Property Rights Five Years After Kelo

Today is the fifth anniversary of Kelo v. City of New London, one of the most controversial decisions in Supreme Court history. In Kelo, a narrow 5-4 majority of the Court ruled that the condemnation of private property for transfer to other private individuals for purposes of promoting “economic development” was permitted by the Fifth Amendment, which allows government to condemn property only for a “public use.” Kelo was a flawed decision and it drew a massive political backlash. There are lesson to be learned from both.

I. The Shortcomings of Kelo.

In my view, Kelo was wrong both because it goes against the text and original meaning of the Constitution and because it embodies an unrealistic view of the political process. On the former point, this article by leading property rights historian Jim Ely does a good job of summarizing the relevant historical evidence. The Founders and early 18th and 19th century jurists disagreed among themselves about the exact meaning of “public use.” But there was widespread agreement that government lacked the power to condemn property owned by one private individuals and transfer it to another merely because the government claimed there might be some sort of public benefit.

Kelo was also mistaken because the majority justices wrongly assumed that the existence of a “plan” would minimize the likelihood that private interests would exploit the condemnation process to take from the politically weak. In reality, the political process makes it very easy for this to happen, as voters have great difficulty monitoring the quality of economic development takings. Moreover, the new owners of condemned property generally have no legal obligation to actually provide the economic benefits that supposedly justified the condemnation in the first place. This predictably results in condemnations that not treat property owners unjustly, but actually destroy more economic value than they create, as happened in the Kelo case itself. I develop these points in greater detail in this article.

More generally, it seems contradictory and self-defeating for courts to allow legislators to define “public use” as they see fit. The whole point of the Bill of Rights is to constrain government power. That objective is undercut if the scope of the rights to be protected is defined by the very government officials whose abuses are supposed to be constrained. It is a bit like appointing a committee of wolves to guard your chicken coop in a world where predation by wolves is the whole reason why you need guards in the first place. As Ely notes, “among all the guarantees of the Bill of Rights, only the public use limitation is singled out for heavy deference to legislatures.” Unfortunately, this is part of the Court’s more general policy of relegating constitutional property rights to second-class status.

II. The Post-Kelo Backlash.

Kelo generated a broader political backlash than any other Supreme Court decision in decades. As I explained in this article, over 80% of the public opposed the decision, and a record 43 states passed eminent domain reforms in the wake of Kelo. Many observers, including legal luminaries such as Richard Posner, argued that this backlash shows that judicial protection for property rights in this field is unneccessary.

Unfortunately, my work on post-Kelo reform also shows that the majority of the new laws provide little or no meaningful protection for property owners. In many cases, they ban Kelo-style takings for “economic development,” but allow the same types of condemnations to continue under the guise of combating “blight.” Blight, in turn, is defined so broadly that almost any area qualifies.

Several factors account for this result, including resistance by interest groups who benefit from unconstrained eminent domain power. In my view, a key problem is widespread voter ignorance that makes it difficult for most citizens to tell the difference between effective reforms and those are primarily for show. Given the overwhelming public opposition to economic development takings, I doubt that interest group lobbying could have prevented strong post-Kelo laws from being enacted if voters had been well-informed about the legislation in question.

The Institute for Justice, the libertarian public interest law firm that litigated Kelo, has a more optimistic take on the results of the backlash in its well-written report on the fifth anniversary of the case. Several of their points are valid. Thus, IJ points out that a number of state supreme courts have recently struck down Kelo-style takings under their state constitutions. This is true, though it’s hard to tell how much of this is the result of Kelo, and how much a continuation of a preexisting trend under which six state supreme courts ruled that way in the ten years before Kelo; with only two (including the Connecticut Supreme Court in Kelo itself) going the other way.

On the legislative reforms, there is perhaps less difference between my assessment and IJ’s than meets the eye. In this article (pp. 15-16), University of Illinois law professor Andrew Morriss has compared my evaluations of the state reforms with IJ’s and finds only three cases where there is a significant divergence (including one – Idaho – where I rated the reform law much more favorably than IJ did). I would perhaps add a couple more cases to this list that arose after Morriss’ paper was finished.

I also agree with IJ that a significant number of states (albeit, in my view, a minority) have passed strong reform laws and that we are today substantially better off than before Kelo. For example, I have long emphasized that reforms passed by referendum initiative tended to be quite strong. The main point of my analysis is to dispute claims that legislative reform is sufficient to address the problem, and take issue with various social science theories that predicted a much more effective backlash.

III. Lessons for the Future.

The Kelo experience offers several valuable lessons. First, there is the need to combine litigation and political action in any reform strategy. IJ and the broader property rights movement could not have been as effective if they had stuck to just one or the other. For example, most of the public would have remained unaware of the problem of eminent domain abuse if not for the media coverage generated by the Supreme Court case. Although preexisting Supreme Court precedent and eminent domain law in most states was even more hostile to property rights than the Kelo decision, the “rationally ignorant” general public was oblivious to this reality.

Second, the shortcomings of the Kelo backlash undercut the widely held belief that we don’t need judicial intervention to protect rights that are supported by majority public opinion. Although bolstered by such authorities as James Madison’s Federalist 10, this view has serious flaws that the Kelo experience highlights. A combination of political ignorance and interest group lobbying can easily lead to violations of rights that majorities value. It also makes it extremely difficult to correct those violations using the political process alone.

On a more positive note, the widespread political reaction to Kelo shows the potential for cross-ideological alliances on property rights issues. Kelo was denounced not only by conservatives and libertarians, but also by numerous left-liberal leaders and activist groups, such as Ralph Nader, Bill Clinton, Maxine Waters, the NAACP, and the Southern Christian Leadership Conference. They recognized that economic development and “blight” condemnations often target the poor and politically weak. It is unfortunate this potential alliance has been allowed to atrophy in recent years. Effective protection for property rights is unlikely to be achieved so long as the issue remains primarily a parochial concern of libertarians and conservatives.

Finally, I can’t resist pointing out that Kelo and the resulting backlash has been a great gift to takings scholars that just keeps on giving. For example, it enabled me to publish numerous articles, get offered various visiting appointments, and ultimately get tenure. I am currently writing a book on Kelo and its aftermath which is scheduled to be published by the Harvard University Press. And I owe it all to the justices in the Kelo majority.

As far as the public interest is concerned, I fervently hope that the the Supreme Court improves its takings jurisprudence. But when it comes to my own career interests, I hope the justices keep up the bad work!

CONFLICT OF INTEREST WATCH: As in previous posts on Kelo-related subjects, I want to note that I have written various pro bono briefs for the Institute for Justice. I also wrote a pro bono amicus brief in the Kelo case itself on behalf of the late Jane Jacobs.