, a compelling case needs to be made.
Of course, if the owners aren’t satisfied with the government’s arguments, then they have the recourse of taking the matter to court and all the way to the Supreme Court. In other words, by design, the purpose was to make it very difficult and costly for the government to take away one’s property. After all, if government has to pay for it, it will think twice about it and only do it if it is absolutely necessary. Which is to say, this is really about protecting individuals from the exercise of arbitrary governmental authority. That too is the purpose of the Due Process Clause.
Now you might be asking how this has anything to do with the government’s public health measures which are bringing the economy to a halt. Well, everything. In a seminal book of Fifth Amendment Takings Law, Yale law professor Bruce Ackerman more than 40 years ago distinguished between “ordinary observing” and “scientific policymaking.” The ordinary observer would define property narrowly and say a regulation that effectively diminishes the value of your property while leaving you in possession of it is not really a ‘taking.’
The scientific policymaker will raise a wholly different question: Suppose you own a car rental agency and the government took an action resulting in an oil exporting countries imposing an embargo against the United States. Meanwhile, your agency purchased an entire fleet of SUVs because that is what your customers prefer. Because they cost more to fill and gasoline prices due to a shortage have gone up, nobody rents from your agency. Moreover, you cannot even recoup your investment by selling the fleet because nobody wants them. Your property has just suffered a loss in value. Is this not akin to a taking?
Before you respond that this is merely academic, it really isn’t. The Supreme Court has long held that an easement which diminishes the value of one’s property is in fact a taking. As an example, when John F. Kennedy Airport was built in 1948, the value of people’s houses in the glide path to the runway was diminished to the point that they couldn’t even be given away. In a number of cases the Supreme Court ruled that this was akin to a taking and that homeowners were entitled to compensation.
All of this has relevance to what is going on now. As a result of social distancing and forced lock downs, the economy has come to a halt, the value of businesses has diminished, and workers are losing their jobs. The sell off in the stock market already tells us that companies have lost value. That employers are laying off workers and leaving them with few options means their property in their labor has been similarly taken away. Traditional property owners, i.e. those who manage corporations, have lost value in their property. And because workers have lost their jobs, their wages should be viewed as a form of takings as well.
It should also be noted that at no time was there a hearing on the decisions made by the president and many of the nation’s governors. It is certainly questionable as to whether the announcements made with regards to actions that are taken and will be taken in any way fall under the purview of public justification. On the contrary, following each announcement, there has been another sell off and we are now seeing massive layoffs.
Although workers’ labor has never been considered a property right, under the logic of scientific policymaking it should be, especially given what is happening here. The government is effectively shutting down a large portion of the economy based on what some might conclude is inconclusive data. If the number of confirmed cases increased because of more testing, that is to be expected. But that is a testing effect; not necessarily a “breakout.” And yet, as that number has increased without any serious parsing of the data, pubic officials have ordered shutdowns. In other words, it isn’t clear that a compelling case has been made.
It is for this reason that Democrats and Republicans are both wrong about a stimulus package. Companies have suffered a property loss akin to a taking and so too have workers. And those hurt the most will be workers in the middle of the distribution down to those towards the bottom. The result will be an increase in inequality with the potential to lead to serious social strife and potentially violence if our politicians continue to play the same old political games. This isn’t to say that nothing should be done, but there should be more public justification.
Econometric models of democracy are quite clear: as inequality increases even democracies may be prone to violence resulting from increased social strife. If our politicians are serious, they will act now and put aside their partisanship in the name of the public interest. Of course, that would assume that they really care about the middle class. But as I have suggested in the past, they really do not.
Oren M. Levin-Waldman is Research Scholar at Global Institute for Sustainable Prosperity. Learn more at the professor’s Website: https://www.econlabor.com/. Direct email to firstname.lastname@example.org. Tel: (914) 629-6351.
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Author of Restoring the Middle Class Through Wage Policy: Arguments for a Middle Class
Understanding Public Policy in the United.States.
The Minimum Wage: A Reference Handbook
Wage Policy, Income Distribution and Democratic Theory
The Case of the Minimum Wage: Competing Policy Models
Oren M. Levin-Waldman is faculty member in the School of Public Affairs and Administration at Rutgers University-Newark, and Socioeconomic Research Scholar at Global Institute for Sustainable Prosperity Research. Learn more at the professor’s Website: https://www.econlabor.com/. Direct email to email@example.com