The New York Times Room for Debate blog has a forum on the implications of Pfizer’s decision to abandon its New London headquarters. Pfizer and its New London facility had previously played a key role in instigating the condemnations that led to the Supreme Court’s decision to uphold the use of eminent domain for “economic development” in Kelo v. City of New London. My contribution argues that Pfizer’s role in the Kelo takings and their failure to produce any actual development bolsters the case for strengthening protection for property rights. Here’s an excerpt:
Far from producing the promised “development,” the condemnation of private property in New London under Kelo damaged the local economy by destroying homes and businesses and wasting taxpayer money.
This result should not have been surprising. Government planners who undertake “economic development” condemnations have strong incentives to approve takings that benefit well-connected interest groups, even if they end up destroying more development than they create. Usually, as in Kelo, those targeted for condemnation are poor or politically weak.
I previously wrote about Pfizer’s role in the Kelo case and its recent withdrawal from New London here, here and here.
SuperSkeptic says:
Poor or politically weak? Is there a difference?
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November 13, 2009, 1:01 pmNick says:
If the city spent roughly $80mill to start the project, how much return have they seen? Sounds like a net loss but I haven’t seen any articles confirming this.
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November 13, 2009, 1:21 pmCrunchy Frog says:
Sure, if the poor are members of a favored demographic group with effective
shakedown artistsadvocates.Quote
November 13, 2009, 1:22 pmRichard Aubrey says:
The question isn’t what the city gained or lost.
It’s what the officials who decided to go ahead gained (likely did not lose).
Lifetime forensic audits for officials in this position.
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November 13, 2009, 1:23 pmSteve says:
It’s a shame that the takeaway from this will be “the Supreme Court screwed up,” as opposed to “states and local communities need to look more skeptically at eminent domain,” but I guess that’s what comes of overemphasizing the importance of the court case.
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November 13, 2009, 1:32 pmdave h says:
Well it can be both the Supreme Court and the local governments that screwed up. The government shouldn’t have taken the property in the first place, but the point of the Bill of Rights is to protect citizens against the excesses of their government, and the Supreme Court is generally the mechanism for that happening.
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November 13, 2009, 1:51 pmJoe says:
Poor or politically weak? Is there a difference?
The named plaintiff was not poor.
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November 13, 2009, 3:17 pmED Maven says:
What needs to be understood is that the Pfizer post-Kelo fiasco is hardly unique. Exactly the same thing happened in Yonkers (see Yonkers v. Otis Elevators, 2d Circuit). Recent history is replete with “public” projects (usually, but not always redevelopments) that failed, wasting hundreds of millions of dollars and producing nothing in return. My all-time favorite is Los Angeles’ 1970s acquisition of some 17,500 acres of desert land near Palmdale for a new “Intercontinental” airport which never got off the ground and was formally abandoned within the past year (LA turned in its FAA certification). A close second is New York blowing over $100 million for a new NYSE site and building that was never built. If you want to see a big mall created as a redevelopment project, that had to be abandoned and is now sitting empty, go to http://www.deadmalls.com and look at pictures of the Hawthorne mall.
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November 13, 2009, 3:24 pmEH says:
Crunchy Frog:
Sure, if the poor are members of a favored demographic group with effective
shakedown artistsadvocates.Why you gotta hate on Goldman Sachs like that?
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November 13, 2009, 4:21 pmloki13 says:
Huh. Let’s see–
Barron v. Baltimore held that the BoR wasn’t to be incorporated against the states, so “generally” the Supreme Court wasn’t the mechanism for that happening (and, historically, they didn’t do much with the Federal Government either).
What you mean is that after incorporation, SCOTUS developed some jurisprudence regarding states and the BoR. Of course, this gets into the whole problem of public use– and fair compensation.
But since this is a *state* taking, isn’t the best mechanism for reform to get your state government to pass laws protecting you? The BoR is a floor; your state can be much more protective (and some are). Then, as Ilya likes to put it, you can move with your feet to a state that protects you better.
There is a long history of the use of eminent domain for private entities. What the entities are has changed depending on the nation’s economy– mills, railroads, and so on. But the Court is not there to second-guess all decisions; I would suggest that this is a wonderful place for Federalism so that states that want to have more protection than the BoR floor may do so (think of them as laboratories of democracy!), states that don’t won’t, and we can see empirically how that affects the growth rate.
Cool, huh!
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November 13, 2009, 5:41 pmTim says:
The “best” mechanism would be for McDonald v. City of Chicago to prevail on our side, and allow P&I to incorporate the entire bill of rights in one sweep.
The interesting question becomes where do we go from there? Grand juries for every state? I think not, but we shall see.
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November 13, 2009, 7:25 pmIleene Crane-Franks says:
Are there any cases warming up in the lower court bullpen to bring this issue back to SCOTUS for reconsideration?
This was a travesty for property rights and the individual vs. government.
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November 13, 2009, 8:23 pmBleepless says:
How stupid was Pfizer’s original seizure, given the economic trends? How cynical was Pfizer’s new decision? These could be important factors in deciding whether or not Pfizer should be penalized.
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November 13, 2009, 9:11 pmSoronel Haetir says:
I doubt SCOTUS is going to take another look at this any time soon. Kelo may have been a lousy outcome all around but it was perfectly aligned with prior SCOTUS pronouncements on takings.
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November 14, 2009, 3:29 pmXBradTC says:
How stupid was Pfizer’s original seizure, given the economic trends?
Not stupid at all. You can hardly blame Pfizer for rentseeking. The blame lies with the city of New London.
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November 14, 2009, 7:04 pmJames N. Gibson says:
Regardless of whether Pfizer miss-read the future economics of the project, or whether New London over stepped the cities rights, the real issue is the Kelo ruling it generated. To me this whole story is just another example of the kind of ruling we get from Justice Stevens. Kelo, the Heller Dissent and other statements he has made truly make me wonder if he’s worse then Ginsberg.
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November 15, 2009, 3:37 am