Eminent Domain, Imminent Danger

The power of eminent domain permits government to seize your house, land or business for “public use,” the term used in the constitutional clause which limits this authority. Local governments are increasingly abusing this prerogative, transferring seized land to other private parties rather than putting it to a truly public use like roads and other infrastructure. The recipients are usually corporations represented by powerful lobbies. In 2005, the Supreme Court ruled in Kelo v. New London that a confiscatory transfer to another private party is a legitimate “public use” if the resulting economic activity under the new owners benefits the community. However, every piece of land would generate more employment, more goods and more tax revenue for the confiscators as a commercial establishment than as a private residence. Every home in America is now vulnerable to seizure under eminent domain under this expansive new interpretation of “public use,” not just those along roads which need to be widened.

What local politician doesn’t want economic revitalization on his resume? Under the Kelo decision, land seizures will proliferate, ruining the lives of people who cannot afford to purchase a new home if dispossessed of their current ones. The so-called “just compensation” offered by the government is usually insufficient — if market value was offered to begin with, eminent domain would probably not need to have been invoked. Even if the forced payment is fair, there is no guarantee that the homeowner can find a comparable house at the same price, or even in the vicinity of his former home, affecting his life in areas like his job or where his kids can go to school. The very existence of a strengthened eminent domain power would lower the value of the home itself due to increased risk of potential seizure. If the displaced homeowner must buy a more expensive house, eminent domain would force him to spend money he would not otherwise spend. If he must buy a house at a cheaper price, equal in every respect to the one taken from him, companies would have been able to persuade him to move there without resorting to taking his land. If he cannot buy a house at all, eminent domain would force him to squander money on rent instead of using it for other needs, like education, retirement savings, or just general enjoyment. It may also be difficult for renters evicted from buildings demolished under eminent domain to find comparable apartments elsewhere.

Small-business owners with no other marketable skills may not be able to make a living if their stores are razed to make way for other merchants. These small stores thrive due to market demand for the services or products they provide. There is no guarantee that the consumers can find these goods elsewhere, or that these small proprietors can find new clients in other places, especially if they sell to niche markets.

Thus, a man loses not just his house or shop, but his whole life and livelihood. It is often asked, though, why one person should impede economic progress. It is important to realize, however, that homeownership itself is an economic value to be considered against that perceived of the re-developed land. Ultimately, value is not measured in dollar amounts, but by the happiness that goods and services provide to individuals in the free market ­­— what economists call “utility.” Everyone prospers when each man is free to decide the utility he gets from goods he has and goods he wants. It is impossible for confiscators and their corporate partners to know fully the utility of the home to the individual and to argue that it is less than the utility of the proposed development to the community. After all, the total utility to a community is merely the sum of the utilities to the individuals.

Further, it is self-defeating to generate economic wealth by subverting its enabling principle — the individual right to property. Being able to keep what you earn is the primary incentive to produce. Endangering this right chills production. Americans would mitigate the potential loss to the increased threat of eminent domain by purchasing smaller homes, or not buying them at all. The losses to the home construction industry, and to the industries which support it, would offset the benefits of the re-developed land. Because a home is the largest expense for many people, reducing the desire for homeownership decreases the incentive to work as hard. Even the confidence of large businesses will be shaken if their land can be taken and transferred to still larger businesses who claim the ability to deliver greater economic output. Productivity would eventually diminish across all economic sectors due to a generally lowered confidence in property protection. Eminent domain undermines the very economic goals the confiscators seek, and its ill effects are not confined to the person whose land is taken.

The expansion of eminent domain power imperils more than just property rights. You exercise free speech by virtue of ownership of the paper your words are printed on, of the film your speech is recorded on, and of the equipment used to produce and to distribute those and other media. Free speech, though it is regulated, cannot even exist without title to the physical property which must ultimately store and distribute speech. To illustrate how the power of eminent domain can circumvent the First Amendment – a right-wing administration dislikes the broadcast of a liberal TV station and seizes the land of its offices and transmission tower for economic redevelopment.

The unjustifiably broad interpretation of “public use” in the 2005 Kelo decision erodes the constitutional barrier against eminent domain abuse. Economic development can only be a true public use if the benefits accrue equally to all members of the public. However, companies which operate seized land receive far more than others. The government, on behalf of the public, could collect all the profits made from operating seized land, but what would effectively be a tax rate of 100% would discourage companies from seeking land seizure in the first place. Hence, economic development cannot be a “public use,” in either theory or practice.

In response to Kelo, initiatives to restrict eminent domain power passed in 10 of the 12 states which had such measures on the ballot last November. Hopefully, more states will follow.