The Pfizer Corporation has announced that it will close down its headquarters in New London, Connecticut. [HT: my former student Josh Blackman, and other VC readers]. As our regular readers may recall, Pfizer played a key role in instigating the notorious condemnations that led to the Supreme Court’s decision upholding the taking of private property for “economic development” in Kelo v. City of New London. Pfizer lobbied state and local governments to undertake the condemnation so that the land could be transferred to developers who would build facilities that were expected be useful to the firm and its employees. The head of the New London Development Corporation – the quasi-governmental agency that ordered the takings – had close ties to Pfizer and was married to a Pfizer executive.
The Kelo condemnations inflicted great harm on the people who lost their homes and businesses and led to the expenditure of some $80 million in public funds. To date, however, nothing has been built on the site, and there is no prospect that anything will be in the foreseeable future. Pfizer’s decision to leave New London makes it even less likely that anything productive will be done with the condemned land anytime soon. So far, the main beneficiaries of the Kelo takings seem to be the feral cats who have settled in the area. Far from producing the “economic development,” the Kelo condemnations have actually damaged the local economy by destroying taxpaying homes and businesses and expending large amounts of public money for no return.
For reasons I discuss in much greater detail in this article, this outcome should not be surprising. State and local governments that undertake “economic development” condemnations have strong incentives to approve takings that are expected to benefit well-connected interest groups even if they destroy more development than they create.