Though work can be done to create a statutory, constitutional, and jurisprudential structure that provides a more just system of compensation for property owners aggrieved by governmental actions, no system of compensation can perfectly replace the value owners attach to their property. Property often has a higher value to its current owner than it may have on the market or in the hands of the public. Because subjective value is impossible to validate when determining compensation, reforms are forced to use the more objective “market value” standard. When the government takes land and is required to pay only the market value, however, the current owner may not be fully compensated. He may be able to put the land to a higher use than the present market value dictates, or he may be able to sell his property rights to others who value the property more than the average person in the market. This potential buyer may be able to put the property to a higher alternative use than would be served by the governmental regulation.
An even more threatening situation is when property is taken for private uses. The one using the state to take the land expropriates this surplus value, thereby creating a dead-weight economic loss. The price the owner would be willing to accept to part with his property will often be higher than the average market indicator. The usefulness of contract is that it creates individualized determinations of value such that both parties to a contract benefit from the transaction. Only when the state, or a private party wishing to employ the power of the state, is forced to bargain with a property owner for acquiring his property or a use of it, can a more balanced scheme of compensation occur. In a compensation scheme based on market value, the harm done to property owners by governmental actions may be diminished, but it will never be eliminated.
For this reason, among others, responsible policy makers must not work to correct just our definitions of takings and liberalize the system of compensation, but must work also to minimize the amount of takings that actually occur. Property owners can truly be protected only when governmental actions do not affect their property rights in the first place. Following the intent of the Framers, a policy maker’s first concern should be to prevent the state from intruding on private property. Property rights should not be a secondary concern receiving importance only after fulfilling some other perceived objective of the state.
A system of restrained regulation will not eliminate remedies for citizens affected by noxious uses of property. The private law of torts affords the opportunity for individuals to bring suits under nuisance or trespass to abate harmful uses of property. Broad based governmental regulations have co-opted this route. Private regulation, however, is superior in that it allows for specific and individualized controls that address actual harms. Returning to a system of greater property rights protections will not, therefore, allow owners to run roughshod over the community by using their property in ways that will harm others.
A sound protection of property rights is a fundamental condition for all other liberties. One’s property defines his sovereign domain as an individual. The ability to labor and exchange and retain the fruits of those efforts is a primary condition for autonomy. James Madison warned, “[A]s a man is said to have a right to his property, he may be equally said to have a property in his rights. Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions." The excessive growth of the state’s power to control real property has vital implications for the citizenry’s liberty in general. This growth must be brought in check if our property in liberty is to be preserved.
Delineation of property rights in our laws, such as those in the Michigan and federal takings clauses, were understood to be vital to limiting the expansiveness of the state and to identifying that zone of liberty which the government cannot intrude. The government should work toward a system, however, where concerns of compensation diminish as it chooses to conservatively employ its power to take. The power of eminent domain is, and was always, meant to be only a power of last resort.