Both Columbia President Lee Bollinger and some of the commenters to my previous post defend the use of eminent domain to transfer property to universities on the ground that universities create "public benefits." While universities do provide important benefits to society, this does not justify allowing them to condemn property.

Most of the benefits provided by universities are "private goods" that are fully captured by their students and faculty. For example, going to college greatly increases a student's earning prospects, but that student will himself capture the benefits. Basic economics shows that there is no need for government subsidies for these kinds of private goods.

Universities do also provide some "public goods" - benefits to society that the university, its faculty, and its students cannot fully capture. Perhaps the most important is basic scientific research. Another might be educating underprivileged students, though this is less clearly a public good than basic research is, since most of the benefits are captured by the students themselves. However, both research and student tuition are already heavily subsidized by the government through a wide variety of programs. For extensive data, see this recent book by economist Richard Vedder. There is no reason to believe that they require the additional subsidy provided by the use of eminent domain. Even if additional public subsidy is warranted, the best way to provide it is to allocate additional funds earmarked for research or education, not allow universities to use eminent domain. Condemnation of property is rarely if ever actually useful for the purposes of advancing research or educating poor students. In general, research can be undertaken and students educated just as well on voluntarily purchased land. Education and research can be conducted in a wide variety of locations and thus are not vulnerable to the "holdout" problems usually cited as a justification for condemning property. Even if holdouts do become an issue, universities can and do use secret purchase and other market-based methods to get around them without resorting to eminent domain(see Point 2 in my earlier post on Columbia).

Obviously, students and faculty sometimes can benefit from acquiring land through condemnation. But the benefits in question (primarily esthetic and lifestyle-related) are not public goods that should be subsidized by the state. If universities wish to pursue these goals by acquiring additional land, they should do it by competing with other potential buyers in the real estate market.

Finally, a possible argument for allowing universities to use eminent domain is that they supposedly act only for the public interest. As President Bollinger puts it, "We are not a profit-making institution looking out for our own advantage," he said. "We are trying to do things that help the world more broadly." Unfortunately, this claim is at best a half-truth. Universities do sometimes "help the world more broadly," but their policies are also heavily influenced by the self-interest of faculty, administrators, and (to a lesser degree) students. Anyone familiar with academic politics knows that self-interest plays a major role. The mere fact that a university is a nonprofit entity does not prove that it acts only out of altruism. Self-interested behavior by universities is often perfectly legitimate, but it does undercut claims that universities should be allowed to use eminent domain because they do not "look out for [their] own advantage" and only "do things that help the world more broadly."

Even under a narrow definition of public use, condemnations that transfer property to public universities would be constitutional, since government ownership of land is automatically considered a "public use" under the federal Takings Clause and most state constitutions. Condemnations for private universities are much more legally problematic, and I would argue that they violate the Fifth Amendment and many state constitutions as well. But whatever its legal status, taking property for the benefit of universities is both unnecessary and unjust.

UPDATE: Another possible "public" benefit of universities is that they may improve the local economy. I did not address this in the original post because it is not a benefit specific to universities, but can be claimed for virtually any enterprise. However, to the the extent that this argument is used to justify using eminent domain to transfer property to universities, it is no different from the arguments used to justify condemning property for the benefit of private commercial developers. I criticize such claims in great detail here and here.

UPDATE #2: I was perhaps less clear than I should have been about what it means for a student to be able to "capture" the benefits of his own education. So long as the societal benefits created by it are reflected in increased income for the student, he or she can be said to capture those benefits and government subsizidation is therefore unnecessary. For example, it is certainly true that more educated workers are more productive than less educated ones and this benefits the economy. But their higher productivity is reflected in higher pay, and so they "capture" the benefits. In any event, I should emphasize that even if government subsidization of higher education is desirable to a greater extent than I contend, it does not follow that such subsidies should take the form of allowing universities to acquire property through condemnation.