Monday, February 07, 2005

Property Rights

A recent post at The London Fog blog discusses the erosion of property rights in Ontario. Douglas Casey's free What We Now Know newsletter reminds us that property rights are by no means safe anywhere, even in the United States:

What We Now Know
Week of 2/7/05


In his landmark 2000 book, The Mystery of Capital, Peruvian economist Hernando De Soto tackles the vexing question posed by his subtitle: Why Capitalism Triumphs in the West and Fails Everywhere Else. The answer, De Soto maintains in a carefully constructed argument, lies not with a scarcity of natural resources, nor the legacy of colonialism, nor some innate inferiority, nor even type of government. It is that the entrepreneurial spirit flourishes in places where private property is strongly protected by law, and languishes where it is not.

Although De Soto buttresses his conclusion in a very modern way, with lots of charts and graphs, it would have come as no surprise to the founders of the American republic. So keen were they on the individual’s right to private property that they wrote specific protections into the Bill of Rights, not once but three times (Amendments 3, 4 and 5), then for good measure threw in the open-ended Amendments 9 and 10, which essentially guarantee our right to live our lives as we please, subject only to a few reasonable restrictions.

It’s a good thing the founders can’t see us now. The past seventy-five years have seen the growth of government from a relatively small entity charged with defending the borders, adjudicating disputes, and delivering the mail, to a bloated nightmare creature whose tentacles reach into every corner of our existence. Liberal administrations and Congresses have come and gone, as have conservative ones. It has made no difference. Everyone in government, it would appear, is primarily dedicated to making it bigger.

The toll on the Constitution has been heavy. Largely because of the misguided War on Drugs, Fourth Amendment prohibitions regarding search and seizure have, essentially, ceased to exist, while asset forfeiture statutes have made a mockery of the Fifth Amendment’s due process clause. And the courts have gone along, siding almost always with the government against the individual, allowing the Bill of Rights to be gutted.

Soon, yet another extension of government power is to be tested before the Supreme Court, and its decision will have far-reaching implications for property rights. The case is Susette Kelo v. City of New London, and at issue is the meaning of the final clause of the Fifth Amendment: “nor shall private property be taken for public use without just compensation.”

In 2000, Ms. Kelo, along with everyone else in the Fort Trumbull section of New London, CT, suddenly found their entire neighborhood condemned in the name of “economic development.” This was not the kind of “blighted” urban landscape that governments routinely seize through eminent domain in order to bulldoze them. It was rather an area of older homes and small businesses that happened to occupy some prime riverfront real estate near a newly constructed Pfizer pharmaceutical plant.

The city—thinking that hotels, expensive offices and more upscale residences would help with job creation and (probably more important) generate greater tax revenues—attempted to help itself to the land, with the intention of transferring control to the private, though non-profit, New London Development Corporation (heavily backed by Pfizer). The NLDC would, in turn, lease back the property at a buck a year to private, for-profit developers.

Affected homeowners, asserting that this governmental action hardly qualifies as taking private property for “public use,” filed suit to stop it. The case reached the Connecticut Supreme Court, which ruled 4-3 in favor of the city. Final appeal was made to the U. S. Supreme Court, which agreed to hear arguments during its next session.

The stakes are high. As the Property Rights Foundation of America points out in an amicus curiae brief filed in this case, the Connecticut Court’s decision “gives government carte blanche
to take private property from one person and transfer it to another person, limited only by the government’s willingness or ability to proclaim that its intent is to promote economic development.”

Whether the Supreme Court will see fit to overturn the Connecticut ruling remains to be seen. Given its usual bias in favor of government and business, one might think the chances are slim. However, the Justices may take into account recent rulings by both the Michigan and Illinois Supreme Courts that decided similar cases in favor of the plaintiffs. Said the Illinois Court as it invalidated a taking of private land to create additional parking for a racetrack: "To constitute a public use, something more than a mere benefit to the public must flow from the contemplated improvement."

Seems like a sound principle to us.

Scary stuff. And it's getting worse. The inmates have left the asylum and they're coming after the rest of us.

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