Eminently Wrong: On the Supreme Court’s dangerous precedent from Kelo v. New London

By Jonathan Godoy - (Property Rights) - Travel to New London, Connecticut and one will find, along the city’s shore with the Thames River, a large 70-plus acre plot of unkempt, largely abandoned land. Now frequented by feral cats and covered by untamed weeds and grasses, the lot stands as an odd and out-of-place blot in a otherwise generally developed area.

Yet, this was not the fate once ascribed to this land. Back in the late 1990s, the city approved a plan that would have converted this unassuming lot into a $300 million plus office and retail complex, complete with a theatre, restaurant, park and new offices for the pharmaceutical company spearheading the proposal Pfizer, Inc. The plan, as presented, was largely benign and, given the potential economic benefits that it would afford the area, should have garnered general approval and little controversy.

That would have been the scenario that played out had there not been one complicating factor: the lot, contrary to its current state, was once developed, privately-held land.

At the time of the approval of the plan, this land was dotted with single and multi-family homes, not unlike the one’s found in the surrounding area today. As Pfizer, Inc. began planning its development, it started buying up land from the residents in that area.

Many of the residents willingly and voluntarily accepted the payments for their property and moved out. However, a few “stubborn” residents refused to accept the offers. The project, as proposed, could not proceed without control of the entire land and the company was not in a position to forcibly take the land itself or coercively demand that these few residents accept their offers.

But where the private company lacked power, the city government found a policy loophole by which it can justify such land grabs: eminent domain. While the Fifth Amendment of the Constitution protects citizens against unlawful and arbitrary seizures of property, it does allow for the government to take privately held property for public use with “just compensation.” 

The practice is a controversial and rarely used one in the United States. Questions surrounding the government’s definition of “public use” and what constitutes “just compensation” have plagued previous uses of this power and made for numerous court battles.

In this case, the city government of New London took a broad and liberal view of “public use,” justifying the land grab on the basis of the economic and fiscal benefits that such a project would have for the city. As planned, the estimates called for the creation of over 3,100 new jobs and would have generated $1.2 million in new tax revenue. The argument, taken to its furthest extent, claimed that such benefits vastly outweighed the costs incurred by the few residents who were forced out of their property and would help the city of New London as a whole.

One of the stubborn residents, Susette Kelo, took the case to court, which ultimately found itself in the highest court of the land. In Kelo v. New London, the Supreme Court ruled in a 5-4 decision in favor of New London, stating that the economic benefits presented a legitimate form of “public use.”

This view is patently wrong.

Foremost among the problems latent in this argument is that it conflates the difference in meanings between “public use” and “public purpose” or “benefits.”

The phrase “public use,” as it should so narrowly be defined, includes only those products and services for which the public has open access to. “Public purpose,” on the other hand, is a necessarily more vague term and is taken to include broader social implications and considerations – i.e. large-scale economic benefits. Such a consideration, while perhaps noble, was not the original intention of this law and should be restricted.

Under the conception of the phrase given by the Supreme Court, the government would be allowed to confiscate private property on behalf of another private citizen or organization.  The problems with this are twofold.

First, taken to its most extreme interpretation, this definition of “public use” would allow for any government to justify the confiscation of property purely on an economic basis. Such a policy would theoretically allow for a city government to tear down an entire residential area to make way for a venture that is more economically productive and prosperous, the likes of which may include a factory, theme park or mall.

Secondly, it allows for the government to play a redistributionist role, but not in the progressive sense. It is unlikely that economic considerations would incentivize a government to take control of a corporate office or retail center to make way for a series of low-cost, middle-class family homes. Such a project would likely produce a net loss of jobs and tax revenues and create an environment hostile to businesses.

The Kelo case is a perfect example of this potential problem in action. The city government of New London, presumptuously asserting its own more “holistic” view as superior to the private considerations of a few isolated residents, disregarded their personal rights and privileges in the name of a perceived “social benefit.”

And yet, despite their successful efforts to arbitrarily amass power and impose their centralized economic plans, the project proved ultimately futile. A casualty of the 2008 recession, the multi-million project was cancelled and the lot left deserted.

The Supreme Court’s far-reaching and irresponsible decision has left a dangerous precedence with respect to the government’s powers over private property. If nothing more, the ultimate fate of the New London lot should be proof enough that such a power grab is unnecessarily expansive and inefficient.