Money can’t buy happiness, so the saying goes. But, does giving away property bring happiness? That is the proposition considered by Professor Dave Fagundes, in his new article Why Less Property is More: Inclusion, Dispossession, & Subjective Well-Being.
Professor Fagundes urges new thinking on the classic conception of property, moving away from possession and exclusion, long the centers of the construct, toward their more obscured counterparts, dispossession and inclusion. Starting with the notion that property historically has been justified for its utilitarian ends, he suggests that if we are not better off when we amass property and exclude, then a different conception of the rights inhering in property might better achieve these ends.
Professor Fagundes asks us to evaluate property from a hedonic perspective, pointing to literature that reveals that keeping property to ourselves does not improve subjective well-being. Indeed, it is quite the opposite—sharing and giving away property increases happiness in a number of respects. These dispossession and inclusion activities assist with decreasing debt, increasing mobility, and allowing individuals to refocus attention to more rewarding activities rather than on mere objects. Consequently, the real challenge is how to incorporate the hedonic upsides of inclusion and disposition into settled notions of property without doing too much violence. Professor Fagundes lays out strategies in the contexts of the sharing economy, charitable deductions, and property minimalization.
While the sharing economy represents a paradigm shift that emphasizes access over ownership, sharing promises the greatest hedonistic value when it is altruistic. That quality is generally lacking in many current sharing economy models, like Airbnb rentals, for example. Thus, Professor Fagundes recognizes the sharing economy’s potential for increasing subjective well-being without necessarily endorsing all its manifestations.
The same concerns exist with charitable donations. Studies find less hedonistic value in such donations when they are rewarded by tax deductions. While eliminating tax deductions altogether might reduce giving and produce a net loss in societal benefits, Professor Fagundes proposes tiering—the amount of any deduction being determined by the impact of the giving.
The rise of micro-apartments and tiny houses may seem contrary to cultural expectations about size and status. Nevertheless, the phenomena has been tied to greater subjective well-being, from greater affinity for getting out of dwellings to the outdoors to greater interactions with neighbors. To encourage people toward minimalism, at least in housing, Professor Fagundes suggests eliminating home purchase incentives for the grand estate. He acknowledges that this may risk making even modest homes unaffordable for many. Even apart from that proposal, to facilitate choices to live smaller for those who wish to do so, Professor Fagundes proposes normalizing the codes for tiny houses and crafting dedicated codes for them. Targeted abandonment (with registries pairing givers and needers) should also be encouraged.
Professor Fagundes asserts that strategies of inclusion and dispossession can operate to enhance overall social welfare. He posits that the current debate over the right to exclude vis-a-vis inclusion falsely presents these concepts as in opposing roles. He states that “A strong right to exclude is no doubt socially optimal, but it is not dominantly because owners’ rights enable private wealth maximization. Instead, rights of exclusion and possession are necessary as prerequisites to enable the kinds of inclusive and dispossessive acts that are most likely to increase owners’ well-being, and society’s net welfare.”
What is needed is the development of a “choice architecture” to facilitate policies of inclusion and dispossession, to prompt owners to exercise the rights to possess and to exclude toward the end of their best, other-regarding selves.
As suggested, with each of the methods identified by Professor Fagundes for realizing the hedonic upsides, significant societal downsides loom. However, there is yet value in his claims. There are no rules that prevent owners from including and dispossessing. But, the culture of property—with its almost sole emphasis on exclusion—prevents us from seeing the social value in the former.
Given that the right to exclude has long been tempered by larger societal interests—e.g., entry may be justified in case of threats to safety and owners are not allowed to exclude from spaces open to the public based solely upon race—accounting for the hedonistic value of ownership might operate to further expand access by non-owners, such as in the calculation of damages against an intruder or when a court chooses application of a liability rule in place of a property rule. The hedonistic value might be applied to reduce the net injury to the owner, in the end, possibly urging owners to allow entry. And, the recognition of the hedonistic value might be used to coax settlements between parties competing for the same rights.
If we concede that one of the ends of society is to increase happiness, individually and communally, then causing us to see the value of property from its hedonic attributes makes sense. Not only will owners be happier, but so will non-owners, the recipients of the giving.
The issue of who should own federal public lands is often an issue that raises the temperature of politics and protest, especially in the western United States. Greg Ablavsky’s recent article gives us a historical analysis that provides some important answers to these questions.
In 2014, the federal government attempted to halt illegal cattle grazing on lands controlled by the Bureau of Land Management (BLM). For two decades, Cliven Bundy, a Nevada rancher, used the land and refused to pay the BLM grazing fees. But federal enforcement was blocked by armed supporters and private militia members who agreed with Bundy that the federal public lands are unlawful infringements on the rights of states and ranchers.
Two years later, a militia group led by Ammon Bundy, Cliven Bundy’s son, seized federal buildings in the Malheur National Wildlife Refuge in Oregon. The occupation, fueled by antagonism to federal land management and control, lasted 41 days.
Federal public lands are especially significant in western states where the United States owns 47 percent of all land. The belief that public land properly belongs to either the states or to people living nearby is often grounded on assertions that federal ownership is somehow unconstitutional.
According to this theory, land within each state belongs to the state and there is no legal or historical basis for federal land holdings. Gregory Ablavsky’s wonderful legal history article, The Rise of Federal Title, buries such arguments. It also puts an exclamation mark on one of the most important lessons of property law: that governmental recognition of title is fundamental to property ownership.
Ablavsky’s article draws upon the history of western expansion across the Appalachian mountains from the original colonies and states to the fertile land beyond (especially present day Tennessee and Ohio) to show how the federal government came to have so much power over all aspects of land ownership in the territories and states. As numerous scholars have highlighted, although military conquest dominates the country’s historical imagination, non-Indians acquired land from Indian tribes largely through purchases and agreements.
What Ablavsky adds is a sense of the messiness of land claims in the frontier, in the territories, and in newly admitted states. Ablavsky describes how speculators rushed to claim western land and how fortunes were made and lost on land speculation. Adding to the chaotic mix of speculative claims were those of veterans who had been promised western land for their service and those of individuals who unilaterally asserted the right to land based on state law preemption allowances.
Though Johnson v. M’Intosh is typically taught as the mechanism—through elevation of federal title over title acquired by an individual directly from an Indian tribe—by which many of these conflicting claims were resolved, Ablavsky situates it as more a “belated capstone to the nearly century-long struggle over private purchases.” (P. 656.)
As The Rise of Federal Title shows, the low level governance practices of the federal government—the way that people came to rely upon federal government officials to resolve the many land conflicts—was arguably more important than broad legal pronouncements in establishing the primacy of the federal government when it comes to the ownership and control of land within the growing nation.
Turning to current debates, Ablavsky convincingly shows that there is no historical basis for arguments that federal public land should be turned over to the states. Although this was the cause célèbre of the Bundy family and enjoys the support of some conservative politicians, the idea that states rightly should have been admitted without the burden of internal federal land holdings or interests (national parks, BLM land, Indian reservations, etc.) has very little historical support.
The equal footing doctrine cannot do the work that those seeking federal land cessions are asking of the doctrine. Ablavsky critiques the Court’s decision in Shelby County v. Holder, which purported to be based on the idea of equal sovereignty, as historically unsupported “arbitrary line drawing.” (P. 694.)
There is a lot to this article. It is full of historical details that will interest those interested in everything from Indian land rights to matters of federalism.
The commitment of constitutional originalists to interpreting rights based on how those rights were understood historically ensures that there will always be an appetite and practical utility to legal histories of this sort. But for those more interested in the origins of property and not constitutional originalism, The Rise of Federal Title offers a more rich account of the importance of state recognition of property rights than typical origin stories for property, most notably Johnson v. M’Intosh and Harold Demsetz’s classic article, Toward a Theory of Property Rights.
As Ablavsky demonstrates beautifully, conflicting claims to property abound, especially when governance structures are in flux. Untangling these claims required the acceptance of the federal government as the final land rights and governance authority. Ablavsky highlights that this acceptance came as a matter of practical necessities recognized by the states themselves.
Ultimately, property rights themselves depend less on natural law theories of how rights emerge from the commons and more on state, or better stated here “federal,” recognition of those rights. The Rise of Federal Title is well worth reading for how it sheds light on western expansion and frontier land rights, but perhaps the article’s most important contribution to property theory is the work it does to highlight the fundamental role official governmental recognition plays in creating recognized and enforceable property rights.
What’s the best model for property – a sack of LEGO bricks or a heap of sticks? For those with a formalist view of property that emphasizes a stable set of characteristics and a distinctively self-contained architecture, the LEGOs win hands down. The blocks are standardized, free of rough edges and irregularities, and they snap cleanly together while maintaining their individual integrity. The sticks, by contrast, lack any obvious organizing principle or irreducible core. The bundles they form are loose and contingent, vulnerable to endless unbundling and rebundling. Yet the choice of bricks over sticks becomes far less clear on a functional vision of property that focuses on making property rights work well in the messy, interdependent modern world. For a functionalist, the question of optimal property structure must depend on the challenges and pressures presented by the surrounding conditions, and on what one is trying to build.
In The New Essentialism in Property, Katrina Wyman spotlights the incongruity between the formalist and functionalist facets of what she terms “the new essentialism.” Her primary focus is the influential scholarship of Henry Smith and Thomas Merrill, who are presently working on the American Law Institute’s fourth restatement of property (Smith is the lead reporter; Merrill is an associate reporter). Their vision of property as a boundary controlled, thing-based, in rem system of delegated control is steeped in formalism. Yet it also lays claim to functionalist justifications, most notably in the form of information cost savings. Opening the door to functionalism, however, requires reconciling property’s purportedly fixed core with social and economic conditions that are far from static. The resulting brand of essentialism is, as Wyman puts it, “highly malleable.” This malleability has two implications, as Wyman observes. On the one hand, it offers a response to critics who accuse the new essentialist project of neglecting important interests. On the other, it makes the new essentialism less essentialist.
New essentialism accommodates functionalism, for example, when it recognizes that an owner’s right to exclusion must sometimes yield to greater social objectives (such as nondiscrimination or airplane overflights), and that it must also be supplemented by governance mechanisms that operate through modes other than boundary exclusion (such as nuisance law). The tension between formalism and functionalism also emerges in deciding what counts as a “thing.” Merrill and Smith’s vision of property maintains that certain standard property attributes fit together well, and that keeping them intact is essential in a world of high transaction costs. But these attributes are only strongly complementary to each other under certain social and economic conditions. Moreover, there are today many competing complementarities that involve combining rights associated with many different parcels. Just as forming a contiguous path or highway requires assembling pieces of land held by multiple people, putting together limits on the rights of many owners may prove essential to controlling negative externalities or harnessing positive externalities. If we delineate property’s “things” based on the most important complementarities in the picture, we may end up with something very different than the traditional exclusion-based vision of property rights.
Of course, what functionalism demands of property in any given time and place is an empirical question, as well as a normative one (what functions do we have in mind, anyway?). Nonetheless, the notion embeds an openness to adaptation that is at odds with a formalism that assumes there is an immutable answer to the question of how property should be structured. This theoretical inconsistency between formalism and functionalism can be safely ignored so long as we focus on stylized contexts where the formalist model retains most of its functional power—family farms and isolated single-family homes. But if we take seriously the interdependence that prevails in the urban places where most human beings now live, giving functionalism free rein presents a more serious threat to formalism.
To be clear, Wyman does not frame matters so starkly, nor would she agree that changing conditions require a thoroughgoing revamping of property forms. Instead, she examines two modern examples that push at the bounds of property—hydrofracking as a form of trespass, and the dilution of the value of taxi medallions—to illustrate the challenges new essentialists face in navigating changes surrounding resource access. Yet, her analysis carries implications beyond these situated examples, and artfully queues up an important decision point for property theory.
If formalism makes property a fast-fish – contained and fixed – functionalism frees it from those points of adhesion as social and economic realities demand. The new essentialists cannot abide a loose-fish vision of property, but neither can they reasonably pretend that conditions will always replicate the agrarian past in which form and function aligned in a particular manner. Will they respond by prioritizing formalism where it conflicts with property’s functioning on the ground, or do the opposite, ceding more and more of what they claim makes property so distinctively itself? Eventually, they—and we—will have to decide whether the term “property” should denote a formal or a functional category. Do we want our property fast or loose?
Maureen E. Brady, The Forgotten History of Metes and Bounds
, 128 Yale L.J.
__ (forthcoming, 2019), available at SSRN
A decade and a half ago, as a neophyte property teacher, I read Andro Linklater’s history of the surveying and distribution of land west of the Appalachian Mountains. The central animating principle in the book—Measuring America: How the United States was Shaped by the Greatest Land Sale in History (2002)—was simple, and seemingly self-evident: When it comes to surveying and selling land, straight lines are better than squiggly ones.
(I was less convinced by Linklater’s side effort to convince readers that the metric system is infinitely better than the imperial system, although his arguments on this front brought back fond memories of my elementary school teachers’ assurances that the United States would adopt the metric system by the year 2000.)
In the years since the publication of Linklater’s book, economists have amassed substantial evidence supporting his argument that the “grid” system of land demarcation employed by the federal government in the Northwest Territories and (for the most part) thereafter in the distribution of western lands is far more efficient than the older metes-and-bounds system used in the original thirteen colonies and other early states such as Tennessee and Kentucky.
The former system relied on trained surveyors to divide land into rectangular six-by-six mile “townships,” which were subdivided and sold as 160-acre “quarter sections.” The latter, which the colonies inherited from Great Britain, relied upon idiosyncratic descriptions of parcels that utilized non-standard and impermanent features (e.g., walls, rocks, streams, trees).
Gary Libecap and Dean Lueck, in particular, have convincingly demonstrated that the metes-and-bounds system is inefficient and that, over time, parcels of land demarcated by metes and bounds come to be worth less than similar and geographically proximate parcels laid out in a grid. This, of course, is hardly surprising. After all, thanks to the ground-breaking work of Tom Merrill and Henry Smith (among others), we know that the standardization of property forms lowers information costs and facilitates efficient resource allocation.
Against this scholarly backdrop, Professor Maureen Brady steps in with new insights in the role of metes and bounds. Brady does not challenge this important point, nor does she attempt to refute or undermine the findings of Liebcap and Lueck. Rather, her article is revisionist history in the classic sense: She convincingly demonstrates that modern critics misapprehend the goals of the metes-and-bounds system.
At least in the early New England colonies, Brady shows that metes-and-bounds surveying techniques were not conceived primarily as a way to facilitate efficient land transfers. Rather, they were designed to convey customized information both about land and landowners that could not be expressed in standardized terms. In so doing, the metes-and-bounds system formed and reinforced social bonds by rooting colonists to particular communities and particular parcels of property.
Moreover, while the language of many metes-and-bounds deeds might seem obtuse to the modern reader, long-forgotten customs (such as the annual ritual of communal boundary walking) provided clarity lacking in written descriptions of land parcels. In a relatively closed and homogeneous social system, where land was plentiful, these customs, and customized descriptions, actually helped reduce conflicts over property and facilitate land transfers.
As Brady points out, information-costs theorists acknowledge that standardization involves tradeoffs: Standardization reduces transaction costs by making information easier to interpret across a broad audience, but customized information is more capable of being tailored to the needs and preferences of smaller communities.
Therefore, not surprisingly, she demonstrates that standardization became more important as the populations of the colonies grew, diversified, and became more mobile—and land became more scarce. The colonies, and later the fledgling federal government, sought to standardize the system of land demarcation in order to minimize disputes and facilitate land transactions.
Brady argues that this forgotten history of metes and bounds calls into question the dominant assumption that standardization is an important prerequisite to economic growth. Instead, she argues, customization and standardization can both be rational growth strategies at different periods of time. Perhaps—but what struck me about the article was that the metes-and-bounds system worked in the early colonial experience in large part because growth and mobility—at least not as we understand these terms today—were not the point of land records.
Of course, the American colonies were engines of imperial growth, emigration to the colonies represented mobility on a massive scale, and the readily available land on the shores of North America provided unprecedented economic opportunity for British colonists. (By the mid-eighteenth century, Americans were approximately three inches taller than their European counterparts!)
But, Brady’s account also reminds us of a time when property was more than just a commodity, when mobility was not necessarily the end-goal of life, and when communal bonds mattered far more than they do today. Reading it, I was reminded of Andrew Sullivan’s surprisingly positive essay reviewing my colleague, Patrick Deneen’s best-selling book, Why Liberalism Failed (2018). The title to the essay? “The World is Better than Ever. Why are We Miserable?”
Molly Brady’s article is a historical tour de force. But, it is more than that, and it does more than challenge presuppositions about land-demarcation systems and information standardization. It also invites readers to remember that property is not only an economic institution, but also a social institution that serves to bind people together in geographic communities.
The “rootededness” that Brady described has faded in our modern mobile culture, but like the metes-and-bounds deeds that persist in many parts of the United States, I hope that it has not disappeared completely.
James W. Ely, Jr., Buchanan and the Right to Acquire Property
, __ Cumberland L. Rev.
__ (forthcoming), available at SSRN
Can property rights really exist if we do not have a right to acquire property?
When we hear about debates over property rights, they are often about the claims of people who already own property. The focus is on how owners can use property and what regulations the state can place on the use of one’s property. We often lose sight of perhaps a more fundamental set of questions about how we protect, facilitate, and pave the way for earning the means for the acquisition of property.
Only if one can acquire property do any of those other questions even matter. We first need to ensure that people have an equal opportunity to acquire property and become owners. Property rights issues related to possession and use only becoming relevant thereafter. Professor James Ely’s recent work, Buchanan and the Right to Acquire Property, reveals this important lesson: the debate over what property owners can do with property is of little consequence if we do not first resolve the debate over whether individuals have a right to acquire property and how that right is supported.
Professor Ely’s article takes readers on a precedential tour through important jurisprudential moments too often neglected. He starts with the 1917 opinion by the U.S. Supreme Court in Buchanan v. Warley. Ely explains how the Buchanan Court—long before more well-known anti-segregation rulings like Brown—used the right to acquire property as the arrow for slaying a Louisville ordinance that prevented individuals from occupying property in areas dominated by occupants who were not of their race.
Buchanan, Ely recalls, was responsible for halting the progress of racial segregation movements in many cities. Nonetheless, he speculates that the case became a “constitutional orphan” because its property-rights focus made it an “awkward fit for post-New deal constitutionalism” while similarly interfering with and becoming eclipsed by the agenda of Progressives interested in planning and land use controls. (P. 1.)
Ely’s article is notable and worth reading for its retelling of the Buchanan precedent and for its tutorial on the development of the “right to acquire property” in various state and federal cases both before and after Buchanan. He explains that these cases were especially helpful at empowering the poor and minorities because the right to acquire rationale was focused on equalizing them in the marketplace. The later shift toward economic regulation—instead of rights—as a vehicle for social change, Ely laments, proved to be more beneficial to those who engage in rent-seeking to concentrate benefits upon certain interest groups than helpful to the individuals for whom such regulations were purportedly targeted.
Ely’s article is also an important contribution beyond simply the history of Buchanan and the right to acquire, because it traces two interconnected jurisprudential lines of inquiry in state and federal courts. His history reveals a key understanding within state and federal court opinions in the late 1800s and early 1900s—a realization that individuals cannot enjoy a right to acquire property if they are unable to acquire the means necessary to purchase property.
In other words, there must be a right to pursue a lawful calling if the right to acquire property is to be protected. Individuals must be able to use their comparative advantage in the marketplace to earn a living so that property acquisition is an attainable end. In fact, perhaps one of the reasons that the right to acquire property has not survived in a robust independent line of precedent is that by the early twentieth century the “right to acquire property had been as a practical matter folded into the right to pursue lawful callings.” (P. 11.)
Ely concludes with some comments on the modern relevance and renewed importance of understanding these historical lines of jurisprudential thought. Recent debates on occupational licensing requirements are drawing on the right to pursue lawful calling precedents and should be informed by the immediate impact the decisions in this space have on the correlated right to acquire property.
Individuals are prevented from meaningfully accessing the marketplace for property if they cannot meaningfully access the market for occupational development to earn a living. We too often see these issues as silos, looking at the costs and benefits of regulating workplaces or protecting consumers by requiring individuals to obtain licenses before they can work, and then looking independently and having separate debates on how we regulate property and make housing more affordable.
Ely’s work reminds us that there was a time when the courts understood the key interdependent relationship between acquiring property and maintaining an occupation, or calling, of one’s choice. A marketplace, and legal structure facilitating it, that allows individuals to exploit their comparative advantage in the occupational marketplace empowers them to obtain the means for acquiring property so long as the law also does not place any artificial and discriminatory barriers to such acquisition.
Beyond licensing, readers of Ely’s work on the right to acquire will leave it with a newfound appreciation for what should be an obvious point—we cannot enjoy what we cannot access. And no matter how much we improve the quality of certain assets—like the qualities of owners’ rights—they remain meaningless if some people are shut out from the ability to acquire them. Rights to acquire are a prerequisite to the value of a property system.
Most directly, Ely’s work provokes some fundamental questions that all readers will be eager to explore. What responsibility does the state have to create market conditions in which the acquisition of property is a real possibility? What duty does the state have to empower acquisition or at least remove artificial barriers to it?
Undoubtedly, the realization regarding the role that the right to acquire must play in property systems can lead to differing policy prescriptions regarding the proper means for facilitating access to property and empowering acquisition.
Not everyone believes, as Ely seems to, that the best way to achieve these things will be for the removal of legal constraints on pursuing lawful callings, enforcement of non-discrimination principles, and invalidation of state-conferred monopolies. Others will no doubt think the state needs to take a more interventionist role.
But either way, Ely’s article should be a catalyst for debating the right to acquire and revisiting its jurisprudential foundations whenever we are confronting myriad modern-day property controversies—including land use, zoning, housing affordability, homelessness, continuing issues of racial segregation, and others.
“Inclusion” is one of those words that typically elicits warm and positive feelings. However, when an entire society is described as “inclusive,” the question arises—included in what? Putting the question another way, is it even possible for a community be all-inclusive?
Often, contemporary American political and legal discourse draw Manichaean distinctions between advocacy of inclusivity and of xenophobia. With regard to land use and housing issues, complete racial and socioeconomic integration of neighborhoods thus are juxtaposed against sinister demands by NIMBYs, who demand that integration take place “not in my back yard.”
Professor Kenneth Stahl is both an advocate for inclusion and an opponent of easy over-simplification. His analyses of economics, sociology, and political theory in The Challenge of Inclusion led him to observe that, at a fundamental level, the problem resides in the very notion of “community” itself.
I argue that the NIMBY is not the principal barrier to creating inclusive communities. Rather, the very notion of community, however broadly conceived, depends on exclusion. As the theorist Michael Walzer wrote, if communities lacked the ability to exclude, they could not maintain the very thing that makes them communities: their character as “historically stable, ongoing associations of men and women with some special commitment to one another and some special sense of their common life.” The perceived selfishness of the NIMBY is an outward manifestation of this deeply embedded and widely shared desire to preserve community. Therefore, even if NIMBYism could be excised, the challenge of inclusion would remain. (P. 492.)
In particular, Stahl added, sociologists have demonstrated that a system of shared norms enforced by exclusion “enables people to survive in an impersonal urban ‘world of strangers.’” (P. 502.) Beyond that, he reiterated Elinor Ostrom’s findings that strong community oversight could substitute for private ownership: “[W]ell-organized communities with strong collective social norms can develop effective cooperative systems for sharing common resources without private property or government intervention.” Furthermore, these shared social norms “can only exist where communities strictly exclude outsiders.” (Pp. 499–500.)
Affluent political progressives willingly pay taxes for social services for the less fortunate. However, they are unwilling to give up exclusionary zoning in their own neighborhoods, which protects their property values and exclusive access to superior schools that provide their own children with entrees to elite colleges and subsequent advantages in life. In his recent book Dream Hoarders, Richard Reeves points out that Americans less frequently refer to themselves as “middle class,” and more as “lower middle class” or “upper middle class,” which he defines as the top 20 percent of the income distribution, less the top 1 percent. Affluent professionals and managers are growing in wealth and power, and, through exclusionary zoning, Section 529 plans for tax-free college savings, and the like, increasingly seem to be perpetuating a class apart. This growing demographic seems more intent on hoarding opportunities than on inclusivity.
Stahl, on the other hand, declared that “inclusion represents our society’s highest aspiration,” and it has attempted the complicated task, as he puts it, of creating communities that are both “diverse and inclusive.” (Pp. 487–88.) He observed:
“[D]iverse communities practice exclusion in much the same way homogeneous communities do, just at a different scale. Arguably, moreover, these diverse cities could not remain diverse without being exclusive at the neighborhood scale. . . . One way to reverse th[e] pattern of suburban migration and maintain a diverse city, however, is to unbundle residence from public goods and services so that individuals can choose their preferred package of municipal amenities while remaining within the city. This is precisely what exclusionary mechanisms like private schools, BIDs, and neighborhood zoning are intended to accomplish. (P. 525.)
Professor Stahl’s concrete suggestions involve compromise, thus furthering inclusion while permitting a sustainable amount of differentiation. This “municipality as a federation of neighborhoods” approach includes mechanisms for limited local management of public goods and to permit development that falls short of the inclusionary ideal. An example of the latter is the luxury apartment building which includes government-subsidized units for those with low- and moderate-incomes, the latter with separate side-street entrances and lobbies (assailed by critics as “poor doors”). This, Stahl argues, gives the poor ready access to the employment, educational, and cultural amenities of affluent neighborhoods, while assuring their affluent neighbors that “increasing diversity in their neighborhood need not lead to a tipping point of decline.” (P. 531.)
Likewise, private schools and charter schools would preserve the link between schools and residential neighborhoods, while at the same time providing a comforting option to the well-off, while also providing lower-income families some access to schooling in other areas.
Stahl understands and accepts that his approach will face substantial criticism: “As a normative matter, the idea of the diverse city as a federation of neighborhoods conflicts with a perhaps more conventional view of diversity as integration at the granular level. The federation of neighborhoods is not a recipe for mutual understanding or deep meaningful interactions between diverse groups of people. To the contrary, it accepts separation as the price of inclusion.” (P. 527.)
In an era of increased political polarization, Professor Stahl’s approach will not fully satisfy many. Yet it facilitates the kind of compromise between diverse groups that may, in the long run, best advance the cause of inclusive housing and inclusive communities. For this reason, The Challenge of Inclusion is an analysis and a set of prescriptions deserving of close attention.
Robert C. Hockett & Roy Kreitner, Just Prices
, 27 Cornell J.L. & Pub. Pol’y
(forthcoming 2018), available at SSRN
Our economic system, and particularly our laws of property and contracts, assumes that prices arise naturally from the workings of a neutral market. Rational actors with complete information operate independently, and the laws of supply and demand establish a unique price for a good or a service. The market price established in this manner reflects the value of that good or service. If these assumptions are correct, then one may conclude that the price of any item is “just” in the sense that it reflects the value the relevant market places on it and conveys this information to those operating within that market.
Robert Hockett and Roy Kreitner challenge this conclusion by questioning the assumptions that underlie it. For instance, some market actors do not act independently of each other, and coordination may lead to price distortions. More significantly, the rules of trade are not neutral but rather reflect choices that import values of their own. The fact that the assumptions underlying the supposed justice of prices are questionable does not necessarily lead to pricing that is unjust. But this fact should cause us to question whether and when prices are just. The authors seek to propose factors that can help us decide the justice of particular prices.
Hockett and Kreitner begin with a brief review of the early economic literature, which largely argued that competition will lead to fair wages and prices. Some economists questioned those conclusions even then, recognizing that land and other assets were held unequally and that those who possessed a disproportionate quantity of these assets could have a greater effect on prices. Such a system might maximize wealth without maximizing distributive justice. But the early consensus seems to have been that a disorganized and decentralized system is neutral and will lead to prices that are just.
The authors challenge the assumptions of these early economists. The supposedly neutral exchanges that create prices are the products of the laws of property and contracts, which themselves are not neutral. This means that “[p]rices do not ‘just happen.’” (P. 12.) Rather, decisions we have made in the past influence prices. The government, by adopting zoning and intellectual property laws, affects prices. The monetary and tax systems are controlled by the government. “In short, the price system is deliberately engineered rather than spontaneously generated.” (P. 14.)
Returning to the question of unequal resource distribution, Hockett and Kreitner remind us of the injustices inherent in our markets. Some people are at a disadvantage because they possess little property or none at all. And, according to the authors, some market exchanges that proceed should be banned: They raise the examples of sales of bodily organs and the use of child labor. The occurrence of such transactions has ripple effects throughout the market, with the price of a good for sale in one location perhaps artificially reduced by the child labor that helped produce one of its components somewhere else.
One other assumption – that of rational actors with full information – is undercut by the regular recurrence of market bubbles, runs on banks, and hyperinflation. These illustrations demonstrate that markets are not always self-correcting, at least not right away. And any interventions imposed by government in response to these irrationalities will further distort pricing.
Given that private coordination and public intervention in the market occur regularly, it is inaccurate to describe markets as neutral and uncoordinated. Does this inevitably lead to prices that are unjust? The answer will depend on the context. To begin, we must acknowledge the prevalence of these types of intervention. We also must recognize that this quiet participation in the market can hide “sub-rosa decisions with regressive implications.” (P. 21.) The authors proceed to describe settings in which a more active intervention in the market to influence prices may be warranted to enhance justice.
After briefly discussing drug prices and public benefits, Hockett and Kreitner conclude with a discussion of retirement funds. The move to defined-contribution plans in recent decades may have increased total returns, but these improvements have come at the cost of greater volatility for investors. Perhaps, the authors argue, investment in local projects that produce lower returns but greater intangible benefits might be preferable. The local community will benefit from the investment. The investor, meanwhile, will enjoy the intangible benefits that come from enhancement of the community, along with reduced portfolio volatility, at the cost of slightly lower returns.
Much of the literature on property law relies, perhaps not explicitly, on the assumption of rational economic actors transacting in a neutral market. By reminding us that this economic model does not always reflect how actual market participants behave, Hockett and Kreitner emphasize that the conclusions we draw from these presumptions are not always accurate. They do not seek to demolish the traditional model, which is well-entrenched in the literature. Instead, they ask us to question when the model is least likely to reflect the reality of how true market participants behave.
In some settings, creative use of the pricing system may allow us to attain desirable goals. But even more important than that, as the authors note in closing, is acknowledging the reality that prices are not any more just than the social relations from which they spring. “That means our efforts to improve the latter will proceed in tandem with our efforts to improve the former.” (P. 27.)
Cite as: Gregory M. Stein, Are Prices Just?
(June 5, 2018) (reviewing Robert C. Hockett & Roy Kreitner, Just Prices
, 27 Cornell J.L. & Pub. Pol’y
(forthcoming 2018), available at SSRN), https://property.jotwell.com/are-prices-just/
As the United States Supreme Court said in 1979 and restated in 1982 and then restated again in 2002, “‘the right to exclude others’ is ‘one of the most essential sticks in the bundle of rights that are commonly characterized as property.’” Just as the bundle of sticks metaphor has become ubiquitous and virtually indispensable to the definition of real property, so too has the right to exclude become essential to the idea of the assemblage of rights and things that constitute real property. Katrina M. Wyman, in her article Limiting the National Right to Exclude, challenges her reader “to rethink the robustness of the right to exclude that states currently enjoy” against the challenges to human mobility that she believes climate change will generate for millions of people. (P. 459.)
Regardless of one’s position regarding climate change, Wyman draws her reader into a compelling “what if” conversation. What if the earth’s physical environment is changing such that, in a relatively short period of time, land that is currently inhabited will become uninhabitable, either because of sea level rise or because of increasingly high temperatures? How should we understand the prospects of individuals and cultures that become dispossessed under such scenarios?
Wyman is willing to imagine curtailing the rights of sovereign states to exclude foreigners under the circumstances mentioned above. She discusses three categories of recognized limitations on the rights of private landowners to exclude and considers how they inform a discussion of the degree to which states’ rights to exclude foreigners can or should be curtailed.
The first of the three categories involves necessity-based limits, pursuant to which a private landowner’s right to exclude must give way, in cases of imminent danger, to the right of others to enter the landowner’s property to save their own lives or property. (P. 440.) If private rights must yield to great public welfare concerns in the private landowner context, Wyman argues, these same public welfare concerns may “override the right of states to exclude foreigners in peril.” (P. 442.)
The second category of limitations on the rights of landowners to exclude is anti-discrimination limitations in the public accommodations area. (P. 445.) Title II of the Civil Rights Act of 1964 is the private analog of the state as the quintessential “‘public accommodation’ because [states] open their borders for trade, including trade with other nations and foreigners who travel to buy and sell goods and services, and for tourists to simply visit.” (P. 447.) Thus states seem no different from their private counterparts in this category and should have similar limits on whom they must accept and serve.
The third and final category of restrictions on the private landowner’s right to exclude that Wyman offers is eminent domain, the power of the government to take private property for a public use upon the payment of just compensation, pursuant to the Fifth Amendment of the United States Constitution. (P. 452.) Wyman concedes that no comparable right empowers one state to forcibly transfer the land of another sovereign. She also acknowledges that the idea of such forcible transfers is a “highly objectionable throwback to the era of European colonization….” (P. 453.) But, Wyman engages the work of scholars who support a right of partial displacement of existing countries from some of their territories by societies that are rendered refugees as a result of climate change.
Wyman’s normative contribution is to invite her reader to consider the possibility of shifting towards a framework of greater human mobility across national borders, and perhaps even open borders. What is exciting about Wyman’s contribution is that she has taken such a historic concept, the right to exclude, and has offered a new way of approaching it.
I began my 1L property class this semester with Johnson v. M’Intosh. One of the lessons of this iconic case is that “[a]n absolute [title], must be an exclusive title, or at least a title which excludes all others not compatible with it.” I am excited to share Wyman’s article with my students and to challenge them to experience the historic concept of the right to exclude in a fresh and new way, in a way that grapples with challenges and opportunities of the twenty-first century.
Maureen E. Brady, The Damagings Clauses
, 104 Va. L. Rev.
(forthcoming 2018), available at SSRN
In her article, The Damagings Clauses, Professor Molly Brady comprehensively analyzes provisions known as “damagings clauses,” which twenty-seven states have enacted in their constitutions. Her work explains the history of their enactment, the courts’ interpretation of these clauses over time, and the potential for reenergizing these constitutional claims to address governmental damages and injuries to property owners that takings jurisprudence or the common law may not otherwise remedy.
Professor Brady’s stated goals for the article are to persuade readers that “there is a place for damagings within condemnation law, that this neglected constitutional provision has the capacity to address a confusing and undertheorized gap in the application of the compensation requirement, and that courts have lost sight of the language’s history in narrowly construing it.”
She has certainly persuaded this reader, and I encourage anyone working in eminent domain law, regulatory takings law, or property law to read this article.
I am embarrassed to say that, even if I had heard about state damagings clauses in the past (which I do not recall), I have never paid any attention to them until I read Professor Brady’s draft paper last year for the Property Law Works in Progress session at the AALS Annual Meeting in San Francisco. Please read this article so you will not be similarly embarrassed in the future, as I anticipate that scholars and litigants will be hearing more about these clauses in response to projected infrastructure growth.
As Professor Brady sets out in a heavily researched history of the beginning of these clauses, Illinois was the first to adopt a damagings clause into its state constitution in 1870 to address a gap in condemnation law “during controversies over street grading and railroad construction.”
Brady expresses this gap as one in which property owners experience a diminution in the value or usefulness of their property as a result of government action that does not take, occupy, or regulate their particular property but that does substantially impair their property interest and should require compensation based on principles of fairness and justice.
The Court in Lucas v. South Carolina Coastal Council expressed this gap as the “gross disparity” between the landowner whose property is taken by eminent domain to build a highway and the landowner who has suffered a ninety-five percent loss in value from the government’s nontrespassory and nonregulatory actions that are not compensable.
Professor Brady notes that “long before regulatory takings were even conceived of as a category, hundreds of lawyers in jurisdictions across the country worried about the fact that physical takings might not cover all the activities of government affecting land for which compensation should be required,” and they moved to address this problem through state constitutional changes.
The article provides many examples of government actions such as alterations in the landscape to accommodate railroads where nearby “homes [were] either left in midair or buried by mountains of dirt filling in the streets.” Because these actions did not appropriate or occupy land, they were noncompensable even though they destroyed property values or caused the ouster of the landowner.
The language of the state damagings clauses adopted in response to these noncompensable actions varies among the states. However, most states have adopted the language used by either Illinois or Pennsylvania. Illinois in 1870 constitutionalized the principle that “Private property shall not be taken or damaged for public use without just compensation.” In its 1874 constitution, Pennsylvania provided:
Municipal and other corporations and individuals invested with the privilege of taking private property for public use shall make just compensation for property taken, injured or destroyed by the construction or enlargement of their works, highways or improvements, which compensation shall be paid or secured before such taking, injury or destruction.
The damagings clauses offer the opportunity for both professors and practitioners to address the “gross disparity” that has existed in takings jurisprudence between landowners who are the target of condemnation or confiscatory regulation and nearby landowners who experience the devaluation or destruction of their property interests from what Abraham Bell and Gideon Parchomovsky have described as “derivative takings.”
Professor Molly Brady’s excellent article is not only a “must-read” for purposes of understanding “these forgotten provisions of the state constitutions,” it also presents some intriguing discussions of the relationship of nuisance law to the interpretation of these clauses and takings jurisprudence.
Laura Underkuffler’s recent article, Property, Sovereignty, and the Public Trust, is part of a special issue of Theoretical Inquiries in Law. The collection as a whole is an important read for anyone interested in the relationships between individual property rights claims and the role and remit of the state in the “private property” sphere. The twelve articles collected in the special issue offer insightful and wide-ranging contributions to these important debates and, both individually and collectively, will hold much interest for Property section readers.
Underkuffler’s contribution examines the theoretical basis for what she describes as the ubiquitous assumption in liberal democratic systems that government should forbear from interference with existing individual property entitlements. Her starting point is the sovereign’s duty to respond to the needs of all members of its community, and from this position she describes the concept of forbearance as “an inherently troublesome proposition.” (P. 330.)
In the course of the article, she examines the core arguments of conventional theories of government forbearance from interference with existing individual property entitlements—for example, for protecting individual reliance interests, or for public policy reasons like encouraging investment or enhancing social stability, or through the tautology that the idea of property itself determines the requirement of government forbearance.
Yet, Underkuffler concludes that each of these arguments offers insufficient reasons, on its own terms, to adequately explain the “forbearance phenomenon.” She offers an alternative lens through which government forbearance can be explained, rooted in the “fiduciary relationship” between a government and its citizens. Fiduciary theory offers an interesting frame for thinking about the structured, institutional, hierarchical power dynamics of relationships between the state and its citizens, and offers a fresh concept for giving content to the state’s responsibilities towards property owners.
Crucially, this fiduciary duty applies not only to property owners but to all citizens. Through this move, Underkuffler repositions the same state obligation that mandates government forbearance from interference with individual property rights on the basis of potentially overreaching power as also applying to non-owners. By widening the population to whom this state duty is owed to include all citizens, Underkuffler shifts the focus away from whether the state should act with respect to private property, to how the state should carry out its all-citizen duty.
Her answer, applying Evan Fox-Decent’s theory of “the state as fiduciary,” focuses on the fiduciary’s responsibility to be “other-regarding” and “to act with due regard for the [beneficiary’s] best interests.” (P. 346.) In this context, the “beneficiaries” of the state’s power include all individual citizens, and the existence of the fiduciary duty demands that “government at the very least must engage in serious reckoning with individual citizens’ (as well as collective) interests.” (Id.)
Through this move, Underkuffler extends the property/sovereignty debate beyond the state-owner binary, to take account of the interests of other members of the community, who live “outside the bubble” of property ownership. She is careful to emphasize that this does not imply that the interests of private property owners should not be valued and protected by government forbearance; indeed, she argues that the individual interests of property owners “must be considered, seriously, in sovereign decision-making.” (Id.)
Nevertheless, her approach opens up space for arguing that—where these individual property-owning interests conflict with collective interests—the individual claim will not, and should not, always prevail. Through the fiduciary lens, Underkuffler simultaneously recognizes the government’s obligation to check its potentially overreaching powers with respect to property owners, and that:
Fiduciaries, by reason of the demands of the fiduciary obligation, are obligated to all of their beneficiaries equally. There is no basis, in fiduciary theory, to rule in – at the outset – the claims of some beneficiaries, and to rule out the claims of others. Government as a fiduciary must reckon seriously not only with the needs of its beneficiaries who own property, but also with the needs of those who do not.
The idea that the state acts under a duty to give “serious reckoning” to competing claims is not unknown in property systems beyond the United States.
Underkuffler refers to the framework constructed under the South African Constitution of 1996 (P. 352) for the purposes of enabling the newly remade state to carry out this duty, and to the national constitutional provisions adopted in Germany after reunification in 1989 (Pp. 351-52).
Indeed, the case law triggered by property reallocation following German reunification included a further test of the “fair balance” struck by the German state when the dispossessed owners appealed to the Grand Chamber under Article 1 of the First Protocol to the European Convention on Human Rights, with that court concluding (in the exceptional circumstances of reunification) that the “deprivation” of property without compensation was in accordance with law, “in the public interest,” and had struck a fair balance between the general interests of the community and the requirements of the protection of individual rights. Underkuffler describes these balancing processes—between the interests of property owners and “the public interest”—as a “public-fiduciary” approach.
In seeking to “illuminate the fuller context in which these questions arise” (P. 353), Underkuffler emphasises the importance of the property resource to human life:
Of all conceivable human interests, none is more fundamental than the ability to appropriate and retain property. It is a stark biological fact that of all commonly asserted human rights, property claims are among the most essential to human life…the ability to live – and to appropriate property to do so – is assumed by any other human right of which we can conceive. When it comes to property, the stakes could not be higher. In other words, government forbearance towards existing property entitlements is rooted in property’s substantive function, and its required guarantees.
(P. 347, emphasis in original.)
As the passage above demonstrates, Underkuffler moves among property-as-resource, property claims, and property rights, while also touching on the suggestion that property (in the form of property rights) is the “guardian” of other human rights—a proposition that has been challenged in debates about the relationship between the right to property and other (human) rights claims. For example, Andre van der Walt, writing from the South African context, argued that property is not “the saviour, the knight on the white steed, the guardian of every other right,” and that positioning property law in that guardian role makes property—and property rights – too central to debates about the governance of property-as-resource in the interests of the whole community. It will be interesting to track how this crucial distinction is advanced in future scholarship developing the “state-as-fiduciary” approach to property and sovereignty.
Underkuffler’s article—and this special issue as a whole—is likely to be of considerable interest to property scholars, and to provoke much further discussion—within the United States and beyond—about the frameworks we use to think and talk about the relationship between owners and non-owners, and the role of the state in governing the valued resource of property in the public interest.