Saturday, November 14, 2009

Why eminent domain should be used sparingly

This is karma:
The private homes that New London, Conn., took away from Suzette Kelo and her neighbors have been torn down. Their former site is a wasteland of fields of weeds, a monument to the power of eminent domain.

But now Pfizer, the drug company whose neighboring research facility had been the original cause of the homes' seizure, has just announced that it is closing up shop in New London.

To lure those jobs to New London a decade ago, the local government promised to demolish the older residential neighborhood adjacent to the land Pfizer was buying for next-to-nothing. Suzette Kelo fought the taking to the Supreme Court, and lost. Five justices found this redevelopment met the constitutional hurdle of "public use." ...

Scott Bullock, Kelo's co-counsel in the case, told me: "This shows the folly of these redevelopment projects that use massive taxpayer subsidies and other forms of corporate welfare and abuse eminent domain."
The City of New London forcibly took people's homes away from them and got what in return? A field of weeds and jobs that are gone in a decade? Screw the City of New London.


  1. Can't tell you how this disturbs me.

    The city spent a shit-load of money to win that case, those people lost their houses and this is what happens. Now instead of people living in those places and the city getting revenues, they got nothing - no money, no people, no jobs, and a big empty wasteland. Sadly the city (as a corporate entity) deserves this and any elected official that is still around that though this was a good idea ought to be unelected or fired.

  2. Public use? What a joke. The mere fact that the project might have created local jobs and local revenues doesn't qualify it as public use.

  3. Robert Johnson said...
    >>>The mere fact that the project might have created local jobs and local revenues doesn't qualify it as public use.<<<

    The public has an interest in balancing residential, retail and industrial usage. That's why they zone for such uses. Shouldn't they have the same interest in rezoning (as conditions change) as they have when they use Em. Dom. for a new freeway (which they didn't envision when they first zoned)?

    I agree that Em. Dom. can be abused. I'd rather see "just compensation" err on the side of the party afflicted by society's changed circumstances.

    The problem (IMO) is that those affected aren't looking for a 20% premium. They feel, as the last hold-out, the value of their property should be 500% what it was.

    I worked with some people who lived near a plant which was affected by a new freeway. They bought up homes in their neighborhood as people moved out rather than go through the drama. Then they bargained hard with the state.

    Some of the last ones, who held out (like they had the state over a barrel) expected 2-3 times comparables. Their attitude was that there was nothing comparable because nobody else's property was needed so badly.

    The state jammed it to a couple people. They built the off-ramp around a couple properties. Funniest thing I ever saw, these 2-3 properties sandwiched between the freeway and off ramp. The owners eventually sold after 2-3 years.

    I think there's always more to the story like this. People who complain about Em. Dom. have a price. They're just complaining that their price wasn't met. Their price is usually based upon the premise that, if you need my property that bad, pay a price that reflects it. (I.e., they want to hit the lottery.).

    I don't have any more respect for that than I do abuses of Em. Dom. which condemn properties, paying well below market value.

  4. Unrelated to Em. Dom., but wanted to point out that NOW on PBS last night had a piece with a Harvard law professor discussing the improved economy, and how Wall St. banks and ratings agencies are back to their old ways, fighting regulation using their new health which came at taxpayer expense.

    It has some tie in to real estate, regarding the role of Wall St. banks, and their opaque products and services.

  5. Mark,

    So, let's see. Eminent domain is a good tool for:
    *Clearing a path for land-intensive public works e.g. highways.
    *Rezoning to 'balance residential, retail, and industrial usage.'
    *Bulldozing blight in urban renewal projects.
    *Taking land from one private party and giving it to another (as in this case).

    Remember, the people who drive projects that utilize eminent domain are often well-connected and powerful local business people. Do you see any problem with that?

    At what point does the alleged 'public good' start to get trumped by property rights?

  6. Robert Johnson said...
    >>>At what point does the alleged 'public good' start to get trumped by property rights?<<<

    I don't know. I wasn't saying that community prerogatives couldn't be trumped by individual property rights.

    Just that I wouldn't dismiss out of hand a community's legitimate prerogative to rezone (rebalance usage) due to changed circumstances.

    I think even the most passionate opponent to Em. Dom. wouldn't say that a generation 300 years from now should be constrained by the zoning established over the past 50 years.

    If that's true, then the question is how it should be done. Entirely through private/commercial speculation, purchasing each individual residential property, and getting shaken down by the last few property owners who realize they have immense control? All the time, the commercial entity having no guarantee that the neighborhood will be zoned for their intended purpose?

    Or, through an orderly action in partnership with the community?

    I agree with you about the potential for abuse between developers and corrupt officials. I'm not a fan of big business or corporate lobbying (at any level).

    Perhaps the solution would be that, in the case of takings for commercial purposes, it should be a project (or redevelopment plan) approved by referendum.

    I just don't believe that saying a community has no interest in such "re-planning" is a realistic solution.

  7. I see James added a video. The first few seconds indicated to me it's not a very reliable nor balanced portrayal of the issues. It says the 5th amendment enshrines your right to private property without "undue government interference."

    Actually, it protects your right to private property from takings without just compensation. There's no mention at all about what is "due" and "undue" interference by the community.

    We all live with "takings" in various forms. For example, zoning laws and building codes which prevent me from enjoying a perfect property right.

    In my area (not governed by an HOA), I'm actually required by city code to pull weeds, and not park on the lawn! Can you imagine the coercion! Telling me how I must use my property, without any compensation at all! (wink) If I want to put some cars on blocks in the front yard, that's my Jeffersonian right!

    It should also be mentioned that the 5th Amendment was originally a bar against Congressional acts, not state or local. It was the 14th amendment (75 years later) which intended to extend the first 8 bills of right to state and private infringement. However, the Supreme Court did not agree with that intent until the early 1920s when the Supreme Court began to "selectively incorporate" individual clauses of those amendments into the 14th Amendment.

    So, some 150 years after the BoR was ratified, it was finally applied to state and private infringement.

    Now consider how the founding generation couldn't foresee its own needs just 12 years after the revolution(!). After all the libertarian rhetoric about less government, they ditched the Articles of Confederation for the relatively gargantuan federal government of 1789.

    But, 150 years later (when the 5th amendment was extended to states), changed circumstances mean nothing? The fact that we no longer have "never ending frontiers" (a premise of civic republicanism, and something which came at the expense of Native Americans) means nothing? "I got mine, everyone keep their grubby paws off?"


  8. Mark,

    I cede to the point that eminent domain has its place. I simply favor it being rather strictly limited. Under current interpretation I think that it can be too broadly applied, too abusive.

    You suggest that abuse can be limited by having projects subject to referendum. That may work, but there's still the uneven playing field - wealthy developers have more access to political advertising than do private homeowners or small local businesses.

    Due to my biases, I'd like to see more exploration of market-oriented solutions to these problems. Maybe property rights simply need to be redefined in a way that better reflects the needs of community? You might say that eminent domain IS that modification to property rights, but I say that eminent domain increases regime uncertainty precisely because property rights are defined in a way that is inconsistent with eminent domain. Eminent domain is something of a kludge that's been added on to property rights after the fact - to be invoked unpredictably.

    Finally, let me suggest that fair market value, or even fair market value plus 20%, is not necessarily a reflection of the value of a piece of property to its owner. Certainly there are holdouts who simply want to extract what they can. But there are also individuals who are simply not being adequately compensated. Using a non-market solution, like eminent domain, virtually guarantees this outcome because prices are not used to clear the market.

  9. Robert Johnson said...
    >>>wealthy developers have more access to political advertising than do private homeowners or small local businesses.<<<

    I agree. I think that's not a problem with Em. Dom., but the way corporations have been treated as "persons" under the 14th amendment.

    They're fictional, yet legal, "people" created by legislative fiat. Corporate charters serve a valuable purpose. But, it's troubling the way they can influence politicians with the same "freedom of speech" that fully franchised, voting, natural "people" have. Often to the detriment of those natural "people."

    So, to me:

    1) Em. Dom. should be predicated upon true majority consent of a community's plan for redevelopment.

    2) The fictional "person" of a corporation should have no rights of a real person. It's a product of society and should be completely subject to society. That's not coercive. Nobody holds a gun to anyone's head to purchase a corporate "person" from the state. They can freely choose to remain a private company (with all the personal responsibility that comes with such an enterprise).