I Chose Liberty - Ludwig von Mises Institute

Richard A. Epstein 115
carry over—indeed regularly diverged—from the rules that governed the public regulation
of land use. All sorts of things that people could do which their neighbors could not stop
them from became things that people could not do if the legislature so decreed. And the
possibility of compensation to offset the loss of rights was studiously avoided. I had come
to reject any discontinuity between public and private law (as with civil rights cases) and
thought it would be strange indeed that people who could not achieve actions by private
agreement could get legislative approval for those same results and not have to pay for the
change. This all led me to start the work on my Takings book, which marked me as a man
outside of the New York Times’s mainstream, in this case for life. In effect the government
could do to private individuals what their neighbors could do, and not have to pay for the
change. Build a tall building for the post office and you do not have to pay for the neighbor’s
loss of view. But to restrict him from building on his own land requires a restrictive covenant
that has to be bought in private markets. The government can force the change, but can
only do so if it pays for the loss in value. The takings clause, with its just compensation
requirement, violates the libertarian ideal because it permits forced exchanges when transactions
cost are high. But it justifies the coercion by bringing about social improvements in
which all can share when compensation in cash or kind is supplied. By the same token the
state can enjoin conduct (e.g., nuisances, rightly defined) without having to pay a dime
because neighbors are entitled to the same relief. This simple theory of governance could
be expanded to cover all taxes, all regulations, all shift in liability schemes, as from tort to
workers’ compensation. It was, I thought and still think, quite ingenious. It is also the recipe
for striking down the New Deal for reasons that have little if anything to do with the anti-
Roosevelt passions, which oddly enough I have never shared. The ability to combine a
libertarian baseline with the social improvements from forced exchanges offered a powerful
tool of analysis. Let the chips fall where they may.
And fall they did—hard. The anti-discrimination laws were the subject of my book,
Forbidden Ground: The Case Against Employment Discrimination Laws (1992), which called
for the abolition of all these laws in private competitive markets. Here the coordination
problems that loomed so large in nuisance and takings cases did not emerge. So affirmative
action survives in private organizations, not because of any special belief in the need for
the deviation from some principle of a color-blind society, but as an outgrowth of our general
belief in freedom of association. Public universities, I believe, should be allowed to do the
same thing, assuming they should be run at all, if only because they are constrained by the
competition from private institutions. I have no idea whether the combined position is
liberal or conservative. I do hope that this is all correct.
With all this done, I wrote next on those cases in which freedom of contract did not
work for government because of its monopoly power, and in the rough waters of Bargaining
With the State (1993) tried to explain that, even when the government did produce some
net good, it was important to maximize the total amount of that good by limiting its ability
to redistribute the gain to its friends. Next came my book, Simple Rules for a Complex World
(1995), which sought to develop the basic principles of social organization found in the
earlier works in a way that steered for the most part clear of constitutional argument, making
the case on more general grounds of political theory.