The Constitution of Risk

By Adrian Vermeule

How should we approach legal decisions regarding private property for public use? How can constitutional risk be managed in order to maximise the benefits? In this article adapted from the author’s book The Constitution of Risk, Adrian Vermeule explores such questions, looking at the role of constitutional risk within free market development, financial regulation, and how constitutional rulemakers are able to optimise strategy in these fields.

Kelo v. City of New London

In 2005, the United States Supreme Court issued a highly controversial decision in Kelo v. City of New London. Kelo involved constitutional regulation of “takings” – government appropriations of property through the power of eminent domain. Kelo allowed the taking of private property that was then transferred to another private party, in order to promote redevelopment of an economically depressed urban area; the decision triggered a barrage of criticism from libertarian advocates of constitutional property rights.

Under the U.S. constitution, takings generally require “just compensation” to the owner, but there are also restrictions on when government may engage in taking private property at all – most prominently a requirement that the taking must be for “public use.” The critics of Kelo, mostly libertarian lawyers with free-market commitments, hotly denied that a transfer of property to a private party, in the interests of economic redevelopment, should count as a public use. In Kelo, however, the Supreme Court offered an expansive definition of the public-use requirement, and thus allowed a wide range of governmental takings, including forced transfers from one private party to another, for public purposes. How should we assess that decision? Does it rest on an analytically sound approach to constitutional law? What of the risks to property rights, and the risks of harmful interest-group activity? The book offers a way to think about problems of this sort.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.