Kilos of Kelo
Second, a taking is always a poor economic transaction. As Stephen Bainbridge writes:
Unfortunately, the requirement to pay fair market value is a grossly inadequate safeguard on government power for two reasons. First, it fails to take into account the subjective valuations placed on the
property by people whose families have lived on the land, in at least one case, for a 100 years. In other words, the government now will be able to seize land at a price considerably below the reservation price of the owners. Indeed, as Will Collier explained: New London
"... the price even a willing seller would be able to get from his property just took a huge hit. All a developer has to do now is make a lowball offer and threaten to involve a bought-and-paid-for politician to take the property away if the owner doesn't acquiesce."
Second, unlike the prototypical eminent domain case, in which the land is seized to build, say, a school or road, in this case the city is using eminent domain to seize property that will then be turned over to a private developer. If this new development increases the value of the property, all of that value will be captured by the new owner, rather than the forced sellers. As a result, the city will have made itself richer (through higher taxes), and the developer richer, while leaving the forced sellers poorer in both subjective and objective senses.
Whenever you force a transaction, you destroy wealth.
Third, this decision creates yet another incentive for expanded crony capitalism. Corporate welfare is already a big problem in this country, but now instead of concentrating on tax breaks corporations can lobby to acquire real estate. Increased lobbying is bad enough. This particular type of lobbying is terrible.
Fourth, this decision is subject to abuse. In the comments section of yesterday's post, Rashid Muhammad wrote the following:
Essentially this gives the cities the right to say: "We can make more money if Developer X uses your property so we are hereby relieving you of it." Before the municipality itself had to have some sort of project planned that would benefit the community as a whole. Now the "benefit" to the community is more tax revenue which "rewards" the community most substantially with even bigger and more inefficient government.
It is sad because developers aren't even talking to the people who live in the areas that they want to "revitalize," they are going directly to the city and the cities are redefining their standards for blight just to accommodate these projects. This has been going on in minority communities that weren't quite ghetto, but were old for a while. Now it's hit the mainstream.
If you think this is an overstatement, take a look at this conversation between Justices Scalia and O'Connor, and the city of New London's attorney during oral arguments (via Stephen Bainbridge):
Finally, there was no good reason to make this ruling. The Supreme Court has now ruled that purely intrastate commerce is interstate commerce, and that private is public. The language of the Constitution exists for a reason, and that reason is specifically to limit the power that the government has over individuals. The Raich decision and the Kelo decision fly in the face of this ideal. I eagerly await the case of Gonzales v. Gravity, in which the government will assert that up is down, followed closely by Gonzales v. Math, in which they will argue that 2+2=5.
"Justice Antonin Scalia ... describes [City of
lawyer] Horton's position as: 'You can always take from A and give to B, so long as B is richer.' And O'Connor offers this concrete example: What if there's a Motel 6 but the city thinks a Ritz-Carlton will generate more taxes? Is that OK? New London
"Yes, says Horton." (Link)
The Volokh Conspirators have been prolific. Don't miss Orin Kerr, Randy Barnett, and Todd Zywicki.
Stephen Karlson makes several good points.
Ann Althouse has more here, and she notices an embarrassing spelling mistake here.
Will Baude and Raffi Melkonian chime in.
OK, back to work. I wonder if I could get the Tennessee government to seize the Instapundit site for me if I promised to turn it into a pornographic website. It would bring in increased revenue, increased tax revenue for the state, and it would create jobs. Who could be against that?