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More on Kelo:

The core debate in Kelo, as I mentioned yesterday, is over whether the "public use" requirement of the Takings Clause means (1) "the taken property must be owned by the government, or sold by the government to a common carrier that has the legal obligation to serve everyone" or (2) "the taken property must be used by the government as a means of benefiting the public, even if the government benefits the public by selling the property to a private property owner."

I argued that, if one is focusing on the practical merits, requirement 1 seems to fit uneasily with a pro-private-enterprise/pro-market philosophy: In those cases where the government is trying to accomplish some goal using the eminent domain power — an inherently somewhat unlibertarian power, but one that the Constitution does reserve to the government in some measure — there are strong pro-private-enterprise/pro-market arguments in favor of letting the government do this using private businesses, rather than doing it itself or imposing a common carrier obligation. For more details, please read that post.

Let me use the same approach to consider three other arguments I've heard many people make:

1. These redevelopment takings, people say, primarily benefit private businesses, and benefit the public only indirectly. But so what? A key argument for private enterprise is that private benefits may yield public benefits — perhaps indirectly, but much more reliably than attempts to produce the public benefits through more direct government action. A plant may benefit from getting property that it otherwise couldn't get; but this benefit will also help plant employees, nearby businesses, and others. That this is something of a "trickle-down" effect doesn't keep it from being a real effect.

2. Others point out that the redevelopment plans often don't require the private enterprise to which the condemned land is sold to keep using the land for publicly beneficial reasons. If GM ends up getting the property, on the theory that it will build a plant that would provide jobs for employees, more income for local businesses, and so on, then it could turn around tomorrow and just build a private golf course for GM executives instead.

Well, it could, but is that really likely? I suspect not, in part because (for better or worse) GM as a landowner would itself be subject to the power of local authorities. If it decides to build that golf course, it might find that the zoning on the land will get changed, or even that the property will be taken back (and likely without any more compensation than what they had to pay for the land in the first place). The city may well conclude that such an informally understood possibility of sanctions is much more effective than contractual requirements that might unduly tie up the new landowner's flexibility. (For instance, if there's a contractual requirement that GM keep the plant open for 20 years, GM might either not accept it, or might end up underinvesting in the property because it knows that it has less flexibility to pull out of the property if something should go wrong.)

The city would be taking a bet that selling the property to the plant owners unencumbered (except with the inevitable possibility of retaliation if the owners go back on the understood deal) will provide more economic benefit than selling it to them with various strings attached. That may or may not be wise, but I don't see why this judgment should make the city's decision unconstitutional.

3. Still others say that economic development just isn't a permissible public use. But the reason the government has taken property to build railroads, roads, dams, and the like -- uses that are quintessentially constitutionally permitted (even if a libertarian might argue that they shouldn't be permitted) -- is economic development.

It may be that transportation channels are more likely to be much more valuable than just new plants; "creating jobs" is a great slogan, but merely creating jobs for the sake of creating jobs ends up being financially inefficient. I'm actually pretty sympathetic to this argument as a policy matter, and perhaps, since we're talking about practical arguments, it could also be used to justify a constitutional line. Still, I'm not sure that this is so; and I think the economic question is hard enough that courts ought not make the constitutional "public use" requirement to turn it.

* * *

I should stress that these are only some of the matters that should be considered, and they may well not be dispositive. One may well think that the original meaning of the "public use" requirement in 1791 (or in 1868, or throughout the 1800s if one sees those timeframes as relevant) mandates option 1, notwithstanding the practical questions. One may also make natural rights arguments in favor of adopting the least property-rights-restrictive option, when the historical evidence makes the choice between the options into a close call. And one may think that for public-choice reasons, allowing redevelopment takings that use public-private partnerships will do much more harm than good because the private entities will pressure, bribe, or dupe the government authorities into taking property too often. My goal here isn't to say that all the Kelo critics are wrong, but only to cast doubt on some particular arguments that I've heard made.

Baronger (mail) (www):
If economic interest is to be the overriding concern, why don't we go to a planned economy? After all planned economies seem to work so well. But like the speculation on this law, that's all the city of New London is doing. They are speculating. They have no proof, that their economic scheme is going to work. The development may flop. Pfizer may decide to pull out, or they might be brought out, or decide to cut back on their investment.

The city has no clue as to what will happen. But of course they have an economic plan, those always work. If a hotel is economically feasible for the area, then one will be built. We do not need the help of the council. Though of course I'm sure their paid accountants and economists might say different. But then such consultants are always helpful, and are above reproach, bribery, kickbacks and outright silly theories.

But of course the company or developer who gets the property will have to perform. Since what government giveth they can take away. The city will have a club over their heads, "If you don't perform. We will take the property away from you and give it to someone else."

Thinking like this makes me discount your argument for economic development. One theory is that the United States enjoys a high level of economic development because of the security of property. What business will pour money into development and infastructure if they can lose it all at the whim of the local government. Will this make people think twice about home improvements? I wonder if any of those owners in New London, had just put in a brand new tile floor or a deck.
6.24.2005 2:58pm
tbaughman:
As a prosecutor, I'm no expert on this, but I frequently litigate constitutional (and statutory) issues where my emphasis is on what the text says, what it meant to the law-giver (legislature or ratifiers), and how its context within the structure of the document aids that inquiry.

It just seems to me that "public use" gets morphed into "public purpose" or "public benefit" rather easily in many discussions, as though there isn't any question that these mean the same thing. It seems quite possible to have takings that may well "benefit" the "public," or at least arguably do so, but it is not self-evident that this fact means the "use" is a "public use." From what I have read there seems to be a fair argument that "public use" and "public benefit" or "public purpose" are not, as a matter of text and history, interchangeable. But its not a subject criminal-law practitioners get into much!

Tim Baughman
6.24.2005 3:02pm
anon:
Most of the libertarian outrage seems directed not at what Kelo did, but rather at the state of the Takings Clause law ex ante. The scope of the government's ability to take property has long slipped any tether to historical notions of public purpose.

Curiously, much of the liberal response seems also to miss the point that Kelo does nothing to expand what the government can do and only affects the means by which it effects its objectives. One would think Democrats would generally oppose a decision that will most immediately benefit businesses at the expense of average Joes. It is much more likely the government will want to exercise its Kelo muscles in Bellflower than in Bel Air.
6.24.2005 3:05pm
Anthony Lerose (mail):
Option 1 is far more pro-market/pro-free trade then Option 2.

The freedom in a market can usually be determined the extent of government intrusion. The less intrusion, the freer the marketplace.

Option 2 is much less restrictive on goverment intrusion into the marketplace than is Option 1. Option 2 would allow the government to take any private property at any time to give to another private entity, provided some minimal showing of some minimal benefit is made. Option 1 places more restrictions on when the government can take private property, thereby limiting the government's interference in the marketplace.

It could also be argued that economic development is fostered when individuals and businesses are more secure in believing that their property will not be taken away from them so easily. I know that I will be very reluctant to purchase property in or near a city's limits for this reason.

And of course, the easier it is for the government to take property, even if conditioned on a showing that the new intended owner will be more profitable, the easier it is for the wielders of that government power to abuse it. I would argue that increasing the possibility of government abuse is not consistent with a pro-free market philosophy.
6.24.2005 3:08pm
Dick King:
"2. Others point out that the redevelopment plans often don't require the private enterprise to which the condemned land is sold to keep using the land for publicly beneficial reasons." [and the example goes on to talk about GM hypothetically building a golf course on land condemned for a factory, and the article goes on to point out that GM is unlikely to do this for a variety of reasons]

As a libertarian it pains me to write this, but government ownership does matter here. GM wouldn't do anything this stark, but as time progresses GM may nibble at the margins — roboticizing the new plant so it hires fewer workers than in the original plans, selling th eplant to someone else, etc. I seem to recall that some public/private sports stadium projects suffered this fate. We're reasonably sure that the government will use the land for a freeway for a very long time once they condemn the land.

I can't cite anything precise, but I believe occasionally land gets condemned and the government changes its mind [building a smaller thing than intended]. Does anyone know what happens when this arises?

-dk
6.24.2005 3:13pm
Trenchard Gordon:
Dick:

This doesn't exactly answer your question, but it reminded me of an historical footnote to the Lucas v. S. Carolina case. After S. Carolina lost that case and was forced to pay Mr. Lucas for his land, the compelling interest in retaining the land in an undeveloped condition suddenly evaporated. The state promptly turned around and resold the land for ...(you guessed it) beachfront development.
6.24.2005 3:54pm
Anthony (www):
I agree that really, this decision just ossifies the existing state of affairs in eminent domain. However, that existing state of affairs is deeply unconstitutional.

The phrase for "public use" seems to me to limit the use of land condemned under eminent domain to purely public uses, such as a park, an open-access waterway, or the like, or a government use, where the government is presumed to be providing some sort of public benefit, such as a road, a government office, a military base, a police station, or a school. Converting the land to privately-owned common-carrier use seems to be stretching the bounds of "public use" too far.
6.24.2005 3:59pm
chuutriit (mail):
When I step back and look at what Kelo does, I see the state acting as broker in a forced sale of property from an unwilling seller to a buyer at a price set by the broker (who stands to benefit if the sale goes forward, but not otherwise).

As long as we are looking at economic justifications for land use, it seems that the overriding question should be "what is the highest valued use for the land at issue?" I fail to understand how this question is best answered by the interjection of the state as middleman, in effect forcing the landowner to sell his land to the state for a price that the state sets as "fair compensation." This price is likely, in almost all cases, to be much lower than that which would be accepted by the seller resulting from direct bargaining between the private buyer and the seller. That a private buyer might not be willing to pay this price, or that the private buyer and seller might not reach agreement on price, merely means that the use proposed by the private buyer is not the higher valued use of the property.
6.24.2005 4:28pm
Thom (mail):
ECONOMIC DEVELOPMENT:
"A key argument for private enterprise is that private benefits may yield public benefits — perhaps indirectly, but much more reliably than attempts to produce the public benefits through more direct government action. A plant may benefit from getting property that it otherwise couldn't get; but this benefit will also help plant employees, nearby businesses, and others."

I would argue that you don't have a 'free market' in any meaningful sense of the term if the government is granted the task of decided who is the most efficient user of any given plot of land. In a free market, parties signal how much they value land by the amount of money they are willing spend to buy that land. Therefore the party buying has to actually bear the full cost of its decision, so I would expect such a party to very carefully consider how well it could make use of the land.

If we replace the market system of rationing property with a government-planning system, what are the value signals? How does the government figure out which party is the most efficient user of a plot of land? Whims? Guesswork? Lobbying power? Does the government have some sort of mystical insight that enables it to decide things that Ms. Kelo and the NLDC can't decide voluntarily among themselves?

I wouldn't expect a government-planned system of land ownership to yield very efficient results (i.e. didn't the GM Poletown plant shut down shortly after they got their condemned land from the city?), and I wouldn't expect many of the trickle down economic benefits that the free-market often yields. There simply isn't a free market in such situations.


DEFINING PUBLIC USE:
I would also argue that it's intuitive to limit 'public use' to things like public parks, roads, and railroads (with common carrier requirements). These sorts of uses are actually open to the public. Anyone in the 'public' can 'use' them. Whereas, I'd probably be arrested for trespassing if I tried to spend a few nights squatting at the hotel being built for Pfizer's clients.
6.24.2005 4:43pm
Tom Dichiaro:

Objective law is as necessary to a free society as property rights.

Pro-property rights people tend to be rule of law people as well. Even if government "ownership" of the transferred property was not our first choice - it was a system that limited the takings to a defined set of cases - the cases where government operated physical plants. Furthermore, Operating a physical plant requires a commitment which tends to force government to use this power less often, and usually only when the perceived need is greater and clearer . Even though this is not a principled reason for not using Eminent domain, it did have the effect of making the system as a whole more objective in the sense that you knew the cases where eminent domain could and would be used.

A good portion of the outrage is that a contentious power of the government is going to be operated significantly less predictably, because a major limit was removed and in its place was put the short range judgements of local politicians.

The result will be that people will be less free not only because a few will lose their property unjustly but because many will find planning harder and their plans less secure.
6.24.2005 4:44pm
Thom (mail):
UTILITARIANISM:
Another quick point - looking at the case from a more utilitarian standpoint, I think public uses like parks, roads, railways w/ common carrier requirements, etc conveniently (if not by design) tend to be valid public goods, for which there will be a pretty strong market failure argument due to the holdout problem.

But I see no reason as to why the free market will, in the absence of government intervention, underproduce private goods like hotels, department stores, casino parking lots, Pfizer pharmo plants, etc.

I'm open-minded to dissenting arguments, as always.
6.24.2005 4:54pm
Eddleman:

One theory is that the United States enjoys a high level of economic development because of the security of property. What business will pour money into development and infastructure if they can lose it all at the whim of the local government. Will this make people think twice about home improvements? I wonder if any of those owners in New London, had just put in a brand new tile floor or a deck.


It seems to me that none of this has anything to do with Kelo, which at most did nothing but affirm the existing understanding of the Takings Clause. It may actually have signalled the court's willingness to police localities' rationales more strictly than than they have in the past-- Kennedy's emphasis on 'thorough planning' suggests this.

Kelo was a hot-button case because of the possibility that the Court would reverse its previous stance and exert stricter control over the concept of "public use." Property rights are in no greater danger they they were in twenty years ago, and possibly less.

The real surprise in Kelo, as most of the seasoned court-watchers over at SCOTUSBlog have observed, is that Kelo managed to get four votes for what would have been, in light of existing understandings, a quite radical reinterpretation of the law.
6.24.2005 6:11pm
tsj:
Why is the discussion so focused on economics? I agree that more likely than not, the public will benefit from such transactions.

But is the purpose of the Fifth Amendment takings clause simply to afford the greatest degree of economic efficiency? I might be mistaken, but I thought this nation was founded on the principle that the government's power must generally respect and yield to the sanctity of private property, and NOT the other way around. The takings power was never meant to be a routinely exercised means of economic development, but was intended to cure greater societal ills (which may or may not be economic) when no reasonable alternative existed. Recently, however, raw economics has taken too great a role in influencing our wannabe economist judiciary.
6.24.2005 6:38pm
jd:
Eugene:

I think your central fallacy is this: the assumption that the choice is either between the government taking and acting itself or taking and acting via an intermediary by granting the taking to a third party.

You've commit the fallacy of a false dichotomy. Certainly IF that was the only choice, the latter is more "free market", but free-market principles inheriently dispute that such a government action would be beneficial. The property will transfer of its own accord if that is in the net benefit of society.

I hear the objection: what if the property owner is recalcitrant? Um, then that means the property owner highly values his decision to retain the property. Thus your calculus of the social optimum was wrong because you misjudged his harm.

Once you argue that the government can "compute" a better distribution of property you run into the socialist calculation fallacy and have abandoned free-market principles. Please see Eugen von Böhm-Bawerk's "Karl Marx and the Close of his System" 1896 or von Mises's Socialism for a much more complete account than I could hope to reproduce on my own.
6.24.2005 9:43pm
Sisyphus:
As Thom implicitly points out above, Volokh may have erred in his description of point 3. The traditional uses of eminent domain are not simply economic development uses. Rather, they are public goods, whether provided by the government (e.g. a park) or private industry (e.g. railroads).

In contrast, Kelo's holding applies eminent domain to the provision of private goods. It's the transfer of private goods from one party to another that is objectionable, and not the transfer of private goods to the public for the provision of public goods.
6.24.2005 10:04pm
Baronger (mail) (www):
Edleman

Economics has everything to do with it. Since economics is what the court is citing, for the reason the taking is allowable.

However the court may have fallen for a version of the "broken window" fallicy in economics. With this fallacy, it is assumed that a broken window, encourages economic activity. However it fails to note all the other things that money could have been spent on. Likewise yes there might be a localized economic bump up, however the increased risk in property ownership will have an overall dampining effect on the economy. We are mainly arguing economics, I think because that is what the court ruled on. It was the discent that argued for basic property rights.

However I stand by my assertion that the city council should stay out of the way of business to begin with. Planned economies don't work as well as the free market.
6.24.2005 11:33pm
Public_Defender:
I think this is a close call, but I come down more on the conservative side. What I don't get is the vilification of the opinion, especially from the right, especially since it looks like President Bush used a Kelo-like transfer to enrich himself when he ran the Texas Rangers.

According to this article (by the admittedly biased Molly Ivins), Bush's texas Rangers got their stadium by eminent domain. <> (I found this on Kevin Drum's site.)
6.25.2005 6:56am
TLove (mail):
The limit can be placed where there are sufficient externalities to make private development unlikely.

Although there are private highways, they don't seem to have been sustainable. Thus, condeming land for a highway seems to be an externality laden transaction justifying state action.

Common carriers fall under the same justification - if we tell you you have to provide electricity to everyone, then we have to give you the means to do so.

Public health - slum clearing - if geniune, is another.

But office buildings and shopping malls????? I see no shortage of private development of office buildings and shopping malls.

Thus I think the rule, inartfully expressed, ought to have been is the use being proposed one that is commonly provided by non-governmental entities for profit - and if so, the use is by its nature private. I realize that gov could work to make things unprofitable, and then announce ha ha, the use is now public, but that can be countered by looking at larger economic units than just the political unit in question (nobody can profitably build a high rise condo in Detroit, but they sure can in Boston).

The decision pours gasoline on the unavoidably corrupt nature of local political regulation of real estate development. Now Trump doesn't have to engage in traditional surrepticious block assembly, just traditional surrepticious politician assembly.
6.25.2005 4:02pm
Michael:
Under the current system, if land is seized, the owner must receive fair market value compensation (right?). But if the land in question is so important to the city/public, shouldn't the city be willing to pay more than fair market value?

Even an increase in 10% of the compensation price for those takings might deter inappropriate takings. a) do you think this might deter bad takings but not good takings, and b) how much higher than the fair market value would the compensation price have to be to achieve this effect?
6.25.2005 6:56pm
joe (mail):
Did anyone else notice that Thomas's dismissal of the orignal acceptance of the constituionality of Mill Laws as probative to the case relies on a Living Constitution line of reasoning?

He writes that, at the time of the founding and immediately thereafter, Mill Laws passed constitutional muster. These were laws that allowed mill owners to flood their upstream neighbors' land, without their permission, in exchange for compensation. The justification for this, Thomas explains, was that at the time, corporations were considered to be working in the public interest. They were private organizations, but because they were working for the public, takings done on their behalf met the Public Use standard.

However, Thomas goes on to explain, the understandings and practices that surrounded corporations changed over the years, so that they came to be seen as purely private entities, and takings on their behalf no longer met the Public Use standard.

In other words, since the objective circumstances of how the world operated changed over time, the language of the Constitution had to be applied in a different way - in fact, in exactly the opposite way. There is a term for this style of jurisprudence: "Living Constitution Jurisprudence."

Unless, of course, Thomas's constitution really is dead, but didn't expire until 1850 or so.
6.25.2005 9:27pm
markm (mail):
Joe: Maybe the laws under which corporations are created and regulated have changed to the point that they are not at all comparable to the organizations benefiting from the Mill Laws.

Or perhaps, like Dred Scott, the Mill Law decisions were just bad law in the first place.
6.25.2005 10:25pm
SupremacyClaus (mail):
Prof. Eddleman: President Mugabe's repossession, in Zimbabwe, first, of white farm land, and now, of the shanty town areas of his political opponents, meets Kelo doctrine criteria. I await the next phase of Kelo. If the bulldozers crush the house with 2 year old babies still in it, there is no civil liability for the township. Call it the Mugabe Doctrine.

The government's response to the starvation and devastation of the economy? Brilliant. Obesity tourism. Fat Euros and Americans are invited to till eroded Zimbabwe farm land. They can produce food for the favored few, and lose weight doing manual, Stone Age farming. This is government planning at its best. Could you have thought of that solution? Not me. Bless our Zimbabwe on the Potomac Justices. We need more such government functionary brilliance in New London.

I am not allowed to candidly characterize the Justices as what they really are, anymore. It is called "staying on point," or "civility," but law blogs are heavily censored, just like our courts.

However, I suggest changing the number of all appellate court Justices to an even number, 8 or 10. This would avoid, irresponsible, morally bankrupt, dumbass 5-4 decisions. An even number would make the court more conservative, in the sense of sustaining more lower court decisions. Many of the latter are mere obedience to prior dumbass holdings. It would just pause the human experimentation, self-reversal ping pong. Kelo is a good argument for this change.
6.28.2005 12:10pm