Theorists Flashcards
Demsetz: Hypothesis I
Hypothesis I: The emergence of new property rights takes place in response to the desires of the interacting persons for adjustment to new benefit-cost possibilities.
Decision→Old Rule→Externalities→Change→Increase in Externalities→New Rule
Example:
Old Rule: No rule
Externalities (low): Harms to the fish industry
Change: New technology
Increase in Externalities: Change in the perception of the problem
New Rule: Response to public reaction – No taking fish
Example:
Old Rule: Only possession represented property rights
Externalities: no worries about killing beavers
Change: Fur industry – fur became valuable
Increase in Externalities: over-hunting occurred because of valuable pelt
New Rule: Private property is allocated – can kill the beavers only on your property
Demsetz: Hypothesis II
Hypothesis II: The tendency to internalize externalities will tend over time to result in property rights being held by individual private owners.
Examples of Communal Ownership:
Condo Association Gym – everyone has a right to use equipment
Common areas in community living situations
Examples of State Ownership:
Military bases
Post Office
Airwaves
- Private property has fewer externalities
- Communal ownership has higher externalities
- Over time systems will tend to drift toward private property rights–usually starts as communal and gradually shifts towards private ownership property rights
Rose: Labor Theory
Rewarding useful labor with possession of property
Problems with this theory:
–One may not own their labor (could be laboring for someone else)
–Isn’t clear on how far labor goes in establishing a right
In Pierson v. Post: the majority was arguing for a clear act principle while the dissent was arguing for rewarding labor. However, each side acknowledged the importance of the other side’s principle. Therefore, maybe there is a way to reconcile the labor theory with the clear act theory.
Rose: Clear-Act Theory
Are you sending out the right signals to show people that you own something?
–Common law defines acts of possession as some kind of statement, such as rewarding the one who communicates a claim, does reward useful labor; the useful labor is the very act of speaking clearly and distinctly about one’s claim to property.
Adverse possession example: A.P. rewards useful labor in the trespasser, but also requires the original owner to assert her right publicly
Problems with this theory:
Difficult to make clear
1) at relevant time
2) to the relevant audience (people who actually use or might want to use the thing in question).
–Acts showing property in land often depend on not conforming to nature–MUST BE CONSPICUOUS, which can be expensive
Sax
First formulation = role of the government:
1) Government as Enterpriser: government is using property to build for the use of the public and itself. Everyone is going to get to use the property so everyone should pay for it.
–EX: government is building roads, bridges, and airports (government should pay in these situations – acquiring property to act as enterpriser)
2) Government as Arbiter: government is resolving disputes between private land owners. No compensation is due.
–There are actions that the government takes that are not clear as to what role they are taking. Sometimes the arbitration is between a private party and the government.
–The government is allowed to act to limit externalities without compensating. If you are acting to regulate spill over effects you don’t pay.
Epstein
There are two situations where the government can regulate in a way that reduces property value:
1) nuisance control (not indirect harm, nor harm to society in general)
2) when it supplies implicit compensation
–Implicit compensation: Compensate specifically to the particular land, NOT to society as a whole. It’s not enough to say that you get the same benefit as other members of society. It needs to be grounded in property value specific to the property in question.
–If people could bargain freely, they would bargain for this result, so the government is doing the bargaining. Epstein views the government as mimicking the bargaining that would happen if the transaction costs weren’t present in community bargaining.
Michelman
–Compensation v. No Compensation: Not looking at if we are going to regulate in the first place, only about whether we pay or not.
1) Settlement Costs: What are the costs of the choice to compensate?
–Money for all similar claimants is included. Not simply the one brickwork that you are shutting down.
2) Demoralization Costs: People are unhappy with the government when not compensated.
–The government ought to worry if a lot of people become anti-government due to not compensating
–Demoralization costs are likely to be high when they appear to be arbitrary or unfair in some way
Ackerman
How do ordinary people in the culture view takings?
–Ordinary v. Reasonable: When a test is reasonable, the judge makes the decision based on what they think; BUT, if you base the test on ordinary then they have to think of how someone else, the ordinary person, would think.
–”Taken” means either:
A) Gone completely (like an ordinary enterpriser case)
B) “Bad Joke” is term of art focused on what’s left
EX: Mahon (if Holmes correct); Nectow (zero value); Causby (hard to imagine a way to use)
–”Unduly” suggests some consideration of benefits of the use, but looks like a version of noxious use
Basic Test:
1) What’s left of the property? (usable and/or valuable)
2) What’s the use of the property? (beneficial v. harmful)
Direct Investment-Backed Expectations
–Expectations = O’s at time of investment (reasonable)
–Distinct = Specific
–Investment backed = Specifically paid for
Exam Note:
1) Owner generally had some DIBE at purchase (intended uses)
2) Check if right affected is specific part of DIBE
3) Check if interference with DIBE is significant (e.g. no reasonable rate of return)
–Significance: Protects against specific out-of-pocket losses
–If O explicitly paid for specific use and state denied that use, may be Taking
–If reasonable rate of return on intended investment, not Taking
Denominator Question
1) Don’t divide a single parcel into segments to determine if whole segment gone
2) Look at all of parcel (rights) affected by regulation
–Generally would seem possible to have DIBE in particular segment if pay for separately
–To determine whether a property is either a single affected parcel or a new combined parcel, measure
1) DIBE (primary v. secondary)
2) Reasonable Rate of Return
3) Loss in Value
Common Type of Constitutional Analysis
Asks if :
1) the means chosen (particular State law) is sufficiently well-designed to achieve
2) an end (State interest) that is sufficiently important
Rational Basis Scrutiny
A) Means chosen must be rationally related to
B) Legitimate State interest
C) Used for ordinary legislation (where deferring to legislature)
D) Government almost ALWAYS wins
Strict Basis Scrutiny
A) Must be narrowly tailored to
B) Compelling State interest
C) Used for, e.g., lines drawn on basis of race, religion, speakers’ POV
D) Government almost NEVER Wins
