PROPERTY RIGHTS are the foundation of a market economy. Only a well-defined system of property rights allows for the exchange of goods and services in the marketplace and provides incentives for investment in all manner of business ventures. Our theme is the economic importance of legal protection of property rights from government takings. We express concern that as deregulation proceeds in telecommunications and electric power, regulatory agencies are attempting to erode those constitutional protections for private property and are pursuing a government taking of unprecedented proportions through a carefully structured sequence of deregulatory programs.

FOUR EPIGRAMS FOR PROTECTING PRIVATE PROPERTY IN NETWORK INDUSTRIES

The analysis that we present is neither an apologia for regulation nor a defense of monopoly. To the contrary, our overriding concern is the protection of private property as the foundation of a competitive economy. Our analysis of deregulatory takings in the light of the constitutional defense of property rights is meant as a criticism of regulators who seek to use their authority to effect taxes and income transfers “off the books.” We strongly favor moving from a regulated regime to a competitive market in the network industries as quickly as possible. That transition, however, requires loosening regulatory controls not only on entry, but also on the incumbent utilities. The need to compensate the incumbent utility for past, present, or future regulatory obligations does not mean that competition should be delayed.