Victimization, rent-seeking and just compensation

... though people can adjust satisfactorily to random uncertainty, which can be dealt with through insurance, including self-insurance, they remain on edge when contemplating the possibility of strategically determined losses. For when the bearing of strategy is evident, one faces the risk of beingsystematically imposed upon, which seems a risk of a very different order from the risk of occasional, accidental injury. One faces also the rational necessity of devoting a large proportion of his energies and resources to counter-strategy aimed at fending off the risk; where the possibility of loss will be visibly determined by strategy, that possibility cannot be conveniently dismissed from consciousness on the ground that, being uncontrollable, it is not worth thinking about.

Frank Michelman (1967: page 1217)

With some fixed probability, an exogenous event will occur that will make a parcel of land sufficiently valuable for public use so as to trigger a government decision to take the land.

Blume, Rubinfeld and Shapiro (1984: page 72)

Abstract

When should government compensate citizens for harm inflicted by public policy? In practice, all public policy is harmful to somebody, even when it is beneficial to society as a whole. The common view in the legal profession is that a fuzzy but serviceable line can be drawn between “taking” which should be compensated and the proper exercise of the “policy power” where no compensation is warranted. Recently this view has been challenged by some authors who argue that harm to victims of socially-advantageous public policy should never be compensated, and by others who argue that compensation is almost always warranted. The latter would go so far as to proscribe all redistribution of income as a “taking” from the well-to-do. This paper is a defense of the common view against both challenges. The key to the problem is the distinction between unalterable risk and the risk of victimization of citizens by the government, giving rise to rent-seeking and a general disorganization of society.