Powerline’s John Hinderaker is having Second Thoughts on Kelo:
Today most significant development projects involve multiple uses and cooperation between public and private entities. While such projects can no doubt be subject to various abuses, they can also be enormously successful and of great public benefit–to take just one example, consider the spectacular renovation of Baltimore’s inner harbor. Moreover, two factors minimize the danger that economic development projects pose to individual rights. First, they are carried out in the glare of publicity. Nothing in local government attracts more scrutiny or more criticism than such projects. Second, the Fifth Amendment requires that anyone whose property is taken for a public use be fairly compensated, and in practice, most takings are compensated generously. Thus, while condemnation can undoubtedly impose hardship on individuals, it is unlikely to result in gross injustice.
Which makes the standard for the state seizing private property for economic redevelopment what, exactly—the potential for “enormous” public benefit (loosely defined), over and above the potential for abuses and the wishes of the rightful owner?
My problem with Kelo is that eminent domain is being used in place of the market; and in practice, the Court’s majority ruling has the effect of further codifying the suggestion that all property rights extend from the state—a judicial point of view that favors a utilitarian view of property rights against the natural rights view that others argue it is the states’ function to guard, but certainly not to grant.
Hinderaker’s argument is that
the proposition argued for by the petitioners was quite radical: use of eminent domain by a city in furtherance of an economic development project is per se unconstitutional. Adoption of such a rule would have been at odds, I think, with many decades of Supreme Court jurisprudence, and would have severely limited the ability of cities and other local government units to try to reverse urban decline by promoting redevelopment.
…which reasoning hinges on the fear that any ruling that would so emphatically exclude “economic development” from the purview of “public use” set out in the Fifth Amendment is both dangerous, from the utilitarian perspective of municipal governance, and, from a legal standpoint, would seem to walk back “decades of Supreme Court jurisprudence” (something that I think makes sense, given the ever-growing penumbra surrounding “public use,” coupled with an unwillingness on the part of the Court to place restrictions on the interpretive openness of the term—a reason why legislation that does just that is long overdue).
From my the perspective, the argument goes that If New London found that particular property so appealing as part of its economic revitalization plan, the city should have paid whatever the market called for in order to secure the land from its rightful owners, rather than asserting the legality of an non-negotiated buy-out “contract” under eminent domain. Or else they should have looked elsewhere for development property. Because for what it’s worth, I think that the “use of eminent domain by a city in furtherance of an economic development project” IS ”per se unconstitutional” when it doesn’t meet the narrow standard of public use (which should not, from either an originalist or natural rights perspective, include things such as increased tax revenue garnered from what is in function a forcible exchange of private property ownership rights from one party to another that is “brokered” by the state).
But I’m no lawyer, so take this all with a grain of salt.
See also: The Confidential Report; Hidden Agenda.
Please alert me to other reactions you come across, as I’d like very much to track them here.
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update: via Club for Growth, VoluntaryXchange looks at Kelo from the perspective of call options. More here and here.
And the Claremont Institute’s Ken Masugi addresses the Hinderaker piece, and provides links to a host of other reactions to Kelo.
Post hoc, ergo propter hoc?
Bullshit.
Care to elaborate?
The fact that decades of SC decisions incrementally weakened the Takings clause doesn’t make it a good thing. It makes it more important to correct in the new court’s decisions. If it can be got onto the calendar.
Ditto on the Commerce clause, in case you care.
Post hoc is lazy bullshit.
I do care. And I agree. And I know I’m right when I suddenly hear liberal activists braying about the sanctity of “settled law” (code for “you don’t get to assert a sign in place of a convenient signifier).
JG to the right of Powerline? Hugh Hewitt clasps you to his swelling bosom!
I’ve always been an intentionalist at heart.
No lawyer here, but an observation on his statement that a negative ruling would have “severely limited the ability of cities and other local government units to try to reverse urban decline by promoting redevelopment.”
This is complete and utter bullshit. It would only prevent the massive boondoggles that cities love to indulge in that are rarely successful. It would not prevent, say, a convention center from going up (so long as the city controls its use). It would not prevent a city from offering tax breaks if buildings are renovated. It would not prevent a city from increasing police presence to make the neighborhood safer, from repaving the streets and sidewalks, from installing pocket parks, from encouraging mixed-use neighborhoods.
Yes, all this is incremental change that doesn’t necessarily look great. But that’s what city officials can do if they are truly dedicated to creating an urban environment that works, and not lining their pockets and blowing up their egos spending the people’s tax dollars like lottery winners in Vegas.
A city shouldn’t be allowed to slice like a fucking hammer through people’s lives without having to prove that it has to. The Constitution was devised to protect us from the government, not the government from us.
In my mind, fair compensation is what the owner is willing to sell it for. If the government is willing to pay that, why do they need eminent domain?
This is totally off-topic, Jeff, but you should see Malkin’s Martha post if you haven’t yet.
Well, as a matter of course I’m not one to defend eminent domain, but I can see how the Fifth Amendment protects a municipality from being extorted into paying far above market value before they are able to build, say, a need interstate commerce route through privately owned, undeveloped acreage where no feasible alternative exists.
FWIW, here’s the most amusing reaction to Kelo I’ve read to date.
http://www.freestarmedia.com/hotellostliberty2.html
“JG to the right of Powerline?” Well, not to sound like the ultimate rightwinger, but Hinderaker is making an incredibly, almost purely leftist argument. (I feel like I just called Rush Limbaugh a commie.)
The problem is his views on the somewhat vague term “economic development”. He devotes quite a bit of text to discussing how “successful” it is, but so what? If it violates the original intent and plain text of the Bill of Rights, I don’t give a damn how much it helps the economy. (You could use his logic to argue in favor of agricultural subsidies or many other programs conservatives tend to rail against. At least with agricultural subsidies you’re not forcibly taking people’s homes.)
Then there’s the hilarious bit at the end where he states: “The principal threats to property rights lie elsewhere. In particular, regulatory actions often severely limit what an owner can do with his property.” Hahaha. Yeah, like, I dunno, live there?
Somebody needs to give that Liberty Hotel guy John Hinderaker’s home address, see if it changes his views on “gross injustice”.
ps. I’M OUTRAGED!
Well, Jeff, if you are to the right of Hindraker you’re going to have a lot of company—including me.
Also—this from Richard Epstein, professor of law at the University of Chicago, that I believe goes right to the heart of the new definition of “public benefit” replacing “public use”:
Amazingly now, “public benefit” will exist solely within the perception of the city council (who has allowed themselves to be persuaded by oodles of green) of just what choice bits of property are not being “properly” managed by their owners..you know, those damned unproductive retirees, churches, synagogues and middle income families. Let’s build a mall and offices and movie theaters !!! Home owners? Bah!
“severely limited the ability of cities and other local government units to try to reverse urban decline by promoting redevelopment.â€Â
You know what I’d like to see? A severe limitation on the power of governments to cause the sorts of urban decline that these “redevelopment” projects are supposed to remedy.
Wherever there is a problem with blight, then, really—a fair and evenly applied property tax system would take care of it. The owner of completely unproductive property will abandon it, default on taxes, whereupon the state will seize it and auction it off. Problem solved. The worst areas of blight become the most affordable.
It would be even better if they let lawyers act as privateers to collect unpaid taxes. Any lawyer that finds a property tax delinquincy of a certain age (say two or three years!) should be able to file suit on the city/county’s behalf and collect the money for a percentage. Most cities hand out the tax collection contract to one law firm, which promptly falls behind on its work by two or three years, while the bureaucrats who assigned the contract gets fat on kickbacks. And the rest of the law-abiding, taxpaying community gets to bear the disproportionate burden. See San Antonio, Columbus, etc.
Or New Orleans. The city has a religious exemption a mile wide. Something like 70% of the city’s area goes untaxed. Meaning that 30% of the landowners pay 100% of the taxes. And another state exemption on the first $75,000 in value. The result, huge swaths of urban land lying undeveloped, or hover at the $75,000 mark. Why? Increasing the value of your property to anything over $75,000 instantly becomes counter-productive. When they raised the exemption from $50K to $75K, values of the great section of poorest neighborhoods rose in lockstep, from $50K to $75K. (Of course, in my libertarian heart, the public schools that are the driving force of property taxes are just government indoctrination centers and ought to be abolished tomorrow—there’s a problem-solver for ya!)
Take a look at the disaster that was New York’s building restrictions and rent control—a huge volume of property that, due to price fixing, became unprofitable. It literally destroyed the Bronx, which was a viable working-to-middle class neighborhood all through the 1920s up to the 60s.
There is not one single area of urban decay that I have ever seen that was not caused by some form of misguided and/or discriminatory governmental restriction on land use and taxation. Not one.
Hindraker ought to see a good lawyer who will explain property ri- oh, wait…nevermind.
Look on the bright side: If blatant land redistribution in Hawaii was unanimously upheld 20 years ago, it’s amazing there were four dissenters in Kelo.
Phinn, good cogent argument there. Didn’t know that about New Orleans.
On the map of Charlotte, N.C., just southwest of downtown, you may see the designation “Brooklyn.” That used to be an all-black neighborhood, with homes, restaurants, nightclubs. Cab Calloway used to play there.
It’s all gone. Urban renewal swept it away in the ‘60s. All that’s left are big corporate buildings surrounded by big parking lots and nothing else. A whole neighborhood, wiped out.
I’m afraid I don’t know some of the details here, which levels of government are allowed to use eminent domain (Feds? States? Counties?) nor what the exact definition of “property” is but as someone interested in economics this ruling strikes the very fear of God into me.
There is a distinction made between “property” and “real property”. The latter is what you are all talking about, land, houses etc. The former is much wider. Intellectual property, spectrum, stocks, bonds, your car, the clothes on your back, these are all “property”.
That’s what Voluntary Exchange (who is a real economist, not just someone interested) was looking at. If eminent domain now extends to the forced sale of property so as to increase tax revenues (which is what Kelo seems to say) then why shouldn’t it extend to forcing people to crystallise their captial gains so as to pay tax on them? If a patent is held by a small company and would generate more tax if held by a large one, why should it not be subject to forced sale?
If Clear Channel will generate more tax than a little community station why should they not be forced to hand over the spectrum?
If the ruling holds only for “real property” then it’s still a pretty shitty ruling, grossly confusing “public benefit” with “public use” and doing so at the level of the greatest corruption in American life, municipalities and developers, but not quite tthe nuclear bomb that VE and I think it might be.
From an abstract political philosophy point, the situation is quite easy to comprehend. As such, it astonishes me that anyone calling themselves conservative can see clear to legitimizing the taking of private property for others’ private use.
But here, in short, the ultimate Political Philosophy 101: Communism is just an elaborate means of justifying slavery. Socialism is just an elaborate means of justifying theft.
Kelo simply serves to solidify socialist principles in American governance. It’s disgraceful. And it’s certainly not conservative.
Shouldn’t that be whence come our property rights? Whither would be where our property rights are going. If we can even stand to think about that.
Turing word: “without”, as in “Where would we be without usage pedants?”
“Whither I go, thither shall you go too;”
Or in this case whither go our rights in property, thither shall go our civilization.
Would you rather have Chavez Ravine or Dodger Stadium??
Ballgame!
I guess the nub of it for me is the shift in the idea of the public good. Before, the work done by tax revenue was considered to be the public good. Now, the tax revenue itself is the public good. I can’t help but gulp at the abyss that’s just opened underneath our rights.
Turing = defense, as in If SCOTUS has issued this call for governments to go get the boodle, what defense can there be?
Actually, eminent domain corrects a form of market failure—the problem of a common good. It may be in the collective best interest of a community to bulldoze a slum and build something new. The problem is that once the plan becomes public, the “fair market value” of individual parcels of land become inflated by the fact that individual property owners have the ability to hold the entire project hostage.
Eminent domain fixes this problem by ensuring that property rights, in some situations, are subordinate to the public good, and that property owners get “just compensation” and no more, i.e., they can’t extort money from the public as the price of getting them to vacate their tarpaper shack so that redevelopment can occur.
Actually, eminent domain corrects a form of market failure
There is no such thing.
The “market” has no top-down, decreed-from-above purpose. It is merely the natural result of allowing people to cooperate with one another by mutually beneficial trade. That is only possible in an environment in which people are protected against invasions of their liberty and property (via aggression, theft, etc.).
Since it has no pre-determined purpose, a market cannot “fail.” It simply is.
The concept of “market failure” is only meaningful to someone who is already enthralled to a paternalistic, statist philosophy devoted to the centralized control of others.
It may be in the collective best interest of a community to bulldoze a slum and build something new.
More poverty, destruction and death has been inflicted on humanity under the banner of “collective good” than any other idea in history.
The problem is that once the plan becomes public, the “fair market value†of individual parcels of land become inflated by the fact that individual property owners have the ability to hold the entire project hostage.
God forbid some cretin stand in the way of your Master Plan, O Great and Wise Benefactor!
Jeez, dude, get over yourself.
In a free market, the actual participants to the transaction get to decide what is “good,” what is preferred, and what is not.
That way, each transaction is mutually beneficial. The very fact that two people participate in a voluntary transaction is proof that they each find what they get to be more valuable than what they give. It’s called subjective value—another facet of freedom, incidentally.
In your “plan,” some benefit and others lose. That is, at best, a zero-sum outcome. (Much like armed robbery, actually.)
It also requires the use of aggression to accomplish (again, like armed robbery), which is a big red flag that should tell you that it’s abhorrent.
Suggesting one’s sympathies for the problems of municipalities should allow policies to trump market forces, or sympathies for the policies of municipalities that supercede the markets, is where Hinderaker (whom I respect) stretches a bit too far.
What concerns my overactive imagination: At what thin threadlike line does civic policy, superceding market forces, slide into a central planning-like set of ordinances?
This was not about the public good. It was about a private company’s “good”.
But as long as we are only concerned with the public good, then we might as well go ahead and take this thing all the way.
The government should swipe all the land in the 50 states and then “award” parcels to private entities based on the financial return. Of course, those private entities could be then be called Earls and Dukes and Lords and we are all just peasants, but hey, it is for the public good.
The truth is Kelo solidifies the fact that there are no landowners in this country. We only rent our property from the government in the form of taxes. And we do not even have a lease, it is on a strictly a month-by-month basis. Whenever they find another tenant that will pay more, we will be evicted.
And fairly compensated is a joke. It is only fair of the seller deems it fair. If he does not deem it fair but has no right to refuse to sell, it is no different than the cattle companies and the sodbusters of the early American West.
So, if I rape a woman and leave, it is a crime. But if I rape her and drop $100.00 on her before I go, then it is not. She has been fairly compensated and therefore she is a whore. An unwilling whore perhaps, but a whore none-the-less.
Actually phinn, there are forms of market failure, usually due to economic inefficiencies caused by price floors/ceilings or access to information. That is to say, eminent domain can create economic inefficiencies if people really aren’t getting a fair market value for their property. A fair market value being what they would sell it for if someone walked up to their door and asked to buy it, regardless of the buyers intended use. Of course, fair market value never includes what’s regarded as intrinsic value, the value placed on not having to buy something new.
As in, the 1977 AMC Pacer I drive to work everyday only has a fair market value of $7.36 (or so), but I would never sell it for that price because I don’t have the money for a new car. The Pacer’s intrinsic value to me is closer to several thousand dollars than it is to it’s actual market value. The real kick in the pants about Kelo is that the government can pay the market value, regardless of what kind of pain in the neck it will be to get your broke (and now homeless) ass into another dwelling.
There are a few things we can do. One is to get involved (hold your nose if you must) with either the Evils or the Stupids at the local precinct level. Heinlein’s Take Back Your Government! is a good guide for folks going that route (I’m joining the Republican Club in my town and angling for the vacant central committee slot in my precinct).
More drastic: There’s enough bad craziness now that I’d be willing to chance a Constitutional Convention, especially if the alternative is that we (meaning classical liberals and fellow travelers) lose our liberties more slowly.
Most drastic (on the “hope I never live to see it” level): If all else fails, remember the progression: soap box, ballot box…third box.
Well, Phinn, you won’t get any argument from me on the proposition that the concept has been frequently and grossly abused. I think you and I share many of the same libertarian impulses.
But, that does not mean that the concept is illusory. There are collective goods that are beneficial to society as a whole and that won’t occur through the unfettered operation of free markets. You won’t find an introductory economics text that says otherwise.
Just consider that the mutually beneficial exchanges that you celebrate (as do I) are facilitated by common goods that, for example, reduce transaction costs so that the exchanges are possible. Like the roads you used to drive to work this morning. You and I are having this discussion in part because we have access to telecommunications networks that have been continuously under construction since the 1890s. In America, these networks were built by private companies (mostly Ma Bell), but these companies were granted by statute the power of eminent domain, along with the right to use public streets, in order for the phone system to come into existence.
In other words, if the Kelo plaintiffs are right and the power of eminent domain is per se illegal if employed for an economic purpose, we would not have had a privately owned telecom network. It would have had to be a state-owned enterprise, like the post office or (in past years) the phone companies in most other countries. And our telephone service would have been of much worse quality, and more expensive, as it was in all other countries.
The Kelo plaintiffs might have won if they had argued that the development in question involved an insufficient public purpose to justify the condemnation of private property. But it appears that they stuck to an extreme position, and so they lost.
Actually phinn, there are forms of market failure, usually due to economic inefficiencies caused by price floors/ceilings or access to information.
You will have to be more specific.
If by price floors or celings, you mean prices that are fixed by government (via direct setting, or proxies such as production quotas, barriers to entry, or more complex schemes like buy-backs and non-recourse gov’t loans or subsidies), then by definition we are not dealing with a free market.
If by price floor, you mean the price below which a producer cannot sell a product for a profit, that is not market failure. That is an instance of a producer failing to accurately predict consumer demand for his product and/or its relationship to his production costs. That is a business failure, not a market failure.
As for the supposed lack of information, there is a market for information, too. If there is a demand for it, and the cost of providing it is lower than the cost of acquiring it, then that is a market opportunity, not a market failure. (By the way, if you know of a particular instance of this situation, please let me know immediately; I’d love to make a few bucks!)
‘Intrinsic value’ is a meaningless concept. What you are describing is better described as the phenomenon of subjective value, or marginal utility.
Value is subjective because it represents the intersection of a vast array of factors, many of which are peculiar to you, and which often change throughout the course of your life (or even the course of a day). A major factor is the value you place on your time, your leisure, or your labor, for example.
Marginal utility represents the fact that, when you already have one thing, the utility of acquiring yet another one is correspondingly reduced.
For example, the fact that you already own a Pacer means that, in order for you to buy another one, the price you would pay for the second one (or a bicycle, or a bus ride, etc.) must be lower than what you would pay for the first.
None of these circumstances represent a “market failure,” though. No one has ever been able to identify one.
Price ceilings and floors are examples of economic efficiencies, and they exist all over the place (milk, housing, labor). They all hold a price somewhere without regard to where the market will value that asset based on simple supply and demand. Price control, whether a floor or a ceiling are all classified historically as economic ineffciencies. You say that a price floor is the producer’s fault, when it most assuredly is not. The produce would wish to sell their product where they can get a market equilibrium price for it, not just produce and produce because they know it will sell because the government has set a price floor for it and no matter what it will sell at that price. It is (just like a ceiling) defined as a market inefficiency.
When I referred to information effecting efficiency, I meant access to information. There are three forms of market efficiency all based on the freedom of information, as advanced by Eugene Fama.
All of these instances (price control, weak, and semi-strong form efficient markets) represent instances and conditions of market ineffciency. Effectively, policy is interfering with what the market (supply and demand) dictate the price should be.
The fact that the government can define ‘reasoable market’ prices for land is an oxymoron in itself. Yes, you can find out what a 1977 AMC Pacer goes for in on average in my zip code, but the only person who can define what my AMC Pacer goes for is me, because I own it. If you really want this AMC Pacer, you’re demand is going to have to meet my condition of supply somewhere. The government can’t just say “That’s the average price for one, and that’s what we’re giving you.” That’s not a free market.
By the way, Phinn, I’m not a real estate lawyer, but it’s my understanding that in most jurisdictions you actually own the land in front of your house out to the middle of the street. The public has only seized an easement to use the land as a public way, not the underlying title to the real estate.
So, Phinn, those commie bastards that run your town have already made you a victim of eminent domain.
I agree completely with your discussion of “intrinsic” value and marginal utility as it relates to the Pacer.
Marginal utility would only apply to the Pacer if I had bought it new and used it to the end of its useful life. Just like donuts. If I really want a plump, warm Boston creme and I haven’t eaten in a few hours, I might pay two bucks for one. But right after I eat that donut, since it has lived it’s useful life and my appetite is all or partially satiated, I might only pay a buck fifty for the second one. My demand is not as great, and the supply has hardly changed at all.
However, with the car or the home, it’s useful life is indefinite. In some cases, these goods can last generations. Additionally, as soon as I consume one, my demand is not lessened, it is just as immediate as it was when I originally purchsed the home or the car. Marginal utility would not apply to my home or car, because after I use one up, I still need a new one just as bad.
I think you and I share many of the same libertarian impulses.
I’m not trying to pick nits, but this is one of those expressions that irks me. It’s like “libertarian tendencies.” It’s a way of saying, “hey, liberty and rights are all well and good, but let’s not get crazy here.”
I arrived a libertarian political philosophy by starting with economics. Free-market economics is based on a body of thought that represents one of the finest achievements in human history, in my opinion. It is rational, logical, and peaceful. It represents what I believe to be the path to a level of peace and prosperity that the world has never seen (and I am not being sarcastic or ironic when I say that). Free markets are, literally, the natural product of a fundamental respect for human dignity, and out of that peaceful cooperation that it represents comes an avalanche of abundance and material wealth.
The political implementation of these ideas is merely the expression of these basic, scientific truths.
There are collective goods that are beneficial to society as a whole and that won’t occur through the unfettered operation of free markets. You won’t find an introductory economics text that says otherwise.
I disagree. I would not describe anything as a “collective good.”
Certainly not telecommunications networks. They should never have been granted government-sponsored monopolies in the first place. The inventors and developers of the technology should have had inviolable property rights in the lines, equipment, etc., and then been required to provide their goods and services in a free market (patents are a separate matter, debateable but generally defensible).
You cannot say that because these networks exist today that they have necessarily operated in the most efficient manner possible. The fact that they were created and developed in a government-sponsored monopoly environment does not mean that a free market version would not have been better. I believe it would have been. But it was never given the chance. The same goes for energy, and other forms of industry that have been collectivized for so long, no one thinks of them any other way.
I don’t mean to confuse the issue, but, actually, rights in land are somewhat different, economically speaking. There is a subset of economic libertarians called Georgists, or Geolibertarians, who posit the idea that free markets and property rights should not extend to things that are not the fruits of one’s labor (or those fruits that are then transferred to you in some way). In other words, the appropriation of otherwise unsued, wild land does not give a person an absolute property right. It is only the actual productive use, transforming it in some way (by building on it, or growing things on it, etc.) that gives the user a superior claim to occupy it. As for the physical land itself, that was not created by the product of anyone’s labor.
On this basis, they believe that the taxation of the value of the undeveloped value of the land is justified. In essense, it is a location tax.
I tend to agree with them, although I haven’t studied the issue enough to be sure. In essence, though, the theory is that land is a unique economic factor.
Incidentally, I don’t agree with the concept of eminent domain at all. The restrictions that ED be used only for “public use” and with “just compensation” are merely devices that make the seizure of land less likely. They do not justify that seizure in the first place. In my opinion, ED does not belong in the law at all, any more than slavery does.
What bothers me about Kelo is the government’s willingness to disregard its own rules, as weak and inadequate as those rules are.
I was. You seem to have missed my post above, because I gave very specific examples (we were posting at about the same time).
So one more time: Free markets fail to adress the problem of common goods. Like roads, telecom networks, and a standing army. We rely on the coercive power of the state, including the power of eminent domain, to get these things done.
The most massive construction project in human history was the construction of the interstate highway system in the U.S., officially the Dwight D. Eisenhower National System of Interstate and Defense Highways. As the name suggests, the original rationale for the system was something of a fraud. It was justified on the basis of national defense during the Cold War era. I guess the idea was that we could move troops around faster in the event that Canada invaded.
In any event, the consequences of the system have been more far-reaching than anyone could have imagined, and have been overwhelmingly (but not entirely) beneficial. There is a universal consensus today that the system was easily worth the investment and it has now been emulated by just about every country on the planet. It was entirely made possible by the fact that government had the coercive power to condemn the land and tax it’s citizens in order to pay for the project.
Dang, we’re still posting at the same time.
We’re in agreement that telephone service never should have been a monopoly—but that’s a different issue. Eminent domain would still have been necessary for the current network to evolve if Bell and Edison had been allowed to continue competing, as was the case in the early years.
In much the same way, eminent domain has been used to create railroad rights of way. Railroads would not have been possible if every single farmer along the route had the ability to force the railroad to detour around his beloved family farm.
But what do things resembling utilities (phones, roads, etc) have to do with Kelo? Kelo was not in regard to a public works project, it involved appropriating land for Pfizer to build some offices on. I don’t see how that’s going to improve national infrastructure or common good. They’re a billion dollar company, surely they can afford to pay for land just about anywhere. Why petition the local government to help them build on someone else’s home?
Free markets fail to adress the problem of common goods. Like roads, telecom networks, and a standing army. We rely on the coercive power of the state, including the power of eminent domain, to get these things done.
The State should not be involved in any of these things.
The State should be used to protect and defend rights to life, liberty and property from invasions, in the form of aggression, theft, fraud, and tortious damage caused by negligence.
That’s it.
Everything else is not only unnecessary, but counter-productive.
As for the “standing army” goes, I suppose it is defensible on some group-self-defense ground—self-defense is a basic human right—but it typically enables a country (ours is no exception) to engage in various acts of aggression (e.g., Roosevelt’s blockade of Japan’s oil trade routes that started WWII, or Wilson’s assistance in the blockade of Germany that started WWI, etc.). There are better ways.
The most massive construction project in human history was the construction of the interstate highway system in the U.S., officially the Dwight D. Eisenhower National System of Interstate and Defense Highways. As the name suggests, the original rationale for the system was something of a fraud. It was justified on the basis of national defense during the Cold War era.
Oh, dear God, don’t get me started on the highway system. Yes, it was a fraud. They always are. They talk up the benefits and hide the true costs.
It was modelled on the autobahn, for crissakes. Hitler’s autobahn. Not exactly a defender of liberty, that one.
In any event, the consequences of the system have been more far-reaching than anyone could have imagined, and have been overwhelmingly (but not entirely) beneficial.
No. It has been something less than completely harmful, but you cannot say that it is beneficial unless you account for what would have existed in a free market.
Unfortunately, such a situation was never allowed to exist (especially since the invention of the automobile), so there is nothing around to compare it to. But you cannot simply declare it “beneficial” unless you can show that it is better than the (now non-existent) alternative.
There is a universal consensus today that the system was easily worth the investment and it has now been emulated by just about every country on the planet. It was entirely made possible by the fact that government had the coercive power to condemn the land and tax it’s citizens in order to pay for the project.
The costs are unimaginable. Devastation of whole regions. Creation of urban sprawl. How do you even begin to measure that?
Besides, a system of that size has a whole series of secondary and tertiary layers of effects—it created the entire trucking industry (and destroyed the railroad industry). It created the modern automotive industry. It created suburbs. It created the oil industry as we know it. Did you include the “costs” of the various wars we have fought (including this one) in order to maintain oil prices in your balance sheet of costs and benefits? The first Gulf War was explicitly sold to us on the grounds that it was to keep down gas prices. The recent occupation was just a follow-up to that first one (and thus more justified on grounds of necessity, actually, than the one in 1991).
Did you include the “costs” of 100+ traffic fatalities per day in this country? The insurance and litigation to deal with them?
My point is that the market did not choose this system. People did not choose this system. Politicians did. They decided for everyone.
I prefer a decentralized, self-organizing system of economic allocation, based on personal preferences.
Railroads would not have been possible if every single farmer along the route had the ability to force the railroad to detour around his beloved family farm.
This is one of those persistent myths that somehow managed to elevate itself to self-proving truth.
Actually, it meant that the railroads would have had to pay a price for easements that they did not want to pay. So, they complained. Loudly.
If, because of the development of railroad technology a landowner’s land suddenly became much more valuable, why should the railroad company be the only one to get that benefit? If the market justified paying a certain price for the land it used, then why should they not be required to pay that price? The railroad consumers would have simply paid higher prices. Or the railroad comanies would have needed to find a way to lower their costs.
Where in the law does it say that everyone had the right to pay a certain price for these goods and services?
Besides, the landowners would have eventually settled on a price for either sale or an easement—once that price exceeded the value of that land as a producer of crops. Farmers are just as rational as railroadmen.
In other words, once the price that the railroad companies could pay (which was in turn derived from the price they could get from consumers for transporting goods) exceeded the price of the crops that would be grown on that land, the farmer would sell.
Otherwise, the land was better used for crops. That basic economic calculation (crops vs. railroad) all comes down to price. The price contained all the economic information needed to tell which use was more economically efficient.
No, the farmer is not that dumb. You keep ignoring the obvious. He would not sell for the market value of his lost crops, but for the extortion value of forcing the railroad to find another route, which would be exorbitantly expensive, and in some cases (e.g., a valley floor) completely unavailable. Long story short, without eminent domain we would not have railroads. Real life is not an Ayn Rand fantasy. For some purposes, government is necessary and private rights must yield to public welfare.
Of course you cannot prove that the interstate highway system is more beneficial than whatever would have happened if government had left road-building to the mercies of the free market. (Prior to the advent of modern intercity road-building by the Romans, who invented paving, gutters, and a sub-surface bed that would resist the freeze-thaw cycle, what actually happened was dirt paths through the woods. Many consider the technological breakthroughs involved in Roman roads to be the critical factor that made the Roman Empire possible.) But most consider the net beneficial effects of limited access interstate highways intuitively obvious, even after considering the secondary and tertiary effects you mention. The fact that almost every nation has since elected to build such a system indicates that there is a consensus on this.
And as always, when logic fails Hitler gets dragged into the discussion. Yes, the Autobahn happened on Hitler’s watch, and was the precursor to the interstate highway system. And Mussolini made the trains run on time. Do you have a point? Didn’t think so.
Me too, but such a system is dependant on some level of essential public services. Like, for example, courts that enforce contracts, protect property rights, and put criminals in jail. And roads. We can debate how many such services are essential. I am highly skeptical that the Post Office, for example, was ever necessary or ever should have been a monopoly. But your myopic view of the ability of free markets to accomplish anything worth doing is unfounded. Free markets, for example, are not going to prevent your factory from polluting the river that runs through my neighborhood downstream. Government intervention of some sort is required.
Once again, the plaintiffs in Kelo chose the radical, and unwise, strategy of arguing that using the power of eminent domain to pursue economic objects was per se illegal. This would have overturned decades of settled law that established, for example, that cities can use eminent domain to clear “blighted” areas in order to make room for an urban redevelopment project undertaken by private interests. The court took the conservative stance of deferring to elected officials to make the initial judgment on the value of such projects, rather than ruling that all such projects are unconstitutional.
That being said, I would be in favor of a ruling that the secondary economic effects of making room for Pfizer are not a sufficient to justify the use of eminent domain to condemn a perfectly fine neighborhood. But that’s an argument the plaintiffs chose not to make, and the court is obliged to stick to the issues presented to it and not speculate on what the plaintiffs might have been able to prove if they had attempted to do so.
What bugs me about Hindrocket’s stance is that it appears to stem from an idea that has bugged me for some time; the idea that precedence trumps all. It grants the courts the sort of infallibility that people laugh at Catholics for granting the Pope.
You are partly correct, but mostly wrong. I need to qualify my earlier statement.
You are correct that a farmer will hold out for a higher price once he knows that the purchase of the land will be for a railroad, since a railroad has several features—(1) it is highly profitable over a long period of time (at least it was then), and (2) as you said, it is expensive for a railroad to alter its route.
So, yes, a farmer will not necessarily sell once the price that the railroad could pay for the land exceeded the value of that land as farmland. That is only the starting point. We know that the farmer will not sell below that price, because farming that land is more profitable. Fair enough.
Any price above the value of the land as farmland represents a premium for the farmer. Any sale price above that point represents an added benefit for the farmer. Clearly, he will want to maximize that benefit. Fair enough.
But what is the upper limit of that premium? What is the most that the railroad will pay? It is price that the railroad can pay for its land-use and still expect to be profitable. This situation is really no different than a business that pays rent to a landlord for the space it occupies—the landlord will want to raise the rent to the highest possible price that he can get, which is bounded on the lower limit by whatever else he could get for the property other than from renting it out, and on the upper limit by raising the price so high that it prevents any business from renting it at all. We can call that upper limit the hold-out price.
Back the farmer. He will want to sell (or lease) his land at a premium, and for the best premium he can get. Remember, the premium, by definition, represents more money than he could get by farming that same land. So, as they say, anything above that price is “gravy” for him. (A Southern expression; I hope it makes sense.)
Basic logic tells us that the farmer will not hold out for a premium that is so high that it scuttles the railroad altogether. He does not get offers every day to buy that land at a vast profit above the value of the land as farmland. He will not want to raise his price so high that it drives the railroad away completely. He wants to maximize his premium, not destroy it. Your assertion that “without eminent domain, there would be no railroads” is therefore simply false.
Why is it so unacceptable for the farmer to maximize the price he gets for his land? You did not answer my question before—if the railroad business is so profitable and socially important, then why shouldn’t the farmer, whose land is used for that purpose, be the one to reap the benefit of it?
You call it extortion. This is really offensive. Extortion is defined as a threat of physical violence or some other wrongful act for the purpose of extracting something of value.
Getting the best price for your land (or any other property) is not extortion. The farmer did not threaten anyone with violence. You discredit yourself by even using that term.
You know, I enjoy discussing these issues with people who are willing to open their minds, but this sort of attitude is what I expect from the mouth-breathers over at Daily Kos or Washington Monthly. If you can’t be civil, then you can promptly fuck off.
I was being very serious when I asked if you accounted for the 35,000 or so deaths a year from automobile crashes, plus the insurance and litigation associated with them. Of course, you didn’t. No one ever does. People who promote these government boondoggles always ignore most of the direct costs, and inflate the benefits. They have to, since the market has already decided, in its rational analysis, that the project is not economically sound. Hence the need for governmental force to make people go along.
The fact that other governments do it, too, does not make it right. Might does not make right. Consensus is two wolves and a sheep voting on what’s for dinner.
Those decisions, at the time they were made (e.g., Hawaii) themselves overturned rules of law that had existed for even longer.
Several members of the contemporary Supreme Court claim they “must” adhere to precedent, but when they want to re-write some rule, they bravely forge ahead, precedent be damned. In other words, they set aside the law when it suits them. That makes them hypocrites and liars. I suggest that you elevate yourself from being one of their apologists.
No. All persons must respect the life, liberty and property of everyone else.
I suppose you will call me absolutist, as though that is a genuine criticism. But slavery is absolutely wrong, and is not made right by paying the slave. Armed robbery is absolutely wrong. Rape and theft are absolutely wrong. And forcibly taking someone’s property for some other economic purpose is absolutely wrong.
People have no trouble seeing this in the context of daily life, but are blinded (by either greed or the lust for power?) when it comes to these other areas. I don’t know what it is about railroads (or power companies, or freeways …) that makes it so easy for people to disregard their principles, and feel no compunction about using force to get their way.
If anyone is the victim of extortion, it’s the farmer in our railroad scenario. He is threatened at the point of a gun to vacate his land. It’s no different than the “deal he couldn’t refuse” described in the Godfather.
P.S. Ayn who?
My “fantasy” is based on the works of people like Carl Menger, David Ricardo, Friedrich Hayek and Ludwig von Mises.