Wednesday, January 30, 2008

Eminent Reality

From: MDDWhite
Date: Wed, 30 Jan 2008 14:00:22 EST
Subject: Fwd: Doomsday? No Way: New Study by Institute for Justice


The Wall Street Journal editorial with worth posting. You may also want to put up the Instutitue of Justice material upon which it is based.

Michael D. D. White


Eminent Reality
January 30, 2008

Does restricting "eminent domain" -- the power of government to seize private property -- harm economic growth? A new report from the Institute for Justice looks at the evidence and concludes the answer is no.

Since the Supreme Court sanctified eminent domain on behalf of private developers in the dreadful 5-4 Kelo ruling in 2005, 42 states have passed some restriction on the practice. Some reforms have been far-reaching, as in Florida, which barred public entities that seized property from transferring it to private hands for 10 years after the seizure. Other reforms are more modest, changing the definition of "blight" or throwing up other obstacles to overeager planners.

But one constant since Kelo v. New London has been the refrain, echoed by developers and politicians alike, that eminent domain is necessary for redevelopment. In 2006, Iowa Governor Tom Vilsack vetoed an eminent-domain reform, arguing that it would harm the economy if the state restricted the power to expropriate private property. Groups such as the National League of Cities make similar arguments.

So the Institute for Justice, which spearheaded the original campaign to save Suzette Kelo's home, decided to crunch some numbers. First, the report assigns each state to one of three categories according to the level of reform implemented after Kelo: "strong," "moderate" or "none." Then it compares the data for construction jobs, building permits and property-tax revenue before and after the effective dates of the reforms for each state. The verdict: So far, there has been no discernable hit to economic activity from the restriction of eminent domain, even in those states with the broadest reforms.

This result isn't surprising. Developers love eminent domain because it's easier to snap up land when government forces owners to sell -- no unpleasant dickering over price, etc. Local politicians likewise believe they are best positioned to pick winners and losers and to shape the future of their cities.

But private development went along very nicely for two centuries before politicians began seizing one person's property for the benefit of another private citizen. Sometimes the marketplace adapted in amusing ways, as when major building projects were forced to go up around, or even on top of, older buildings. But in the absence of the coercive state, buildings still got built.

The most grandly conceived plans are also often those most likely to fail. If a project cannot proceed without government interference, it is reasonable to ask whether it is worth putting the hamfist of government on the scales at all. As the Institute for Justice's report notes, Baltimore's much-touted Inner Harbor redevelopment remains dependent on government handouts. At the same time, private redevelopments without eminent domain, such as in Anaheim's A-Town, are thriving.

The backlash against Kelo has had the healthy effect of limiting the hubris of local politicians, which is why they have resorted to these scary economic claims. We're glad to see them debunked on the merits.

See all of today's editorials and op-eds, plus video commentary, on The Editorial Page.

Doomsday? No Way
Economic Trends and Post-Kelo Eminent Domain Reform

When the U.S. Supreme Court upheld eminent domain for private development in the 2005 Kelo case, the public reacted with shock and outrage, leading to a nationwide movement to reform state laws and curb the abuse of eminent domain for private gain. By the end of 2007, 42 states had passed some type of eminent domain reform.

Throughout the public backlash to the Kelo ruling, those who favor eminent domain for private development predicted—and continue to predict—dire consequences from reform for state and local economies: fewer jobs, less development and lower tax revenues.

This report tests those doom-and-gloom predictions.

We examined economic indicators closely tied to reform opponents’ forecasts—construction jobs, building permits and property tax revenues—before and after reform across all states and between states grouped by strength of reform.. . . .

READ MORE,download this entire study in PDF format

Download: Doomsday? No Way

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