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  • Oren Levin-Waldman

It is Time to Apply the Fifth Amendment to Losses Suffered by Business Owners and Workers

State officials have been hiding behind a fiction that businesses are shuttered and people are out of work because of a pandemic. This is only partly true. Businesses are shuttered and workers are out of work because of government ordered lockdowns. This is no different than the government effectively seizing one’s property without just compensation under the ‘takings’ clause of the Fifth amendment to the Constitution.


We are all familiar with the concept of eminent domain, whereby the state can seize one’s property for a public purpose. But it isn’t just a question of seizing property, but taking an action which also diminishes its value. ‘Takings’ law requires that property owners be compensated at fair market value. To then mandate that businesses only operate at 25 to 30 percent, or even 50 percent, capacity is to effectively diminish the value of property.


Nobody will argue the public purpose of such restrictions amid this pandemic, but the $1.9 billion COVID Relief package replete with pork and other goodies intended to purchase votes which is currently being debated is not only misguided, but perhaps unconstitutional. O.K. the $1.9 billion isn’t unconstitutional per se, but denying businesses and workers full compensation for their losses surely is.


At the same time, it is odd that while various groups have challenged state lockdowns in court, nobody has really challenged them on the grounds that they violate the Fifth amendment to the Constitution. Again, to invoke the Fifth Amendment is in no way to say that there are no legitimate grounds for states to use their emergency powers and order shutdowns. Rather, full compensation must be paid.


Were it the case that consumers simply stopped patronizing businesses because of the pandemic, then the result would be a normal recession for which some relief might be warranted. But that is not what happened here. Businesses were ordered either to shutdown or reduce their capacity, with the effect that many were forced to lay workers and some cases forced to shut down altogether.


For state officials to then blame the pandemic is really to shirk responsibility and accountability demanded by the Fifth Amendment. It has been commonplace for free marketeers and/or laissez-faire advocates to claim that the Fifth Amendment protects the sanctity of private property. But that isn’t completely true. Rather, the Fifth Amendment is about public justification, and the protection of individuals from arbitrary exercises of governmental authority.


When the state wants to exercise its powers of eminent domain, it condemns property because it may seek to build a road or something that serves the public good. This initial condemnation then triggers a set of procedures, which forces the state to have to justify its actions. First, a set of hearings are held, whereby property owners can challenge the decision. If property owners are not satisfied with the outcome of these hearings, they can then challenge the decision in court.


The rationale for compensation at fair market value is that a sovereign who is forced to compensate for property loss will think twice before doing it. The sovereign, in other words, will only do it if it is absolutely necessary for the sake of the public good. The objective is to protect individuals’ rights from the arbitrary exercise of power and authority. This is important because it wasn’t uncommon for medieval kings to seize one’s property because either they wanted it for themselves, or a property owner was simply no longer in the king’s favor.


Although a COVID press conference whereby restrictions, including lockdowns, might ve viewed as a form of public justification, it actually falls short of the procedures triggered by traditional eminent domain. Those whose businesses who are to be shut down should have been afforded an opportunity — a venue — whereby they could challenge these measures. Moreover, public officials should have been required to really justify these measures beyond the standard bromides of “public health” and of course “follow the science.”


Moreover, if they had been required to compensate business owners and laid off workers for their loss, they most likely would have thought twice about undertaking these measures. Perhaps they would have considered other approaches to mitigation. The proposed $1.9 billion COVID Relief bill does not in any way compensate the small business owner who has been permanently forced out of business. And it certainly doesn’t compensate the workers who is permanently locked out of work.


To those who have been locked out, it appears to be arbitrary. Why can the convenience store remain open, but the gym with social distancing cannot? Part of the problem is that for workers their work is not defined as a property right in their labor. If progressives truly wanted to make a statement for worker rights, rather than generating noise, they would write laws that do indeed define workers’ work as a property right in labor. Then they would truly have to be compensated for their loss.


The other part of the problem is that for businesses, they still own their businesses even if they are forced to shut down for a period. There are cases that support the position that maybe they aren’t entitled because they still own their businesses. But there are also cases that hold that property owners need to be compensated if there has been a diminution in the value of their property as a result of governmental actions. The longer the shutdown, the greater the loss of value.


If Progressives are really serious about protecting workers’ rights, then it is time to afford them property rights in their labor. And if they really believe in democracy, as they so often profess to, then they should reject pork barrel politics and packages which do little for workers in favor of true 100 percent compensation of losses to workers and business owners. Because like everything else in Washington, this package only demonstrates that they really couldn’t care less. The elites, after all haven’t lost anything; only the common worker. Until labor laws are rewritten, the common worker will always get the shaft.

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