Rise of the "Investor-State"?

October 10, 2001 9:46 AM

Rise of the "Investor-State"? I was reading The Nation online, and came across this article. William Greider has written a piece detailing how many conservatives in this country think that the Constitution's Fifth Amendment protections against private property being taken from individuals should apply to EVERYTHING, including government regulations. Taken to extremes, if a city want to pass an ordinance banning strip clubs from school zones, any club with even an inkling that they were going to build a club in those zones could sue the city against future POTENTIAL earnings.

Seems silly to me. What about you?

TOO LATE: IT'S ALREADY IN NAFTA. It's called Chapter 11, and it protects foreign investors/foreign companies from regulatory actions. So, for example, when California passed a bill to remove the carcinogen MTBE from gasoline in order to halt its spread into drinking water, Methanex Corporation, from Canada, sued for $970 MILLION. These lawsuits are popping up all over the place, and it's only going to get worse once the FTAA is passed.
posted by taumeson (7 comments total)

Yes, there have been other posts about this "revolting development", but this post has the piece in The Nation.
posted by taumeson at 9:51 AM on October 10, 2001

Recommended reading... good find taumeson.

"The tension of deciding which comes first--property or people--has always generated the deepest conflicts, including the Civil War."
A very defining and succint statement for those who can only handle b/w simple.
Now, where do you stand? Property or people, choose one.
I choose people!
posted by nofundy at 10:13 AM on October 10, 2001

Surprising the Libertarians haven't seized on this yet.
posted by revbrian at 10:15 AM on October 10, 2001

The basic issue isn't new. Ever since zoning became widespread, communities have had to deal with lawsuits from people upset when their land gets rezoned, even if they're not doing anything with it at the moment.
posted by agaffin at 10:45 AM on October 10, 2001

I'm sure the intent of this Chapter is that without it, investments on foreign soil become much riskier.

Let's say that you spend $2 billion on building a manufacturing plant in Mexico. Then, the Mexican government passes legislation making your product illegal. Now your $2 billion is down the tubes.

Without this protection, recruitment of foreign firms would be almost impossible.

But the $970 million lawsuit isn't quite right, either.

Where to strike a balance?
posted by yesster at 11:04 AM on October 10, 2001

If you think it's only happening at the international level, you're wrong.

In Rhode Island, a businessman is suing the government because of environmental restrictions that prevent him from developing marsh-front land he purchased.

The kicker? The environmental regulations have been in place over 20 years! And the plaintiff already knew that before he even bought the land.

But he is trying to use Epstein's "Takings" doctrine anyway. Part of it went to the Supreme Court, to see whether the Takings idea applies. The Supreme Court said that Takings could be applied, but sent it back to the lower court to determine if the guy should be compensated.

link: Landowners Win Right To Attack Rules
posted by jewishbuddha at 12:02 PM on October 10, 2001