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Kelo update
Those who would sacrifice property rights to development end up with neither.
Posted by Alex Tabarrok on November 13, 2009 at 10:46 AM in Economics, History, Law | Permalink
Comments
A good example of why local government is usually more corrupt and more inefficient than other levels of government. Developers are the source of local political contributions, and local government is not as well monitored as much or as well as other levels of government. That's my opinion.
If you believe in markets, there are better uses for property where transactions should occur. There is an issue of hold up for the last parcel of property in which the last parcel holder extracts all the benefit of the project. It would probably be better for all concerned if the property holders all banded together and formed a cooperative to sell their collective rights and distribute the gain based upon appraisal and a bump based on the value of the transaction. But, just letting developers use the power of eminent domain is not fair and should be limited to China.
Posted by: Bill at Nov 13, 2009 11:28:48 AM
Heh, so true, so true. Property rights ensure the system works, when you abandon them in favor of short term advancement you lose in the slightly less short term.
Posted by: Doc Merlin at Nov 13, 2009 11:40:34 AM
In my limited experience local government support for development is almost a religion among local politicians. At a meeting when I brought up that a project could be funded privately they looked at me like I was insane. They simply did not comprehend the concept.
I bet the hold up for the last parcel of property is mostly a myth. And even if not, there are ways around it that are so easy that I wonder if people prefer the myth to stay alive. I wonder more about the first parcels to sell.
Posted by: Andrew at Nov 13, 2009 12:22:49 PM
Wow, I didn't know this sort of things happens even there. Further proof that judges should study a little bit of economics.
Posted by: John at Nov 13, 2009 3:03:04 PM
Actually, the Rangers stadium is still there. (http://www.nytimes.com/2002/07/16/opinion/bush-and-the-texas-land-grab.html)
Posted by: cactus at Nov 13, 2009 5:21:36 PM
Based on anecdotal evidence from Billings, MT, I'm unsure what the best route is. We have a couple roads that have been earmarked for major commercial usage once the construction goes through. The problem is that the city/county have had problems getting the funding. The smaller of the 2 roads received private funding a couple of years ago and has already had major development (and the introduction of roundabouts, something I love, but so many hate). The longer more economically attractive road has been in constant construction for over 10 years and doesn't seem to be near completion. None of the businesses have moved in and no one is standing by to pay for the road. So the city/county keep trudging forward. Shouldn't private industry have dumped money into the road by now? It worked with the smaller one, so why not the larger one? Not exactly an eminent domain issue, but private funding just isn't coming where it's especially needed.
Posted by: Dan * at Nov 13, 2009 5:27:54 PM
Keep your eye on the town of Dennis, Cape Cod where the town planner and Eco Dev Committee want to replace a cottage colony on Nantucket Sound with a high end resort for all the same tired reasons plus getting rid of the septic systems for one big sewer system. Envirofascism of a sort ...
Posted by: Dennis Van Essendelft at Nov 13, 2009 9:57:12 PM
Kelo was absolutely one of the most hideous and misguided Supreme Court decisions in US history. It effectively unleashed naked state-backed corporate power on every property owner in the nation, and turned urban planners into fascist dictators. Some people might be surprised that most of the supporters of this outrageous decision are on the political Left. Actually, it makes perfect sense when you think about it.
Posted by: Hayekian at Nov 14, 2009 2:11:02 AM
Those who maintain property rights and expect development also lose, if we're to judge by the endless vacant malls throughout the USA.
It's sort of shameless how Tabarrok is appealing to your confirmation bias with an anecdote.
There are good economic reasons why holdouts give sub-optimal results. Takings can be very economically useful. If this problem leads to private corruption of local government, then solve the problem in a way the eliminates the corruption, such as a law enabling private takings through a civil suit for the last 5% of holdouts.
Absolute property is an idiotic idea.
Posted by: Mike Huben at Nov 15, 2009 8:43:34 AM
"Absolute property is an idiotic idea."
Would you elaborate on this? Who, under which conditions, should disown you in your model?
Posted by: Marian Kechlibar at Nov 15, 2009 11:09:10 AM
