Thursday, June 23, 2005

SCOTUS Rules on Kelo v. New London

I'm of two hearts on the decision.

First, it's an unambiguous defeat for property rights. The libertarian in me can't find any silver lining in the fact that, as Justice O'Connor writes in the dissent, "Any property may now be taken for the benefit of another private party". (quote bogarted from Ken Wheaton) with the benefits going to -of course- the richest and most influential citizens and businesses, including the already-hated regional and national developers.

The philosophical issues involved deserve a post -hell, a book- of their own; those of you who are interested will already be well-versed. In a nutshell, the pure market-driven solution isn't practical because land isn't a commodity. Infrastructure (a public good) needs to go where it needs to go, and the lone holdout can create significant and costly externalities by refusing to move. However, extending that argument, as New London has done, to cover the potential gains from private development (and the tax money that would flow from it) is uncompelling to say the least. In my opinion, the bright line here should be between public and private goods. That is to say, something like a transportation or utility network can shove a private property owner out of the way in the name of the common benefit, but any private facility (housing, shopping malls, office space and soforth) has to pay what the market demands. Seems simple enough, but that's before you throw politics into the mix. In the real world, what we end up with instead is a pendulum swinging slowly between greater and lesser scope for eminent domain. That's somewhat natural in a precedent-driven common law legal system, but it shouldn't have to be that way.

Second, the ruling is an unambiguous victory for the planning profession. The reasons are fairly self-explanatory of course, but the key is that a political movement in a given jurisdiction now has much more power to physically alter the landscape (or built environment) within its own lifetime. It seems to me that expanded eminent domain powers should strengthen the hand of local pro-development coalitions vis a vis NIMBYs who essentially sit on prime close-in real estate, forcing new housing and the public and private facilities that go with it to the periphery in classic sprawl.

Of course, that obviously won't make the pro-development folks any more appealing to the NIMBYs, who tend to be seen as "the little guy" in such disputes. If anything, it's likely to make the gap between planners, developers and the public wider and deeper, and ultimately lead to the pendulum's return swing. A more workable long-term fix would be some kind of wholesale reform of the land market, but of course that's strictly an academic discussion. It will be interesting to see where the Kelo ruling takes us in the next decade.