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Libertarian Answer Man: Eminent Domain and Ownership of State Monetary Payments

Dear Mr Kinsella,

I had a question about eminent domain [expropriation] and who becomes the rightful owner of a resource, let’s say a house, after the state has expropriated (stolen) it from the original owner.

I’ve heard you say previously that the rightful/natural owner would be the taxpayer since the original owner has already been compensated. But since the money the original owner of the house has been compensated with is stolen taxpayer money doesn’t this mean that this person never gains title to the money as the state doesn’t rightfully own said money and you can’t transfer title over a resource if you don’t rightfully own said resource? In which case couldn’t you say that he hasn’t truly been compensated and is in reality merely in possession of stolen goods?


It’s not a bad question but it’s complicated. It’s complicated ultimately because of the fact of aggression makes full restitution impossible and causes damage, injustice, in part by muddying things up. For example it has turned money which used to be ownable things like gold into fiat money which, in my view, like BTC, cannot be owned as it does not exist as a physical thing.1 All that said, as long as the state maintains it’s coercive violent monopoly over things and screws things up I am not going to oppose the current legal fiction that people can own fiat dollars.

So in a sense no one owns the dollars. The question is what happened when the expropriated homeowner was paid. If we assume he had a right to take the compensation, then I think we can see why my argument makes sense. The people who were harmed were primarily the taxed citizens, whose money was used to purchase the property. The expropriated homeowner has already received a reasonable compensation—a type of restitution.

You could argue that this is not sufficient restitution, since value is subjective, but fair market value (FMV) compensation is far more than any general citizen-creditor of the state can ever hope to receive. Keep in mind that if the state were dissolved tomorrow all its assets would not suffice to compensate all its victims; the wealth has been wasted and lost and destroyed. My guess is the average citizen could not get more than 0.1% of what he is owed (or even less), because the state has destroyed so much wealth over the years and harmed so many people in so many horrible ways that can never be made up for.

Nonetheless, if the state were to dissolve and its assets somehow distributed to the taxpaying citizens it has been robbing—say, by auctioning it all off and dividing the proceeds up among the citizenry—this would be better than nothing and would be a form of justice. While in the case of an expropriated homeowner he has received something on the order of 100% of his fair market value. Even if it’s only 1/3 that, that’s still far more than anyone else could ever get.

The question is when should we take money from the state. I think anytime you have a chance to get restitution you have a right to go for it, unless you yourself are complicit in the state’s theft or have condoned it (e.g., by voting for socialists or working for the state). As money is not ownable there is nothing wrong with taking a monetary payment. It’s not taking anyone else’s property. Plus it’s fungible anyway. If the state’s cops shoot your dog or your son illegally and you can get $1M from them, you are just getting partial restitution from what the state owes you. If the state takes your home and pays you $200k, then at least the harm done to you has been reduced.

Now if you view the money as owned by the taxpayers, then stolen by the state, and thus the expropriated homeowner is in possession of stolen goods, then he has to disgorge his compensation and make it available back to the general taxpayers for everyone to share in pro-rata, including him—similar to a clawback in bankruptcy proceedings when the debtor pays some favored creditor right before declaring bankruptcy and the other claimants can take that money back and put it in the general pot to be split pro rata— … but the problem is we are nowhere near such a general winding up of the state. There is nowhere for the homeowner to disgorge his money to, except back to the state, and then that doesn’t help the state’s general class of citizen-victims. (I suppose one alternative would be to take the money and then burn it, thereby slightly increasing the purchasing power of all the citizens or fiat holders pro-rata, thus preventing the renunciation of his special claim to his home.)

So all you can do now is get whatever restitution you can. But if you say he doesn’t own the money, okay then he has to return it and then he stands in line with the rest of the citizens to get his 0.1% restitution from the remaining assets of the state. I personally think the better view is he lost his title to his home, now the state legally owns it, but it was “purchased” with general stolen taxpayer funds, and thus the general citizens have a claim on that real estate as an asset subject to satisfying general rectification claims. The homeowner himself has no special claim on it since he was already compensated.



Thank you so much for the thoughtful reply.

 If I may ask a follow up question, supposing that the money is indeed stolen and the expropriated homeowner doesn’t return it, could we then say that he is himself an aggressor?
I mean sure. But in today’s world I don’t think we can say he’s in possession of stolen property. Think about it. Suppose the state takes A’s watch and then gives it to B. And let’s say B knows it’s A’s watch. Should he return it to A? I think so. UNLESS A already got compensated by the taxpayer from the state and would then be double-compensated. In that case, what is B supposed to do? Give the watch back to … whom? To A? to the State? no. If he gives it back to A, by your assumption A is now himself some kind of thief. So what is B to do? I guess his only moral choice is to sell the watch, get cash, and then burn the cash.
But assuming A did not get compensated, B should return it.
But how does this apply to today’s world where there is no dissolution of the state and rectification or reparations procedure being worked out. Let’s say the state imprisons me for 10 years for a crime I’m innocent of, or for a victimless crime. If I’m found to be innocent and released and the state compensates me with $1M for my 10 years in prison, should I turn it down? I don’t see why. So I guess I don’t agree with the premise that taking things from the state, if you are one of its victims, is aggression. Suppose some racist governor gets elected and he frees all the white people in jail for drug crimes. If I’m a white guy in jail for marijuana possession, should I not take the pardon, even though it should have been granted also to black guys?
In my mind this follows. If we can say that the judge, the cop, the IRS agent, the public school teacher, the company that works primarily for the state must return the money they possess to the taxpayer because as Professor Hoppe has argued these people possess stolen money and are aggressors because of this (among other things of course) then it makes sense in my opinion to say the expropriated homeowner is also an aggressor for not returning the money.
I think the first set of people, if you can argue they are net tax eaters and/or that they are morally culpable for working with or being part of or causally supporting the state (might as well include the person-who-votes-for-socialists), you might be able to argue they have no right to restitution and indeed they may be culpable and owe restitution. But I don’t see why the expropriated homeowner is anything like them. Who did he aggress against? Again, even assuming the money he got is owned–which I think is not so clear–what is supposed to do? Not take the payment, and let the state retain it? If he could put it into a general “pot” for payment later to the general class of citizens in a reparations tribunal, sure, but that is not an option now. So his only option is to let the state keep and spend the money, or to take it and spend it himself and thus reduce state control over the money. I suppose you could argue that in a fiat money system, he ought to take the payment, get paper $100 bills from the bank for the whole amount, and then burn it, thus frictionlessly redistributing the value back to the general populace, but I see no obvious ethical obligation to do that. Again, if I can escape from a prison camp I should take the chance. If I can get a pardon from prison I should accept it and work to receive it. If I can get some partial recompensive for wrongs done against me, even if others can’t–that’s better than nothing. If I can build a cabin in the wilderness in Utah controlled by the BLM (https://www.blm.gov/nhp/facts/) without them noticing and get away with it–this is good.
For example if i were to go and try to get my money back from the IRS let’s say, would i be justified?
If I am justified, the reason would be that they are in possession of something that belongs to me and so I have every right to get it back.
I would say: the IRS and all state agencies are criminal gangs and while they have legal control of certain assets they have no rightful ownership of it. Anyone they have wronged has a right to try to reclaim some of this fungible mass of property to make themselves whole. I suppose in the rare and fantastical case where A can seize control of $1T worth of federal assets but his realistic claims are only $100M, then he needs to find a way to return the excess to other victims. But in liberating the property from the control of the state he is not violating anyone’s rights. If there is a genuine victims B of the state, who has a rightful claim to a stolen house, or to a claim on $1M worth of money/value, would you really think B, the rightful owner, would prefer this property stay in the hands and control of the state, or of someone who liberates it?  If I’m not mistaken there is a similar thing in Atlas Shrugged where Ragnar is taking government ships of goods and not seizing the merchandise for his own use but only to return it or its value to its rightful owners. I think we can presume that the victim of theft would prefer an innocent person have his stuff than the thief who stole it, especially if the thief would try to return it. For example suppose a thief takes my bicycle. If some good samaritan realizes the thief has my bike, then I would rather the good samaritan have my bike than the thief, even if the good samaritan cannot find me and return it! I.e., we presume he has permission or license from me, the natural owner, to (a) liberate the bike from the thief, and (b) try to return it to me, but (c) if he can’t, better for him to keep it, or donate it to charity, than for the thief to have it.
If I were to try to do the same with the expropriated homeowner would I also be justified? In my view I would be as he too is in possession of something that belongs to me (a part of it at least) and so I see no definitive difference.
Again thank you so much for taking the time to respond.
Again, in today’s world I do not begrudge non-statists from getting some partial restitution from the state when they can, and I do not view someone who receives such a payout as in possession of stolen goods partly because I don’t think fiat money–information on ledger–is really ownable (though as I said before in today’s system I don’t mind the fiction).
Questioner: “Thank you, I understand now.”
My work is done here, people.
  1. KOL274 | Nobody Owns Bitcoin (PFS 2019). []
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