My Photo
Blog powered by Typepad

Blogs of Interest

« Bloggers in Iran jailed for speaking their mind. | Main | This is just FUNNY! »


Fluffy Bunny

Real estate has many failings when it comes to our collective belief in the free market. Are you in favor of externalities and market failures?


How would the Justices feel about making a decision that prompts a new amendment? If they end up supporting New London, I think that's what will happen. People can understand why governments must sometimes take property for highways and other public projects, but I doubt that most people wouldn't agree with taking private property for redevelopment, which is after all just taking one person's property in order to sell or give it to someone else.

This one stinks to high heaven. If O'Connor goes for this, I think it will give even more support to Bush appointing judges who disagree with it.

Fluffy Bunny

Actually, I think that this will not be close. 7-2 for New London.

I apologize for the poorly worded earlier post, let me try again.

Real estate is intrinsically different than personal property. Its value is dependent not only upon the materials that are present on the property, but also upon its location.

What is the relevancy of location with respect to this discussion? The most obvious example is access. We want to be able to gain access to our property. We want to travel to other property. Thus, we have public roads. That's right, public roads. Public roads are antithetical to the free market, are they not? But I dare say that no one who has posted comments would say that we should get rid of public roads. In addition, location is not something that can is easily replaceable. If I need some steel, it doesn’t matter from where or from whom I get the steel, it only matters that I get the steel. But if I need a 32 acre piece of land for a factory, it does matter where I get that 32 acres. 32 acres in the Outback of Australia ain’t the same as 32 acres in New London, CT. The response may be, well if you pay enough money, the free market will provide you with the 32 acres. But that is obviously not true, is it, because New London is in the Supreme Court.

Another intrinsic difference between real and personal property is that our uses of real property have lots of externalities. Both statutory and common law are replete with well-established property conditions/uses that are nuisances and thus impermissible. And uses/conditions that were not nuisances when they were first created can become nuisances because of other encroaching users. (i.e. a rooster breeder that has become surrounded by suburban homes, see also

Third, and finally, a healthy, vibrant, livable community requires different uses. You wouldn't want a community with only homes or just gas stations. Many people make the argument, that the free market will correct those uses. And to a certain degree, yes, the free market will work towards a balance. But not always. The free market makes mistakes, lots of mistakes. And mistakes made regarding real property are not easily corrected by the free market. For example, a shopping mall built in a location that cannot sustain it and is doomed to failure, will sit vacant, because it is too expensive to operate. And the owner, having sunk millions of dollars into it, will hold it for years if not decades waiting the best time to reopen it or sell it. Meanwhile, the community is left to suffer the effects of carcass that is the shopping center.

In addition, some uses or improvements to real property are not mistakes at the time they are made, but there failure to be updated becomes a failure. For example, houses that were built in the 1930s, 40s, & 50s are completely different in design than houses constructed today. But those houses will not be renovated or demolished and rebuilt until the neighborhoods have become completely bombed out.

So, what does this have to do with the Kelo case. Because of externalities and market failures, the Kelo's use of their property cannot be viewed in a vacuum, isolated from changes in the economy, surrounding land uses, building standards/construction. For society to effectively deal with externalities and the market failures of real property, eminent domain may have to be used when all other land use regulations (i.e. zoning, nuisance, etc.) have failed.

Frankly, all of the issues that I've discussed are the underpinnings of zoning, nuisance, urban renewal/community redevelopment programs. If you accept the legality/necessity of eminent domain for those land use programs, making the leap to the economic development program put in place by New London is not that hard.

I feel that much of the backlash against eminent domain comes from the failure to understand that real property is not like personal property.

That doesn’t mean I don’t think that the Kelo’s aren’t entitled to substantial compensation.

I want to make clear, I'm not for government supported real estate, or tax subsidies, and I think governments are really bad being real estate developers. But I do think that governments are, in many instances, the only instruments that can correct market failures.


Fluffy, your comments scare me. Where did you get that, the UN? If you want to put your factory on my 32 acres, but I don't want to sell to you, tough luck to you. Private land ownership was one of the key reasons for the revolution against England some 2025 years ago.

If my community wants to have only homes and gas stations, that is our business. You can go live somewhere else if you don't like it. Just because you prefer some (usually unelected) government agency telling people what they must do with their own private land doesn't mean that is what the Constitution mandates or allows. How pathetic that you refer to someones private home as a "nuisance" because someone else wants to own the land that it sits on.

Market forces can prevail. If the private entity wants to offer Kelo $25 million for her $100,000 house, she may agree to sell. If not, tough luck for them and go look somewhere else.

Geez, I can't believe the greed of some people (gimme your money - we'll call it taxes - and we'll decide whom to spend it on) Bet you wouldn't feel this way if it was YOUR house they were stealing.

Fluffy Bunny

I would totally be anger as hell if I were in the Kelo's position. I would probably have sued as well. But my anger wouldn't be because they were going to redevelop it for other private purposes, I would be angry because they were taking it at all.

How do you feel about zoning? What about nuisance laws? What about anti-trust laws?

As far as the greed comment, I don't think that there is any evidence that the municipal officials in New London received any compensation from this transaction. As far as the companies that are locating there, I'm not sure that they are getting any better deal than they would somewhere else. The evidence from the case is clear that if they wouldn't have gotten the Kelo's property many of the businesses wouldn't have located there.

Let me pose another question, let's say that New London become so economically run-down, that to support the water, sewer, and roadway infrastructure, to provide for fire and police protection, to pay for the basic operations of the municipality they have to raise property taxes 7,000 percent, which the Kelos then couldn't not pay and had to move anyway. Would that be a taking?

The comments to this entry are closed.