Article from For Liberty by Norm Leahy.

Even as the federal government is preparing to loan billions of additional dollars to small and medium-sized firms, there’s a growing legal debate about using the Supreme Court’s 2005 Kelo decision to compensate firms for what some argue is a government “taking.”

For those who don’t remember it, Kelo was a roundly-criticized Supreme Court case in which the majority ruled local governments had the power to seize property from one private person and give it to another so long as the original owners were “justly compensated.”

How does this apply to government-ordered shutdowns of local businesses? When a government tells a business to close its doors, it’s no different than a government seizing the business outright. So compensation must be paid:

Any order requiring “non-essential” workers to stay at home or “non-essential” business firms to close their doors constitutes a constitutional taking because it prevents such employees and firms from exercising their property rights while depriving them of their liberty interests as well.

Accordingly, instead of handouts, loans, or bailouts through poorly targeted federal stimulus packages, people and firms adversely affected by state lockdowns must be compensated as of right. And because of the federal nature of our system, it is state and local governments who must provide this compensation.

Congress could still have a role to play: it could provide block grants to the states to fund the takings reimbursements. Either way, state governments are legally and constitutionally compelled to provide just compensation to all nonessential employees and firms who have been deprived of their property and liberty rights.

Controversial? Absolutely. Even some libertarian legal scholars have problems with the idea. But it’s also worth testing to see if existing laws and constitutional precepts can help restore businesses’ bottom lines.

Image Credit: Joe Ravi [CC BY-SA 3.0 (], via Wikimedia Commons