Opinion: Daily Journal

Land grabs don’t enhance growth

Image courtesy of Pixabay
Image courtesy of Pixabay

Over the past eight years, conservative lawmakers have done much to constrain the excesses, expenses, and abuses of governmental power in North Carolina. They have cut taxes, controlled spending, slashed regulations, and increased the cost-effectiveness of services by introducing more choice and competition.

As the size, scope, and cost of government contracted, freedom expanded. Not only have North Carolinians regained more ability to make their own decisions — a worthy goal in itself — but also the expansion of freedom has made our state a more attractive place to live, work, invest, and create jobs.

In the midst of many accomplishments, however, are some missed opportunities. One of them is North Carolina’s failure to reform eminent domain, the power governments enjoy to condemn and purchase private property for public use.

In the aftermath of the 2005 decision in Kelo v. City of New London case, in which the Supreme Court declared it consistent with the property-rights protections of the U.S. Constitution to permit eminent-domain abuses, most states decided to limit or block their governments from condemning land merely to convey it from one private owner to another, as New London had done with Susette Kelo’s “little pink house.”

Advocates of the practice argue that if a prospective private owner — a real-estate developer, let’s say, or a manufacturer — promises a “higher-value” use that will generate higher property taxes per acre, governments should be able to employ eminent domain to convey the land to the new owner. The general public will benefit from the transaction, they argue, and thus condemnation is a permissible tool to make it happen.

Most Americans disagree with this argument, and for good reason. The Takings Clause of the Fifth Amendment states that “private property” shall not “be taken for public use without just compensation.” The plain meaning of “public use” is, well, a use by the public — the placement of a courthouse, school, or street, for example. The public-use concept has also traditionally been applied to “common carriers,” as well, to private firms that operate infrastructure such as railroads, pipelines, and power lines.

While such public uses of acquired property offer the promise of benefitting the general public, lots of purely private uses generate public benefits, as well. Public use is a subset of public benefit, not a synonym for it. It is, and was intended to be, a restrictive concept. The federal judiciary has decided in its infinite folly to refine the terms broadly, removing the restrictions.

To say that the federal government won’t stop states and localities from abusing the property rights of their citizens is not to preclude other remedies. Some states have enacted statutes to constrain the use of eminent domain. Others have amended their constitutions. The best approach is to do both, as exemplified by the excellent property-rights protections adopted by two of our Southeastern peers, Florida and Virginia.

Former Rep. Skip Stam, R-Wake, and other state lawmakers have repeatedly tried to enact eminent-domain reform in North Carolina, including the placement of a constitutional amendment on the ballot. So far, no dice.

Special-interest lobbies say that our state’s economic competitiveness would suffer if localities and the state were forbidden from using, or at least threatening to use, eminent domain to assemble land parcels for business recruitment or urban redevelopment. Otherwise, they say, lone holdouts who refuse reasonable offers will slow or kill economic development projects with significant public benefits.

This claim is empirically testable, since some states acted more quickly than others to reform eminent domain after Kelo and a few haven’t acted at all. In a recent study for Economic Development Quarterly, Washburn University economist Paul Byrne found that limiting the use of eminent domain produced “no adverse effects in terms of state employment and gross state product.” These results “give credence to critics of eminent domain,” Byrne concluded, “who contend that local governments can achieve their economic development goals without relying on eminent domain to compel property transfers to developers.”

Yes, they can. Let’s reform eminent domain.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.