by Sheldon Richman
Sheldon Richman is the editor of The Freeman and In brief.
Driving south on I-65 through Alabaster, Alabama, last week, I noticed a sprawling new shopping center on my left. Wal-Mart stood out prominently, but I also saw Belk and Old Navy stores. Ross and Pier One were there too. J.C. Penney and Target will open next year. This was of interest to me because people's homes once stood where those stores now stand. Most of the homeowners had no choice but to leave because the Alabaster city council used its power of eminent domain to seize their properties and transfer them to a shopping-center developer. (Two homeowners managed to beat the city.) In America, as elsewhere, government is the ultimate de facto owner of the land. The apparent owners use it at the government's pleasure, and sometimes — alarmingly often these days — the government decides it would rather have someone else use a particular parcel. The direction of transfers is predominantly from the working class to Big Business. Is it any wonder that people can't always see the connection between capitalism and freedom?
As everyone knows, local governments and their development authorities may legally compel people to sell their property to make way for projects that are expected to produce greater tax revenues. This is said to serve the social good, though I thought that being able to live peacefully in our homes is one big advantage to living in a society. Funny how means can become ends, which then justify other means.
My melancholy at seeing the Alabaster center was lifted somewhat by the news that the Ohio Supreme Court refused to let the city of Norwood, near Cincinnati, and its business-accomplices get away with the same kind of land grab in that state. Three homeowners in a working/middle-class neighborhood resisted the intimidating alliance of a municipal government and a well-connected land developer. After losing in lower courts the plaintiffs finally prevailed when the state Supreme Court ruled that Ohio cities may not take land strictly for economic development. The developer, Jeffrey R. Anderson Real Estate, will now have to find a consensual method of building his $125 million shopping center and office complex. But the plaintiffs are not unscathed by the ordeal. The homes they once lived in are all that are left of their former high-density neighborhood, the others having been demolished after their owners sold under duress. In fact, the plaintiffs don't own the houses anymore because the city went ahead with the transfer to the developer while the court case was pending. If the former owners and the developer can't agree on what happens next, a judge can give the properties back to the plaintiffs. No one is sure how this will actually play out.
Last year's U.S. Supreme Court ruling in Kelo v. City of New London sanctioned the taking of property for private purposes, but noted that states were free to enact stricter criteria for the exercise of eminent domain. Some states have done so or are considering doing so.
The Ohio Supreme Court's ruling was good news for the plaintiffs, but full sighs of relief would be premature. The Court found that the state law's standard for taking properties in deteriorating areas had become too vague — a standardless standard — and it also objected to the fact that an eminent-domain victim may not go to court until he's lost his property. I have no doubt that the politicians will revise the law in a way that's acceptable to the Court, but the new law will provide little if any measurable protection for homeowners. If the land-grabbers need another reason for seizing homes besides economic development, surely they will conjure one up. Blight does the trick in other places.
Private-Sector Accomplices
It's a mistake to focus only on the wrong-doing of politicians in these eminent-domain cases. Throughout the country land developers and retail giants stand by the politicians' sides waiting for the booty. This should disturb defenders of economic freedom, since government/business partnerships are the opposite of laissez faire. True, Wal-Mart, Target, and Crate amp; Barrel didn't write the eminent-domain laws, but they don't have to take advantage of them. When they do, they deserve all the flak they get from the anticorporate activists.
Libertarians should revise their attitude toward retailers that collude with government in land theft and other forms of corporate welfare. They are shoulder-deep in state privilege, enjoying all the creative financing and tax schemes their political friends can cook up. They are so integrated into the local and regional economic-planning establishment that they compromise their private-sector status. That should make laissez-fairists uncomfortable. Although the anti-Wal-Mart activists get much of their economic analysis wrong, many of their instincts about concentrated power are right. In a free market big companies would not elicit suspicion, but in the corporatist mixed economy we live in, they most certainly should. Bigness has the aroma of subsidy — of success in the jockeying for political favor. Considering their intimacy with government at all levels, big companies are more often part of the problem not the solution.
We can't say how the marketplace would look without the land subsidies and privileges enjoyed by major firms. But we ought to find out.