Arnold Kling  

Eminent Domain

Housing Bubbles? A Fact and a... Personal Saving and Corporate ...

Both Gary Becker and Richard Posner weigh in. Becker writes,

Is eminent domain a desirable principle in the 21st century? In the 18th, 19th, and early 20th centuries, governments did rather little, so there was not much to fear from great abuse of the eminent domain constitutional clause. In fact, the first real eminent domain case was not decided until 1876. Now, however, government at all levels do so much that the temptation is irresistible to use eminent domain condemnation proceedings to hasten and cheapen their accumulation of property for various projects, regardless of a projects merits.

Without the right to eminent domain, governments would have to buy property in the same manner that private companies often accumulate many parcels to create shopping centers, factory campuses, and building complexes, like Rockefeller Center. There are difficulties involved in combining separate parcels into a single more extensive property, but whey should that be made too easy, as through a condemnation proceeding?

Posner writes,

Generally, government should be required to buy the property it wants in the open market, like anyone else. If it is allowed to confiscate property without paying the full price, it will be led to substitute property for other inputs

Posner suggests that in eminent domain cases it might be fair for a court to look for evidence that a "holdout problem" exists--that is, for evidence that the property owner is trying to extort a high price for being the last person to yield right of way for a project.

Comments and Sharing

TRACKBACKS (6 to date)
TrackBack URL:
The author at Accidental Verbosity in a related article titled Becker and Posner on Kelo and Eminent Domain writes:

    Via Arnold Kling, both Gary Becker and Richard Posner have interesting thoughts on Kelo and eminent domain at The Becker-Posner Blog. It's not exactly light reading, but most of this stuff isn't, and I've seen worse. They are deta...

    [Tracked on June 27, 2005 10:47 AM]
The author at Knowledge Problem in a related article titled MORE GOOD KELO ANALYSES writes:
    Lynne Kiesling Lest you think that I've become a one-trick pony and can think of nothing else except Kelo, I offer this justification for my attention to it: this is such a big deal that even people who don't normally... [Tracked on June 28, 2005 11:26 AM]
COMMENTS (7 to date)
Lancelot Finn writes:

Does this mean that the Kelo decision doesn't require the local government to provide evidence of a "holdout problem?" I just assumed that it must require that, i.e. require that there be a modicum of sanity in the decision.

The holdout problem can be dealt with easily; make all offers contingent on 100% acceptance.

James writes:

Trouble is, no one can clearly define a holdout problem. Because of this problem of indeterminacy, any policy with a holdout problem provision will turn into a license for government (the buyer) to decide if the seller should be forced into a transaction unwillingly. But this is terribly assymetrical. Why not also include a holdout provision in the tax code so that citizens who object to the high price of government can just force the government to provide its (so called) public goods at a lower price?

Nick Rozen writes:

This is pretty good: possibility of seizing Souter's house using eminent domain!

Boonton writes:

You don't have to objectively define what a 'holdout premium' would look like. The nice thing about the legal system is that trial courts can be used as finders of fact. The gov't would have to present evidence that the property owner was trying to extract a premium to the judge & the owner could provide evidence in defense. It wouldn't provide the property owner with perfect protection but it would at least establish a barrier to abuse that does not exist with the current decision.

James writes:


Fact finding, in the context of jurisprudence, means determining if something is an instance of some previously defined activity. The defining is done by those who make the laws and it generally works because the activity in question is objectively definable. Larceny, forgery, etc., are generally cut and dry. But holding out is like price gouging; both amount to charging a price that is deemed "too high," without any objective criteria for "too high." No amount of fact finding will get around this problem for the simple reason that definitions are not facts. They are abitrary boundary conditions defining the set of objects in the world to which an element of language may refer.

Aside detours through the philosophy of language, there would be a terrible incentive problem with a holdout clause. A holdout clause would leave it to the court to find fact with regard to whether a particular act was an instance of holding out and to define the activity of holding out. We can even assume that the government (the same one that reserves the right to engage in what would be stealing if you or I did it) won't tailor its fact finding to maximize its takings and the problem still doesn't go away. If the court finds that there is no holding out, then the government would have to pay a large sum to a small number of landowners. This also creates the opportunity for a corrupt court to help a friend in offloading unwanted property at a tidy profit. As soon as a few cases of corruption emerge, public opinion, driven by wealth envy toward those who manage to get large sums for their land, will force the courts to err on the side of finding that property owners are engaging in holding out.

Why should the government even be able to sieze the property of so-called "holdouts"? It seems me that "holdout" is just a perjorative for "wants more money than I'm willing to pay".

Comments for this entry have been closed
Return to top