'Deja Vu All Over Again': Repeated Adjustment of Delegated Powers and the History of Eminent Domain

Abstract

In representative democracies, citizens delegate powers. Not surprisingly, citizens react angrily when the delegated powers are misused (i.e., used so as to decrease social welfare). Perhaps more puzzlingly, citizens sometimes repeatedly delegate the same power (e.g., surveillance of citizens, conscription), and then repeatedly react with anger to its misuse. In this paper, we investigate a power that the American public has consistently delegated and repeatedly seen misused for nearly 200 years: the power of eminent domain. We begin by developing a simple theoretical model in which a stylized public chooses the set of powers to delegate. The public obtains new information each period and can forecast rationally (but not perfectly) the benefits and costs of delegation. We then apply the model to the history of eminent domain in the United States. Our model provides a simple explanation of why the public has continued to allow the delegation of substantial discretion over taking private property, despite the fact that eminent domain has generated so much public backlash over the last 200 years. The model also highlights the crucial role played by the courts in forestalling (or not) public backlash. Our analysis helps explain why many scholars have misunderstood the public reaction to the Kelo decision. More generally, our analysis provides insight into the public's response to a perennial dilemma: How much power should be delegated to elected officials?

JEL Classification: D78, H1, K11, N4, P16