The Uselessness of Public Use

Abstract:     
The Supreme Court decision of Kelo v. City of New London has been denounced by legal scholars from the entire political spectrum and given rise to numerous legislative proposals to reverse Kelo's deferential interpretation of the Public Use Clause of the Fifth Amendment, and instead, limit the use of eminent domain when taken property is transferred to private hands.

In this Essay we argue that the criticisms of Kelo are ill-conceived and misguided. They are based on a narrow analysis of eminent domain that fails to take into account the full panoply of government powers with respect to property. Given that the government can achieve any land use goals through the powers of regulation and taxation without paying compensation to the aggrieved property owner, eminent domain is the government power least pernicious to property owners as it is the only one that guarantees them compensation. An important and counter-intuitive implication of this insight is that the calls to restrict the government ability to use eminent domain by narrowly construing public use are going to harm, rather than help private property owners.

The Essay then poses the intriguing question: why does the government ever choose to pay compensation? To answer this question we develop a model of political decisionmaking with respect to land use. Our model enables us to elucidate the political calculus that governs the compensation decision and to specify the conditions under which political decisionmakers will elect to pay compensation regardless of the policy instrument chosen.

Number of Pages in PDF File: 38

Keywords: takings, eminent domain, public use, just compensation, public choice, political cost-benefit analysis, judicial deference, property regulation, property rights, political decisionmaking

JEL Classification: R52, R51, D78, D72, H39, H43, K11

Accepted Paper Series