For many years, people who generally lean pro-free-market and small-government have argued that when the government does things, it should usually do them through private entities. Don't have the government run utilities; have them be run by private companies. Don't fund solely government-run schools; even given a public commitment to government-funded education, it's better to have much (in the view of some, all) of that education be conducted by private schools. If you're going to pay for housing for the poor, do it through vouchers, not through government-run housing projects.
Moreover, you generally shouldn't burden the private organizations with common-carrier-like "you must serve everyone" requirements, at least unless they're monopolies. Better leave landlords and educators, for instance, free (or mostly free) to decide whom to let in, and on balance their economic self-interest will generally yield optimal results. (I set aside here the debates about bans on discrimination based on race, religion, sex, and so on; the common carrier model would ban all discrimination, or all discrimination found to be "unreasonable" by some government decisionmaker, and not just discrimination based on certain proscribed categories.)
My sense is that this is indeed generally a very good policy: Once you decide that the government should be funding or assisting some services, you should nonetheless prefer that they be privately provided (better yet, competitively provided), of course with some exceptions. There are costs to this approach, but they are less than the costs of inefficient government operations. "The public end may be as well or better served through an agency of private enterprise than through a department of government." Berman v. Parker, 348 U.S. 26, 33-34 (1954).
The funny thing is that, in Kelo v. City of New London, it is the (mostly liberal) majority's test that would give the government flexibility to serve public goals by taking property and selling it to private parties, when the government thinks the private parties will be better positioned to provide the public benefit. And it is the conservative dissenters' test that would give the government a strong incentive to own and operate various enterprises itself, or insist that whoever owns and operates them labor under the burdens of being a "common carrier."
Under the dissenters' view, if the City of New London wants to take property to run a shopping mall, which would presumably provide more jobs and government revenue, it's free to do so. But if it wants to take property and resell it to a private shopping mall owner, it may not. True, the latter solution isn't the pure free market: The mall owner would be getting a government benefit in the form of property taken from the original owners (albeit with compensation), just as school choice programs get a government benefit in the form of money taken from taxpayers. Still, it seems better than the City running retail stores — yet the dissenters' approach would give the City an incentive to do that, rather than lining up more efficient private businesses to do it.
Now there are certainly other arguments in the dissents' favor. Perhaps Justice Thomas is right that the original meaning of the "public use" requirement was to mandate that the property be owned by the public or by a common carrier, and that we should therefore insist on this meaning. Or perhaps Justice O'Connor is right that without some such requirement, the government would have too much power to merely take property from one person to another, with no real public benefit. Or one could argue that as between (1) no takings, (2) takings of property to be owned and operated by the government, and (3) takings of property to be owned and operated by private parties, but for a public benefit, #3 is indeed more efficient than #2, but #1 is most efficient of all — and that we therefore should allow only #2, precisely because its inefficiencies will provide a natural deterrence to takings, and push the government more often into the best position, #1. I'm certainly sympathetic to finding some constitutional limit to government power here.
Nonetheless, if we're evaluating the practical benefits of either approach, we might want to be skeptical of an approach that favors government ownership or operation of publicly useful enterprises over private (albeit government-assisted) ownership or operation.
UPDATE: I should stress, by the way, that my point isn't just that a "government ownership and operation is OK, private ownership and operation is not" rule creates perverse incentives. The question is also whether a rule that disfavors privatized but government-assisted enterprises compared to purely government-run enterprises makes sense, given that we generally think privatized enterprises are better.
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Those in favor of the private takings in cases like Kelo usually try to argue in capitalistic terms, even though what they are doing isn't capatalistic at all. They talk about the importance of private industry to their local economies. I think this tends to work because Americans are generally capitalists and respond to capitalist arguments. If suddenly the law required that takings be used only by government entities, the takers couldn't use capitalist language, and I think their actions would be less popular.
Could city governments, for example, exercise public domain and take, say, a baseball team and run it for profit in lieu of (or in addition to) tax increases? Could they exercise eminent domain and take over all of the barber shops and then set high prices to raise money for the city?
Surely the alternative in Kelso is that no one can build a shopping mall if the owners of the property don't want to sell it for that, not that the city has to get into the shopping mall business if it wants a shopping mall there?
Do you really think that New London would have opened its own pharmaceuticals plant if they hadn't been able to take the property to give to Pfizer to build its own?
A more cynical view is that what really happens is: (B) Private business lobbies government for favors, and then (A) government justifies these favors as a benefit to the public.
If you think the first description accurately describes most of these eminent domain transfers, then you're right. The dissenters' view would lead to a lot of inefficient provisioning of services by government rather than private business.
But if you think the cynical view is a more accurate description of what is usually going on, then the dissenters' view would simply stop governments from considering providing these "public benefits" in the first place.
Rule (1) is too inefficient because of the holdout problem. If the government wants to build a road, it would have to buy up many plots of adjacent land. Property owners would catch on to what is happening and refuse to sell, in order to drive up the price (since they know the government HAS to have their land for the road to be built -- they can demand a very high price: much higher than the price at which they subjectively value the land). So the existance of situations that trigger this holdout problem are (in my opinion) the justification for rule (2).
Rule (3) is bad for a couple of reasons. First, it's not a 'free market' situation if the 'private' entity can get its land (probably the biggest component of its fixed cost function) without paying for it. A truly free market will distribute land to those who will use it most efficiently, whereas rule (3) will distribute it arbitrarily according to the whims of government officials (or according to who can lobby these officials most effectively). Indeed, one of the strongest arguments for the free market is its ability to produce efficient outcomes.
Another argument against (3) is that it adds uncertainty to property rights. Private entitities now face a higher probability that their land will be seized, and this is another fixed cost.
I could probably think of more arguments, but this is off the top of my head.
Rule (1) is too inefficient because of the holdout problem. If the government wants to build a road, it would have to buy up many plots of adjacent land. Property owners would catch on to what is happening and refuse to sell, in order to drive up the price (since they know the government HAS to have their land for the road to be built -- they can demand a very high price: much higher than the price at which they subjectively value the land). So the existance of situations that trigger this holdout problem are (in my opinion) the justification for rule (2).
Rule (3) is bad for a couple of reasons. First, it's not a 'free market' situation if the 'private' entity can get its land (probably the biggest component of its fixed cost function) without paying for it. A truly free market will distribute land to those who will use it most efficiently, whereas rule (3) will distribute it arbitrarily according to the whims of government officials (or according to who can lobby these officials most effectively). Indeed, one of the strongest arguments for the free market is its ability to produce efficient outcomes.
Another argument against (3) is that it adds uncertainty to property rights. Private entitities now face a higher probability that their land will be seized, and this is another fixed cost.
I could probably think of more arguments, but this is off the top of my head.
The reason why we have previously used the idea as "publicly owned" to prevent this sort of taking, is because generally we had very few ventures in government that met that criteria. However, with government as large as it is, and running so many things, that is no longer the deterent excuse that it once was.
As I said here, we have now turned this country in a place where you constantly have to justify that you are making better use of your land than someone else who might come along and want it. Time to buy a shotgun. I do believe my 2nd amendment rights trump your eminent domain rights.
Think about this. A city wants to increase tax revenues so it decides to seize the homes and lands of the 200 poorest people int he city and give them to 200 high net worht individuals. Is that for a public good? It increases tax revenues and probably creates jobs and helps business in the area through increased local spending. Absurd I know but is it far off?
Except private property, in my mind, is a moral consideration, not strictly an economic one. (Goes back to the whole "Thou Shalt Not Steal" thing...). I'm probably working myself into a corner, but the concept of eminent domain seemed to be a practical way to allow private property while still allowing government to get the property it needs without falling into the tragedy of the commons. The distinction made between public and private use was the linchpin of this compromise between the the moral imperative of property rights and the practical needs of government. And now the Supreme Court has gone and yanked it; it has said that even private uses can be considered public if governments say they are.
Thus Article I, Section 8:
The Congress shall have power to...exercise exclusive legislation in all cases whatsoever,...over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings;
If the powers were limited, these efficiency issues wouldn't come up.
But most people reacting to this decision are total drama queens. This is not a "tragedy" and people aren't going to have to justify the use of their land to the government. The decision may create the very isolated, occasional injustice. But democracy will prevent it from being seriously abused.
Do any state constitutions give special protection regarding takings for private use?
Yeah, sort of like killing a few people in the name syphillis research is a very isolated, occasional injustice. Surely democracy will prevent it from being seriously abused.
Look, this is democracy, and this is abuse. How does democracy stop this abuse?
I wonder how all those other economic development plans cited by Stevens have turned out.
Politician: Sorry, but voters live there. I can't help you by giving them the boot.
Businessman: Here's a check to help you stay elected.
Politician: A corporate headquarters sure would look high-dollar. Let's make an community economic plan!
Politician thinking: No voters--no problem.
Businessman thinking: Next year I'll get a tax abatement to keep me from abandoning the town.
Huh? How about an approach that simply leaves private property in the hands of its owners, until such time as they sell?
I don't think that is correct; this clause limits taking of private property to only property taken for public use, AND it requires just compensation for the taken property.
See Justice Thomas' dissent for a more complete discussion.
Using your interpretation, the government is free to take property for non-public use and not compensate at all. Is that really consistent with the framers ideas and the rest of the Constitution?
I believe that the Toledo Mudhens (minor league baseball team) are publically owned and run for profit by whatever county Toledo is in.
Stevens and Kennedy both left it open to plaintiffs to challenge the City's determination that the taking has a public benefit (although, admittedly, this is going to be hard). Thomas, in particular, focuses on the basically irrelevant question of whether the city or some private entity takes title.
I understand the need for procuring land for uses such as roads and schools, but to do so in such an unfair and governemnt-first method sounds very very unconstitutional.
I think the government's ability to sieze property and give it to private drug companies is so far down the list of reasons why the government itself doesn't get into the drug business as to be virtually irrelevant.
And, if the government did want to provide a product or service, I don't think its ability to transfer property to private parties, too, would deter it at all.
The issue here is whether "public use" limits the takings power in any meaningful way. Apparently, a majority of the Supreme Court thinks it doesn't.
In that regards, government takings are seen as an evil as there is no compensation for the personal invasion of space and territory.
Most moderns have lost that feeling, that loyalty to a patch of ground and an entity smaller than a nation-state. Who, in this time, would feel that loyalty to their state would overrule loyalty to their nation, especially in an unjust cause (think Robert E. Lee).
No one thinks that the gov. of California would side with his native land over the U.S. But consider the words of the song "breaths there a man with heart so dead, who never to himself has said, this is my land, my native land, this is my native land!" In our age, that would be most of us.
People who have moved a great deal, who do not have generational contacts and roots with the land are, indeed, a different kind of human. I'm one myself, and do not feel as strongly about the land. When I was burglarized, I was miffed, but not violated or outraged. Filled out a claim, noted my deductable, went on with life. People connected with the land have much, much stronger reactions.
With that change I think we are finding a change in how the law regards taking land away from people, from a last resort that does violence to the social bond to a mere economic reality for the common good without any extra- (hmm, what is a good term for that, a sort of extra-contractual damages sort of thing, only the emotional and personal cost of transfer) costs or harms.
In that universe, I think Kelo v. City of New London may be rightly decided. Public use is any use the eventually improves optimality, which is the public good, without regard for the other costs, since they don't exist, or the need to avoid imposing those costs.
Yesterday, this wasn't possible. Today, it would be legal. The corruption that this will cause is mind blowing. No way to fight it. The Supremes have said it is legal. On what basis could you fight it in a court??? This case has just opened the flood gates. Before, at least, the land was going to the PUBLIC. People could accept that. BUT NOW!! The people will have no recourse. In the above case in San Francisco the people who lost their home wouldn't even be able to afford a house anywhere near where their old home was. Yea, sure they can work to defeat the City leaders who did this (and got rich enough not to care if they were defeated).
People will be left mad as hell. With no recourse to the courts. Nothing that they can do to stop their homes being taken. And they can't even say "Well the road had to go through. The school had to be built, etc". Just "They stold MY LAND to make themselves and that &^%^$#HOLE rich." Blood will flow because of this case. I only hope that it's the blood of those responsible and not just the police and the Landowner.
Nails in the lid.
1. First Amendment - McCain-Feingold
2. This takings case.
It will not take to many more of these to really piss people off.
People will FEEL this one. McCain-Feingold hasn't effected people yet. NOBODY in their right mind would have decided this case in this way. As bad as McCain-Feingold was this is much worse.
The correct answer, of course, is no takings, regardless of whether the purported public good to come from what was taken will be provided by state agencies or by private enterprises competing in the market.
The Constitution allows for takings (subject to the requirements of Public Use, Just Compensation, and Enumerated Powers) because the founders believed that there must be cases when in order to provide a clear public benefit you sometimes just have to force somebody to sell. The holdout problem, as Thom points out. An enlightened view of markets and economics, however, can show that there is no holdout problem. Don Boudreaux makes that point in a Wall Street Journal online debate about this very case.
I believe that Justice Thomas' interpretation is in keeping with the letter and spirit of the Constitution, even though it suggests that property taken for public use must be owned by the public. But I also believe that libertarians should argue for no takings at all; if the Constitution doesn't bar Eminent Domain, then the legislatures and executives can simply refrain from exercising it.
Directly on Eugene's point: the Kelo dissent would have made takings more difficult without raising any impediments to privatization of government operations that subsist largely on tax revenues rather than property seizure. As such it would have been a much better outcome than what we got.
If that were the case, the clause in question would read Tom J also wrote "Using your interpretation, the government is free to take property for non-public use and not compensate at all. Is that really consistent with the framers ideas and the rest of the Constitution?"
Yes. Another clause in the fifth amendment reads "No person shall ... be deprived of ... property ... without due process of law". As long as you get due process, anything can be taken. Governments routinely use this power to transfer property to other people (child support payments, car repossesions), destroy it (disposal of contraband), and even convert it to public use for punitive purposes (seizure of the proceeds of a suspected illegal drug sale). Note that such non-public takings are fraught will perils and frequently abused.
As for the Court refusing certiorari on Takings Cases, Rehnquist GAVE TAKINGS LAWYERS AN INSTRUCTION MANUAL FOR HOW TO GET CERT IN FUTURE TAKINGS CASES IN HIS CONCURRENCE IN SAN REMO HOTEL.
I REPEAT: REHNQUIST GAVE TAKINGS LAWYERS A HOW-TO-MANUAL OF HOW TO GET TO THE SUPREME COURT WITH A TAKINGS CASE FROM HERE ON IN WITH HIS CONCURRENCE IN SAN REMO HOTEL.
And governments do indeed run businesses, like liquor stores. The opposite result in Kelo would have allowed Vermont to take land for a state liquor store, but would not have allowed New York to take the same land and give it to a private individual to open a liquor store. Can anyone explain why that would make sense?