July 17, 2009

Property Rights' Big Day

Ilya Somin became the first witness to every be called to testify at a SCOTUS nomination hearing on property rights.  Sotomayor's decision in Didden undoubtedly sparked interest in a field that is typically treated as a red-headed step child by Republicans and Democrats alike.  His written testimony provides a great overview of property rights in a post-Kelo world.

Judge Sotomayor has said that she “strive[s] never to forget the real-world consequences of [her] decisions.” The real world consequences of judicial failure to enforce public use limitations on takings are bleak. Perhaps the most important shortcoming of economic development condemnations is that they are often used to transfer property from the politically weak to the politically powerful. It is not accidental that the Kelo condemnations were in large part instigated by the influential Pfizer Corporation, which stood to benefit from them.17 Similarly, the famous 1981 Poletown condemnations – in which some 4000 people were forcibly expelled from their homes in a Detroit neighborhood in order to transfer property to General Motors to build a new factory – also benefited locally powerful interests such as the United Auto Workers labor union and of course General Motors itself. In both cases, the people displaced were mostly poor or lower middle class residents and smallbusinesses with little political influence.18 It is difficult to imagine an economic development condemnation that transfers property from a powerful interest such as Pfizer or GM to people with little political power, and there are few if any such cases on record. Since World War II, hundreds of thousands of Americans – most of them poor and lacking in political influence - have been forcibly displaced by economic development, urban renewal, and “blight” condemnations of the sort licensed by Kelo and previous Supreme Court decisions that allow government to condemn virtually any property. As the National Association for the Advancement of Colored People and other civil rights groups pointed out in an amicus brief they filed in support of the property owners in Kelo, economic development takings continue to disproportionately victimize poor and ethnic minority property owners.

Since economic development takings are often driven by political rather than economic considerations, it is not surprising that they generally fail to produce the economic development that supposedly justified them in the first place. By destroying existing businesses, homes, churches, and schools, they often inflict economic damage on communities that outweighs whatever benefits they create. The problem is exacerbated by the fact that, in most cases, neither the condemning authority nor the new private owner of the condemned property is under any legal obligation to actually produce whatever economic benefits were promised as justification for the taking. Predictably, this state of affairs gives public officials and corporations an incentive to inflate claims of projected economic benefits, which are then used as justifications for condemnation.

He also comments on her particular handling of the Didden case.

In 1999 the village of Port Chester, N.Y., established a “redevelopment area,” giving designated developer Gregg Wasser a virtual blank check to condemn property within it. When local property owners Bart Didden and Dominick Bologna sought a permit to build a CVS pharmacy in the area, Wasser demanded that they pay him $800,000 or give him a 50 percent partnership interest in the store, threatening to have their land condemned if they said no. They refused, and a day later the village condemned their property.

Didden and Bologna challenged the condemnation on the ground that it was not for a “public use,” as the Constitution’s Fifth Amendment requires. Their argument was simple and compelling: extortion for the benefit of a private party is not a public use. Nevertheless, in a short, cursory opinion, Judge Sotomayor’s panel upheld the condemnation.

With the backlash created across the country as a result of Kelo, I thought this would be an area for Republicans to take advantage without having to delve into racial politics.  Indeed, the racial politics in takings cases are on their side.  Nevertheless,  congratulations to Ilya and hopefully this marks the beginning of a resurgence in the importance of protecting property rights.