Chocolate and Gold Coins

Monday, June 27, 2005

My Thoughts on Kelo vs. New London

Many people who love freedom and private property rights are aghast at the recent U.S. Supreme Court ruling on Kelo vs. New London that allows local governments to seize private property to resell to private real estate developers. Here are some links to other views on this issue: Volokh, Marginal Revolution, Coyote Blog, India Uncut, and a different view from Half Sigma.

I have several opinions about this:

1. This was not unexpected. The court had previously upheld similar cases in which local governments seized land for development. This may not be what the founding fathers had intended “seizing land for public use” but it’s what it means today – for better or for worse.

2. This was really a state court issue since the government in question was under state law (and not federal law) so the case was effectively lost when it failed in the Connecticut Supreme Court. This was Half Sigma's argument, and he did go to law school.

3. In some ways, the issue of the intended use of the seized land was irrelevant. If government wants your land, they can seize it tomorrow using the perfectly valid excuse that they want to build a school. After they bulldoze your house, you might then find out that they had no intention of building a school but rather they intended to sell it to private developers. What good would it do to sue in this case? Your home is gone. It might be better if the government is honest about the use of the land instead of deceptive.

4. Our private property rights are not protected by some document; they are protected by the right to vote. If we don’t exercise our right to vote in local elections (and I tend not to) then local governments will trample over our rights, and we shouldn’t expect courts to come to our aid and against a popularly elected government. The U.S. Constitution is a great document but courts will tend to ignore it if Congress and the state legislatures let them, and pushes them to do so.

5. There needs to be a better, more equitable, way of allowing firms to acquire large blocks of real estate. As it stands now, many if not most of the homeowners will get less than what they would have willingly accepted for their homes. On the other extreme, it would be madness to insist that 100 percent of homeowners had to agree to a deal that involved 100 or more homes: one jerk could spoil a great deal for 99 others. I proposed a 90 percent rule in this post back in February, when the Kelo case first came before the Supreme Court. With the 90 percent rule, almost all homeowners will be very happy with the deal and they’ll get much more money – which is only fair.


  • Yours is the most balanced response I have seen. You also understand that 'property rights' flows from the society. I wouldn't have expected from somebody who seems to be among 'libertarians' a lot.

    You say 100% of homeowners needn't agree to a land deal. Fine. But why is it that 100% of creditors have to agree to a loan renegotiation (or things like that) in case of international loans? Are creditors higher beings than homeowners?

    yum yum

    By Anonymous Anonymous, at 12:06 PM  

  • Hi Anonymous
    The difference that I would see between homeowners and creditor is numbers. There are rarely more than one creditor, and if there are more creditors they will may quickly agree to sell out to the biggest one. There isn't any sentimental value associated with the loan that complicates issues.

    I haven't thought through the game theory aspects here to know if a small creditor could play games. That might be an issue.

    When you have a large number of homeowners, you will never get unanimity. The 90% rule really protects homeowner's rights while breaking the power of the few that could have over the many. It is precisely this issue that is driving these private property takeovers.

    By Blogger Michael Higgins, at 1:51 PM  

  • Hmm, you should find out how creditors squeeze bankrupt countries.

    yum yum

    By Anonymous Anonymous, at 2:38 PM  

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