The (Ir)Relevance of Constitutional Protection for Property Rights: Compensation for Takings in Canada and the U.S.

Abstract

The aim of this paper is to investigate how the choice of legal form matters when securing against takings. The focus is on the consequences of choosing a constitutional, as opposed to a statutory or common law protection for rights. The paper draws on economic and public choice analysis to lay out a set of functional justifications for imposing a liability to pay compensation on when it takes private property. I consider functional interests across two broad categories of efficiency and fairness, looking in particular at interests including: fiscal illusion; investor insurance; externality control; transactions costs; distribution; government failure and property law and norms. I examine the implications of choice of legal form within these interests, and also look across the functional interests in an integrated perspective. The integrated theory suggests that a single liability regime will be unable to accommodate the complex and often conflicting demands imposed by the functional interests. The choice of constitutional form will involve an implicit need to prioritize the functional interests to be served. The integrated theory suggests that the functional interests in efficiency may be as well served by non-constitutional forms of protection, while interests rooted in fairness concerns may require constitutional status. However, the theory also suggests that these may be differences in degree, rather than in kind. The second section of the paper examines the comparative law of takings and compensation in Canada and the US in light of the theory.