Why Kelo is Not Good News for Local Planners and Developers

Abstract

When the Supreme Court announced its 2005 decision in Kelo v. City of New London, few legal scholars were surprised at the outcome, which was premised on precedents extending back to the middle of the 19th century. Legal scholars were surprised, however, by the intense political reaction to Kelo (fueled substantially by Justice O'Connor's hyperbolic dissent), as property-rights advocates, legislators (at all levels of government), and media pundits assailed the ruling as a death knell for private property rights in America.

Kelo's combination of relative legal insignificance and high political salience makes it an interesting case study in cross-institutional dynamics, i.e., the study of how the combination (and recombination) of political, legal, economic, and social forces determine the content of our laws. In this case, the Supreme Court's legal ruling in Kelo generated a political controversy, which is leading to legislative changes in the law. Those legislative changes, in turn, will affect future court decisions.

The primary purpose of this article is to explain the aftermath of Kelo as a socio-legal phenomenon, which is every bit as important as (perhaps more important than) the Supreme Court's ruling in the case. By paying close attention to the political and legislative aftermath of Kelo, we can understand why the Supreme Court's decision is not good news for local planners and developers, who are finding it significantly more difficult to engage in urban (re)development throughout the United States. By contrast, the plaintiffs who lost the Kelo battle, may have won the war to keep their homes.

This article also has a secondary purpose, which is the place Kelo and its political reception in a larger comparative-institutional context. That context (which I develop more fully in another article, Political Institutions, Private Property and Judicial Review: A Comparative Institutional Analysis, forthcoming in 2007 in the Supreme Court Economic Review) examines how political bodies, as well as courts, substantially protect private property rights. Kelo's aftermath, along with other evidence from the United Kingdom and the several U.S. states, supports the proposition that, even in the absence of constitutional protections assiduously enforced protected by judges, the institution of private property would be substantially protected.

Keywords: Law, property, takings, eminent domain, Kelo, United States, United Kingdom, legislation, politics, public choice

JEL Classification: D23, D72, G32, H42, H72, H82, K11, Q15, R3, R14