October 22, 2001

7:53 PM

Talk about a Trojan Horse!The legal concept of "regulatory takings" has slowly been gaining ground in right wing circles, and is embedded in trade agreements such as NAFTA and FTAA. The idea represents nothing less than a complete subversion of democracy. (It's a longish article, but an extremely alarming one.)
posted by Ty Webb (18 comments total)

i want to cry.
posted by rhyax at 8:14 PM on October 22, 2001

I can't figure out which side I'm supposed to root against here, the anti-NAFTA right or the pro-NAFTA right.
posted by rodii at 8:19 PM on October 22, 2001

aaron, you have a different opinion? Let's hear it.
posted by Ty Webb at 8:47 PM on October 22, 2001

It's akin to McDonalds suing vegetarians for the loss of potential profit, and it is indeed alarming. I'm pro NAFTA, as in what the acronym actually stands for, but against the implementation. It attempts to negate risk, and that will never work.

Other threads that may be of interest:
-NAFTA allows corporations to sue governments
-The deadliest threat facing democracy today?

There are more, but I'm on a slow connection here and don't have the patience to find them all. Some good conversations were had, as I remember.
posted by Nothing at 9:43 PM on October 22, 2001

i'd actually heard of the takings movement in one of my last college courses: the human impact on the environment. people suck.
posted by moz at 10:10 PM on October 22, 2001

aaron-
As I understand it, the mutual benefits of Free Trade between nations rest in David Ricardo's theory of Comparative Advantage. The theory in turn depends on what he called " the natural disinclination which every man has to quit the country of his birth." This disinclination, according to Ricardo, will "check the emigration of capital."
However, capital mobility between nations is a fact and the global playing field works now in a field of Absolute Advantage where you may able to debate that free trade will produce more goods but not that it will be beneficial for each nation.

I hope this seems reasoned enough to pull you into a debate.
posted by ProfLinusPauling at 10:21 PM on October 22, 2001

bass turds
posted by billder at 10:29 PM on October 22, 2001

Ricardo's ideas are a good start. But, being nearly 200 years out of date, cannot be viewed as the comprehensive defense of free trade. In particular, Ricardo is stuck in a world view that sees nations as the central actors.

To modernize the idea: what do I care if I work for a U.S. firm or a Swiss one? In fact, the more firms who can make me an offer for my services, the better off I am. I have a wider array of options.

In general, I should like to have the opportunity to make mutually-beneficial agreements with as wide a scope of people as possible. It's not clear to me how my nation serves me by restricting my choices.

Unless, of course, I'm a part of some group that has enough political power to set up some favorable protectionism. Then, I am invariably stealing from my fellow citizens. I can't think of a scenario that doesn't have that effect.

What situation do you imagine that produces more goods on net, and yet impoverishes one side of the bargain? We're wandering a bit from the topic, but I'm interested enough to risk the consequences. Feel free to shift to email if you think it best.
posted by marknau at 10:44 PM on October 22, 2001

marknau: Capital is much, much more mobile than labor. Unskilled and semi-skilled labor is a (corporate) buyer's market to begin with, and unrestricted capital flow simply makes it more so. Also, political conditions in many countries where dissent is forcibly suppressed make it extremely difficult for local workers to organize to redress grievances with employers, either directly or through their governments. That difficulty (in, say, negotiating better wages, or enacting and enforcing minimum-wage laws) limits the gains workers in low-wage countries make at the expense of workers in high-wage countries.

Because capital can more quickly and easily migrate to low-wage areas than labor can migrate to high-demand areas, and because despotism limits wage gains through political means in said low-wage areas, blanket liberalization of global capital flows translates into lower wages overall. In other words, capital gets richer, and labor gets poorer.

I have to agree with you, though, that this is digressing from the original topic of regulatory takings, which is a separate issue. It seems that the regulatory takings idea is making neoliberal trade agreements more controversial than they have to be, and should be discarded simply on pragmatic grounds. Legally speaking, can a treaty grant private parties the right to sue the U.S. government in any tribunal other than a federal court, given the U.S. Constitution and all? Can a mere treaty override the Constitution? And if not (which is my reading), then are these provisions even legally enforceable? Is the government's cooperation with such suits purely voluntary, or what?

Okay, time for bed.
posted by skoosh at 2:44 AM on October 23, 2001

marknau-

With regards to the e-mail suggestion: It's pretty polite. Unless there are any objections from other people I'm fine just posting my responses.

With regard to everything else: I agree with you that it would be good "to have the opportunity to make mutually-beneficial agreements with as wide a scope of people as possible"

However I disagree that as far as international commerce is concerned being part of a nation only affords you the benefit of establishing a series of favorable protectionist measures.

When left alone, the free market only measures cost as what the producer paid to get the good or service to market plus the amount of profit he or she can add thanks to the rules of supply and demand. However, in every market transaction other social costs are created.

In the 1920's A.C. Pigou used the example of a factory producing smoke that eroded the paint on a nearby man's house. In principle, if the cost of the paint isn't accounted for in the price of whatever the factory's producing, then the owner of the factory has no incentive to produce his product in such a way that other memebers of society don't shoulder much of the burden for it's creation without adequate compensation. Hence the need for a way to internalize these external costs. Hence the need for a democratically elected governing body to assess what the value of the external costs should be. hence the nation.

Unfortunately free commerce between nations who are not permitted to adjust the prices of imports based on their own system of factored-in externalities, will result in more and more of the costs being externalized in order to maintain a competitive edge in the market. As a result the whole of scoiety suffers.

In anwser to your question:
What situation do you imagine that produces more goods on net, and yet impoverishes one side of the bargain?

Let's say one not so democratic nation decides to specialize in providing affordable labor. In this competition soon the external costs of these laborers salary are replaced with the bare minimum to keep them alive, working and under control. clearly these laborers are losing out on the deal.
posted by ProfLinusPauling at 3:01 AM on October 23, 2001

hincandenza: MetaTalk.
posted by rodii at 5:42 AM on October 23, 2001

I don't see what's so alarming about asking Government to pay for it's almost always clumsy attempts at social engineering.

The MBTE example is classic. Environmentalists insist that MBTE is used. Oops. In the meantime, society's capital is being wasted as it tries to accomodate the (non)logic of government. Fine, you want to "engineer" society and tie up capital. You'd better know what you're doing.

This isn't only about "big business." My father has had several acres of land declared a "wetlands", which means he can't develop on it. The land is in a fully developed area, next to an Interstate for god's sake! The loss of revenues is in the hundreds of thousands. Do you think the sierra club is going to cut him a check?
posted by prodigal at 6:45 AM on October 23, 2001

The prohibition against government taking without the payment of fair compensation is enshrined in the Bill of Rights of the U.S. Constitution. In no way, shape, or form can the renaissance of takings as a vital area of law be deemed as anything else than a renaissance of democracy, not its supression.

The alignment of the Constitution against the expropriation of monies from citizens by the government is clear.

Consider, for example, that before a federal income tax could be adopted a Constitutional amendment was required. Prior to the adoption of the amendment, the US government survived on business transactions (the sale of land and mineral and other exploitation rights) and upon the levy of customs duties. (Although this is certainly a partial expropriation: although custom duties were levied notionally upon goods, not people, and upon foreigners seeking to export to the US, not upon Americans to the extent people were obliged to pay, Americans economically paid the full cost of the customs.)
posted by MattD at 7:15 AM on October 23, 2001

Damn, I posted this 12 days ago (October 10th)
posted by taumeson at 7:16 AM on October 23, 2001

double post - see taumeson's link
posted by yesster at 7:23 AM on October 23, 2001

Double-doublepost notification.

(See me disappearing up my own bum. I oughta sell tickets!)
posted by stavrosthewonderchicken at 7:34 AM on October 23, 2001