The power of eminent domain has had a lengthy history, first originating in the Middle Ages and becoming enshrined in British common law. It is included in the U.S. Constitution as a means of government appropriating private property if this appropriation serves a “public use.” However, under the 5th Amendment, the government is obligated to provide “just compensation” for any property thus taken, which is usually interpreted to mean that the government must pay the market value of the property to the owner from whom it is taken.
Recently, however, governments at all levels have begun to stretch these powers to encompass one private party’s land being taken for the benefit of another, especially if the other is a larger business that has the potential of bringing in greater tax revenues. This is a measure of questionable constitutionality, and even far more questionable morality. It is desirable to abolish such seizures of private land for the purposes of redistribution to other private entities, and to at least limit eminent domain powers to seizures that will only be directed toward benefiting government projects and infrastructure. That is, the power of eminent domain might still be invoked to build a public road or school, but not a shopping mall or apartment building. The arguments in favor of this restriction are overwhelming, even though it does not go as far as complete eminent domain opponents such as myself would like.
First, for somebody who values property rights, private property is an absolute, not to be contingent on “the public interest.” If the individual sees the benefits of keeping his property as outweighing those of selling it, he can either refuse to sell it or ask for more compensation. Anybody but the owner should be allowed to take the property only with the owner’s consent.
Often, current governments do not even give market value to “compensate” for seizures, but, even if they did, there are subjective values that owners associate with their property which are hard to quantify and which only the owners themselves can enumerate accurately. As the story of certain homeowners in the 2005 Supreme Court case of Kelo v. New London shows, some of them have built their dream homes out of places that were run-down when they first purchased them. And, after they had invested their lifetime’s work into those houses, the houses were condemned by the government. Surely, a coercive demand that they accept “market value” is not sufficient to compensate such a deeply personal investment.
Furthermore, “the public interest” is a collectivist notion, which ignores the fact that only individuals exist and that invoking “the public interest” in fact implies that the government should coercively back some private interests over others.
The policy of eminent domain has, recently, been used with blatantly power-hungry justifications. Business X brings in less tax money than Business Y might, so X must be demolished to give way to Y. Y is also a larger business that might create more jobs, so this justifies putting out of work those individuals who are currently employed by X. The flaw with this reasoning is that it views individuals as fungible, or substitutable for one another. It should not matter how many other individuals benefit from a government policy if it ruins the livelihood and property of even one innocent person. Individual rights are absolute.
Advocates of eminent-domain redistribution of property to private parties will attempt to state that the government can actually bring about “efficiency” through the use of eminent domain power to achieve “urban renewal.” However, economic theory from Adam Smith on has shown that the free market achieves any goal more efficiently than the government. A business that thrives because of government favors through eminent domain is not thriving because it functions better than others in market competition. As a matter of fact, that business might well not be favored by supply and demand, and has therefore not been able to acquire the land it seeks under a mode of free, voluntary market exchange. Therefore, its owners are seeking to gain what they have not earned by expropriating it from those who have earned it.
The kind of eminent domain supported by the Supreme Court in Kelo v. New London is pure legalized theft. It is time to recognize it as such.