The Politics of the Takings Clauses

A long-standing consensus exists that the arbitrary or excessive expropriation of private property by a country hurts its economic growth. Although constitutions can play an important role in protecting private property, remarkably little is known about how they actually restrict the power of eminent domain and whether such restrictions are associated with reduced de facto expropriation risks. This Essay fills that gap by presenting original data on the procedural and substantive protections in constitutional takings clauses from 1946 to 2013. Its main finding is that no observable relationship exists between de jure constitutional restrictions on the power of eminent domain and de facto expropriation risks. This Essay explores two possible explanations for why constitutional restrictions on the power of eminent domain fail to make a difference in practice. The first is that countries adopt disingenuous promises to bolster their international reputation or to attract foreign aid. The second explanation holds that societal disagreements over the desired level of expropriation might be built into the constitution’s design. Such disagreements emerge when a portion of citizens believe they benefit more from expropriation than from the general benefits that flow from secure property rights. This Essay finds empirical support for the second explanation. Specifically, it finds that real-world constitutional property regimes are often riddled with ambiguities. That is, constitutions often include strong procedural and substantive restrictions on the power of eminent domain but also include “fine print” that can undermine those restrictions. This Essay finds that when accounting for such fine print, constitutional restrictions on the power of eminent domain appear to be correlated with reduced expropriation risks. This finding suggests that the effectiveness of takings clauses might depend on the politics surrounding their adoption