The Castle Coalition
by Ari Armstrong
The following article originally appeared at Boulder Weekly on July 14, 2005.
We hold these truths to be self-evident, that all men are created equal...
My wife and I celebrated Independence Day in the best possible way. We went to a barbecue hosted by Ralph Shnelvar at his lovely home nestled in the foothills of the Flatirons. And we talked about politics. Everyone at the party agreed the Supreme Court erred horribly in its Kelo v. New London decision. The Court decided that some Americans are more equal than others, and homes and other private property can be taken through eminent domain for use by private developers.
Local sentiment echoed national protests. Logan Darrow Clements is so pissed off about the ruling that he's trying to build the Lost Liberty Hotel -- on the land in New Hampshire where Supreme Court Justice David Souter currently owns a home. And the Institute for Justice has started CastleCoalition.org.
...that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness...
At the barbecue, Shnelvar argued that all eminent domain should be stopped. But several of his friends, including Jeep Campbell, argued that eminent domain has some legitimate uses.
The Bill of Rights says, "nor shall private property be taken for public use without just compensation." It seems simple, but those dozen words are fraught with difficulty, as we discovered over our chicken and pasta salad.
The first problem is to understand this idea of "private property." One of Shnelvar's friends pointed out that property rights rest on governmental rules such as homesteading.
Next, what is "public use?" If the public has access to a Wal-Mart, is that "public use?" We discussed transportation lines (roads and railroads), hospitals, schools, and parks. Surely a transport line is the paradigm example of eminent domain for "public use." However, eminent domain has often been used to transfer land to private transportation companies. The Court cited the 1954 decision of Berman v. Parker, in which the Supreme Court allowed a "redevelopment" plan in Washington, D.C. Yet leftists such as Robert Putnam now consider such redevelopment schemes to have been a disaster that disrupted local neighborhoods.
Finally, what is "just compensation"? In Economic Analysis of Law, Judge Richard Posner explains that, in most situations, the standard view of property rights -- that private property is under sole control of the owner -- makes economic sense. If somebody else values a piece of property more highly than the current owner does, the first person can offer to buy the property. The money exchanged in the sale is worth more than the property to the current owner, while the property is worth more than the money to the buyer.
Posner also grants that property is valued differently by different people. He writes, "If I refuse to sell for less than $250,000 a house that no one else would pay more than $100,000 for, it does not follow that I am irrational... It follows only that I value the house more than other people. This extra value has the same status in economic analysis as any other value."
But sometimes there is a hitch. Posner explains, "Once the railroad or pipeline has begun to build its line, the cost of abandoning it for an alternative route becomes very high. Knowing this, people owning land in the path of the advancing line will be tempted to hold out for a high price..."
The "hold-out" problem is related to the scale of project. Posner explains, "While some government takings of land do occur in high-transaction-cost settings -- taking land for a highway, or for an airport or military base that requires the assembly of a large number of contiguous parcels -- many others do not."
The "hold-out" problem can also be solved by contracting with all the sellers before starting the project, as Shnelvar noted, even though this still involves relatively high transaction costs.
The standard case for eminent domain, then, depends on the idea that the government can reduce transaction costs. There is a serious problem with that case: The government also imposes heavy transaction costs. Private parties have every incentive to abuse the process of eminent domain for personal gain rather than for "public use."
Courts, which themselves impose significant costs once all the lawyers are paid, face the impossible task of weighing economic values and figuring out which uses sufficiently benefit "the public" (itself an ambiguous concept).
Maybe Shnelvar is right, then. Still, the notion of home-as-castle won't stop the police from breaking down your door, if they reasonably believe you are holding somebody hostage (for example) and if they obtain a warrant. Might there also be reasonable uses of eminent domain? At least the courts should err on the side of property rights. The Supreme Court has erred on the side of theft.
Now liberty depends on the Castle Coalition, which believes... that to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.