Kelo and its Discontents: The Worst (or Best?) Thing to Happen to Property Rights
The Independent Review, Vol. 11, No. 3, pp.397-416, Winter 2007
21 Pages Posted: 5 Jun 2010
Date Written: January 1, 2007
The Supreme Court’s 5-4 decision in the property rights case, Kelo v. City of New London, ignited more controversy than any issue decided during the Court’s 2004-05 term – more than medicinal marijuana (Gonzales v. Raich), peer-to-peer file sharing (MGM v. Grokster), federal sentencing guidelines (U.S. v. Booker), and two decisions on the public display of the Ten Commandments (McCreary County v. ACLU and Van Orden v. Perry). Seldom has a Supreme Court decision fomented such impassioned reactions, from all levels of government and every ideological stripe, as did Kelo’s apparent green light to a Connecticut local government to seize fifteen homes in trying to turn around a failing local economy.
The reactions were immediate, widespread, and intense. The House of Representatives condemned the Kelo decision. Libertarians and property advocates lamented the end of private property. Political liberals decried the unjust effect on low-income populations. Newspaper editorial boards across the nation denounced the decision as an unfair invitation for abuse by local authorities. Justice Sandra Day O’Connor, in her dissenting opinion, famously and bleakly remarked, “[n]othing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.” The ominous Kelo rushed in like a dark cloud to hang over property rights. But did Kelo unleash the power of local governments, posing the specter of an end to private property? Or did the decision set in motion a process of institutional change that ultimately reins in local governments and leads to even less use of eminent domain? If so then the discussion takes on a profoundly ironic twist. Could Kelo be the best thing that ever happened to property owners? This study surveys developing events at the state and local levels in the year following Kelo, and examines the data through the perspective of economic efficiency and constitutional political economy. On the one hand, there is much evidence to suggest that Kelo had an “opening of the floodgates” effect, emboldening local policymakers to be more aggressive in acquiring private property for economic development. On the other hand, a competing hypothesis suggests a “backlash and spotlight” effect, whereby public opinion has swung heavily in favor of property owners, such that local policymakers fear negative publicity and prolonged legal battles while states feverishly enact legislation restricting the use of eminent domain. Kelo ignited a struggle for power among voters, developers, local policymakers, and state governments. Out of this struggle, states are experimenting with how to achieve the balance of power that is best for their unique needs, and property owners are gradually securing a stronger foothold under the states’ legislatures than they would have had under Kelo.
Keywords: property rights, takings, eminent domain, kelo
JEL Classification: D72, D23
Suggested Citation: Suggested Citation