Takings and Givings


November 18, 2004


Browse in Takings

For years, property rights fundamentalists have yearned for a world in which they get compensation for just about every restriction on the use of their property. It’s fine for the community to pump up the value of their property, through such things as highways, schools, proximity to other developments, and the like. But when they have to give something back — well, that’s a “taking.”

In Oregon they have gotten their wish. On election day, voters there passed Measure 37, which exempts landowners from any zoning laws enacted since they bought their property, unless they get full monetary compensation. Until now, Oregon has had the most thorough and effective approach to land use in the entire country. Cities have thrived, forests and farmland have been preserved, kids have enjoyed the same kind of open space that their parents did.

Now, under Measure 37, parts of the state may start to look like Houston, Texas, where there is no zoning to speak of. “In Oregon, when government steals your retirement nest egg, they call it planning,” a Measure 37 advocate said. But exactly who is stealing what from whom? Say someone has sat on rural acreage for twenty years, waiting for sprawl to come their way. The taxpayers pay for highways, schools, police and fire protection. Other landowners build facilities for shopping. All this makes the speculator’s land ripe for development, and worth a great deal of money.

In other words, he or she glombs onto the investment of others, and calls it their own. The landowner didn’t add the value; society did. In such cases, Measure 37 requires taxpayers to compensate a landowner for something the taxpayers themselves helped provide in the first place.

This insight is not new. John Stuart Mill wrote, famously, that land speculators get “rich in their sleep.” Thorstein Veblen called land gains a “run of free income.” Henry George, the self-taught economic writer, developed the idea in his book “Progress and Poverty”, which was an international sensation at the end of the last century. It helped propel the Populist movement. Farmers kept it next to the family bible on their bookshelves.

So great was the threat of George that Robber Barons funded economics departments at major universities to put his arguments to rest.(See Mason Gaffney’s book The Corruption of Economics for details.) It was much the way wealthy Americans fund the pro-market opinion tanks such as the Heritage Foundationtoday; and the stamp of this reactive strike remains on mainstream economics. That economics makes little distinction between constructive investment that creates jobs on the one hand, and passive gains acquired by poaching off the commons on the other. (It will be interesting to see what the President proposes in his tax “simplification” bill in this regard.)

The “takings” argument is a fruit of this tree. It is the politics of victimization as practiced by the political Right. If Oregon’s land use policies required more flexibility — for landowners who wanted to build a residence for example — that could have been done without this big giveaway.Perhaps Oregonians now will start talking about “givings” — that is, expenditures by taxpayers and other landowners that accrue to the profit of a particular owner.

Compensation is a two way street. If “takings” require it then should not “givings” also?