The Supreme Court’s Kelo decision in 2005 generated a massive political backlash. Kelo v. City of New London endorsed the condemnation of private property for transfer to other private owners in order to promote “economic development.” Polls showed that 80 to 90 percent of the public opposed such takings. Oddly, however, we’ve heard almost nothing of this broadly popular issue from the presidential campaigns.
Yet government officials continue to take property and transfer it to politically influential businesses. Last week, the Missouri supreme court ruled that local governments have the power to condemn property for transfer to private developers. Last month, federal courts applied Kelo to uphold the condemnation of dozens of homes and businesses in New York City in order to make way for a new NBA basketball arena and luxury housing projects.
Economic‐development takings often transfer property from the poor and politically weak to politically powerful interest groups, such as developers. They also undermine economic growth in the community far more than they promote it. Often, they destroy preexisting enterprises that have greater value to the community than the ones established by the post‐condemnation owners. Since World War II, some 3 to 4 million Americans have lost their homes to urban renewal and economic development takings; numerous businesses, churches, and schools have also been destroyed.
Libertarians and conservatives oppose Kelo-style takings because they undermine property rights; many liberals oppose them because they victimize the poor and minorities for the benefit of the more politically powerful.
The lack of campaign focus on the issue is unfortunate. There is a great deal that the next president could do to protect property rights. First and foremost, he or she can appoint federal judges who take constitutional property rights seriously. Kelo was a close 5–4 decision. Although two of the four dissenting justices have since left the Court, it is possible that their replacements (Justices Alito and Roberts) are also skeptical of that decision’s outcome. The next president may well end up appointing the justices who will determine whether Kelo will be overruled or at least limited in its impact.
The president can also help protect property rights through the legislative process. In 2005, the House of Representatives passed the Property Rights Protection Act, which would have denied federal economic‐development funds to local governments that engage in Kelo-style takings. Unfortunately, the PRPA died in the Senate, and is now stuck in committee in the House. Strong presidential support could well force its passage. The next president should also work to broaden its scope, which in its current form would only apply to a very narrow range of federal grants. Denial of federal funds would create a strong incentive for states and localities to respect property rights.
Finally, the next president could strengthen President Bush’s June 2006 executive order on eminent domain, which forbade federal agencies from initiating condemnations intended to “merely … advance[e] the economic interest of private parties.” Unfortunately, Bush’s order did not actually prevent any economic‐development takings because government officials can always argue that their goal is to benefit the general public. A new and stronger executive order would have limited impact. But it would send a valuable signal of presidential resolve to protect property rights.
Some may assume that presidential action is unnecessary because the problem has already been solved by the legislative backlash against Kelo. Forty‐two states have indeed passed legislation seeking to curb eminent‐domain authority. However, the majority of the new laws are likely to be ineffective. California, New York, New Jersey, and Texas are among the major states that have enacted purely cosmetic reforms or none at all.
Legislators have found many ways to produce bills that appear to protect property rights without actually doing so. The most common tactic is that of allowing economic‐development condemnations to continue under the guise of alleviating “blight.” Many states define “blight” so broadly that almost any neighborhood qualifies.
Widespread ignorance probably plays the key role in stymieing legislative reform of the kind voters want. Much specialized knowledge is required to tell the difference between an effective “anti‐Kelo” bill and one that is just for show. Most voters lack the ability and the incentive to scrutinize such details closely. A recent Saint Consulting Group survey showed that only 21 percent of Americans know whether their state has enacted eminent‐domain‐reform legislation since Kelo, and only 13 percent know whether their state’s legislation is likely to be effective or not. Such ignorance makes it easy for state officials to pass off cosmetic legislation as genuine “reform.”
The next president should put the protection of property rights on his or her agenda. The recent Missouri and New York cases underscore the need for action.