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Saturday, July 10, 2010

Abuse of Power: How Government Misuses Eminent Domain

Eminent Domain Is Now Used to Advance Any Public Purpose

The essential difference between a market economy and a socialist one is that in the former, individuals decide how to use the resources they own, while in the latter, government officials make the decisions. The market system is consistent with individual liberty and works well without the use of coercion. The socialist system is not consistent with individual liberty and works poorly because it necessitates the use of coercion.

America at one time was a market economy, but as the country has aged, we have slid toward socialism in many respects. Among the signs of this slide is the loss of freedom to control one’s own land. That’s the case with farmers, for example, who must abide by government regulations on the crops they may grow. It’s the case with urban landowners, who must abide by zoning regulations. And it’s also the case when land is taken from owners under what is called eminent domain. This is the theme of Abuse of Power by journalist Steven Greenhut, who has followed this subject for years. What Greenhut gives us is a thorough investigation of the rampaging growth of this assault on private property, which frequently leaves the reader shaking his head in disbelief at the villainy of the process.

The original concept of eminent domain sanctioned in the Constitution is that government may take private property when it is necessary for a public use, and then only if just compensation is paid to the owner. Even that is a dangerous departure from libertarian principles; government should no more make anyone “an offer he can’t refuse” than should criminals. But so long as eminent domain was limited to property seizures only for true public uses—roads, for example—the damage was fairly small. The problem, Greenhut informs us, is that eminent domain is now routinely used to take land from people not for some public use, but instead to advance anything that might be called a public purpose. By going along with this, the courts (the U.S. Supreme Court is now the main culprit) have allowed an almost limitless expansion of eminent domain.

As Greenhut shows with many, many cases, eminent domain is now routinely used to transfer land from one party to another simply because politicians believe that it will be put to better use. “Better” here simply means “paying more in taxes.” An old house or a small business brings in a small tax take. Condemning the property and forcing its sale in order to hand it over to a big commercial enterprise that will generate far more tax revenue is regarded by many politicians as a public purpose. They have no qualms about slapping the label “blighted” on people’s homes or businesses so they can force them out.

Forced transfers to satisfy politicians and well-heeled developers are appalling enough, but the other side of the transaction is also terrible. The requirement of “just compensation,” Greenhut contends, is often ignored. “Almost always,” he writes, “the government tries to lowball the property owner, in many cases offering a fraction of the property’s value.” The unfortunate property owner usually loses. Even if he hires an attorney to contest the amount offered, the legal expenses involved generally mean a considerable net loss in wealth for him. (Of  course, “compensation” in a forced sale can never be just; justice requires consent.)

Where is the judiciary in all this? Won’t judges step in to stop these seizures? Unfortunately, no, as Greenhut demonstrates. Judges are often indifferent to the plight of individuals targeted for removal. Most seem to share the mindset of the politicians: that people who fight against eminent domain are greedy opponents of social progress.

Not even churches are safe from eminent domain. Actually, tax-exempt property is among the least desirable of all uses from the standpoint of tax-hungry politicians. Greenhut’s cases where churches have been eminent-domain victims will raise the reader’s ire further.

An instructive side lesson is that many of the politicians guilty of eminent-domain atrocities are “liberals” whose campaign rhetoric oozes with “compassion” for the supposedly downtrodden citizens.They don’t mind treading all over real people, however, if it will enable them to achieve the supreme objective of an expanded tax base, enabling them to spend more on their favorite projects and constituencies. Eminent domain is another piece of evidence for the Public Choice economists.

At the book’s end Greenhut offers helpful advice to people who find that they need to fight back. It can be done. Bravo to the author for showing how.

  • George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

  • Steven Greenhut is senior fellow and western region director for the R Street Institute. In this role, he is responsible for running R Street’s West Coast office in Sacramento, California and leading R Street’s work on legislation and issues affecting the western states.