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Affluent Christian Investor | August 20, 2017

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This Ruling Allows Officials to Seize Your House Because It’s ‘Ugly and Dumb’

U.S. Supreme Court Building

U.S. Supreme Court Building

Just over ten years ago, the Supreme Court decided a crucial case involving eminent domain – Kelo v. New London. The dispute was extremely important in the continuing struggle to protect property rights against government encroachment.

Under the Fifth Amendment, governments may take private property, but only if it is done for “public use” and if the owner is paid just compensation. But what if the government wanted to take your property simply to transfer it to another person or organization because politicians thought you weren’t making the best use of it? That is what happened when the New London Development Corporation wanted to seize the homes of Suzette Kelo and several others in 1999.

New London didn’t need their land for a road or bridge that the public would use. Instead, it wanted their land as part of a redevelopment plan worked out in conjunction with the pharmaceutical giant Pfizer. Could the government seize and destroy homes that people wanted to remain in just because the big new complex envisioned was supposed to create jobs and bring in more tax revenue? Are such takings for “public use” under the Fifth Amendment?

Ilya Somin’s new book The Grasping Hand tells the story of the legal battle in fascinating detail. Somin, a professor of law at George Mason University, succinctly recounts the facts that many readers will remember, but adds a great deal of additional detail to show many ugly but unknown truths about it. Readers discover that the case was much “dirtier” than it first appeared to be.

Somin also examines the public policy issues that grow out of eminent domain. Not only was the seizure of property in this instance unnecessary and harmful, but, he concludes, we should expect similar results in most cases. In short, using eminent domain for anything other than the paradigm of an essential road or bridge is a bad idea and shouldn’t be allowed.

The Fort Trumbull area of New London adjoins the Thames River and had until 1995 been home to the Naval Undersea Warfare Center. But its closure left the city with fewer jobs and less revenue than formerly. Hoping to revitalize the area, local government officials and business leaders created the New London Development Council (NLDC).

Within a couple of years, NLDC came up with a plan for an office park with shopping and high-end residential units. Pfizer would be the biggest occupant, locating its headquarters there. What many people do not know is that the plan could have been finished without destroying many of the homes that were ultimately seized through eminent domain. Pfizer executives, however, said that they didn’t want their beautiful headquarters “surrounded by tenements.”

Think about that. A large corporation was going to receive a gigantic gift, but still felt empowered to demand that people whose homes could have been preserved must nevertheless be forced out because, as the president of NLDC put it, their houses looked “ugly and dumb.” Thus we see one of the hidden consequences of eminent domain – it engenders a domineering, elitist attitude where the politically powerful think they can ride roughshod over unimportant “little guys” to get what they want.

The homeowners, with expert legal help from the Institute for Justice (IJ), challenged the taking in court. The legal battles raged for years, from trial court to the Supreme Court of Connecticut (where one justice lodged a very strong dissent against such takings), to the U.S. Supreme Court.

Somin informs us that during this period of time, the plaintiffs were repeatedly subjected to vindictive harassment by public officials – the very people who were supposed to protect their rights and uphold the law. Apparently, the desire of Suzette Kelo and the others to remain unmolested and enjoy their property was intolerable to those “public servants.” We should regard that as another hidden consequence of eminent domain – the erosion of civility and respect for those who don’t want to sacrifice for the “collective good.”

Arguments before the Supreme Court pitted Scott Bullock of IJ against veteran Connecticut lawyer Wesley Horton. The big moment came when Justice Sandra Day O’Connor, who had written a decision in favor of a very broad view of the eminent domain power twenty years before, asked Horton if it would be constitutionally permissible for a government to seize a Motel 6 and turn the land over to Ritz Carlton just because the latter would pay more in taxes.

Horton unflinchingly said yes, an answer that raised many eyebrows in the Court.

O’Connor wrote a strong dissent based largely on the lack of any limit to “economic development” takings, but the majority went along with Justice Stevens, who saw nothing wrong with that policy and thought the courts must defer to the presumed wisdom of government officials.

The decision, Somin notes, led to a backlash across the country, with many states considering legislation to stop Kelo-type takings. Unfortunately, those efforts have brought about only marginal improvements.

My favorite part of the book is Somin’s powerful case against “economic development” takings. Using Austrian and Public Choice analysis, he shows why such efforts are no better than other kinds of economic meddling. They inflict needless harm on “little people” to help the wealthy and powerful; they exaggerate the supposed benefits while underestimating the costs; they encourage special interest groups to rely on government power; they lead to wasteful lobbying costs.

Among the critics of the sort of redevelopment planning in Kelo was Jane Jacobs and Somin quotes from her famous 1961 book The Death and Life of Great American Cities: “[P]eople who get marked with the planners’ hex are pushed about, expropriated, and uprooted, much as if they were subjects of a conquering power. Thousands upon thousands of small businesses are destroyed… Whole communities are torn apart and sown to the winds, with a reaping of cynicism, resentment and despair that must be seen to be believed.”

Often, the justification given by the politicians and planners is that an area is “blighted” and therefore needs their attention.

What may appear to be “blight” and “economic depression” to the rich and powerful is a community of individual property owners, renters, and business people doing the best they can under their circumstances. Politicians imbued with the central planning mindset look upon such areas and think, “This must be improved so the city will be more prosperous – and we will collect more in taxes.”

That mindset is the real problem. It assumes that it’s an appropriate use of the coercive power of the state to inflict losses on a few for the imagined “greater good” of the whole. Such efforts have visited untold misery on humans over thousands of years of history.

Adam Smith correctly understood that economic progress comes about when individuals pursue their self-interest in a setting of private property and the rule of law. In contrast, Somin writes, “The use of eminent domain to promote ‘economic development’ is based on the exact opposite assumption: that resources will often fail to generate as much as they should unless their allocation is controlled by government. Instead of the invisible hand of the market, eminent domain relies on the grasping hand of the state.”

Exactly – and what was the ultimate result of the grasping hand of New London in this case? The plan fell through. Many good homes were destroyed and lives shattered for nothing. Check out the dismal photographs on pages 236-7 and compare them with the photos of two of the “ugly and dumb” homes on pages 13-14.

I strongly recommend this book for its sharp legal, economic, and historical analysis of the eminent domain debate.

 

Originally posted on Forbes.com.

 

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