Eminent domain not working
Opinion polls show that overwhelming majorities of Americans oppose the use of eminent domain to promote private development. A new study by the Federal Reserve Bank of St. Louis provides another reason for being against it: In all too many cases, not only doesn't it work, but it does more harm than good.
The study's authors concluded that the "taking of private property from one person and giving it to another for economic development . . . is unlikely to create a net benefit to society. It is more likely to create economic inefficiencies and to reduce economic growth . . . The reason is that even the most well-intentioned policymaker cannot comprehend or replicate the complex interactions of buyers and sellers that occur in free markets."
The study did note, however, that not everyone loses. "Of course, there will be certain groups that do benefit from the taking of private property, such as developers, property managers and local politicians."
The authors' suggested alternative to seizure of private property? "Rather than use eminent domain or other tools to target individual economic development projects, local governments should ask the fundamental question as to why the desired level of economic growth is not occurring in the local area without significant economic development incentives. For example, are taxes too high, thus creating a disincentive for business to locate to the local area? Do current regulations stifle business creation and expansion? All of the targeted economic development in the world will not compensate for a poor business environment. From a regional perspective, local governments should focus on creating a business environment conducive to risk-taking, entry and expansion rather than attempting targeted economic development through eminent domain or other means."
To read the report, click here: http://www.stlouisfed.org/publications/re/2007/a/pages/prosperity.html. Then forward the link to your state legislators, who have done nothing to rein in eminent domain abuse.
The study's authors concluded that the "taking of private property from one person and giving it to another for economic development . . . is unlikely to create a net benefit to society. It is more likely to create economic inefficiencies and to reduce economic growth . . . The reason is that even the most well-intentioned policymaker cannot comprehend or replicate the complex interactions of buyers and sellers that occur in free markets."
The study did note, however, that not everyone loses. "Of course, there will be certain groups that do benefit from the taking of private property, such as developers, property managers and local politicians."
The authors' suggested alternative to seizure of private property? "Rather than use eminent domain or other tools to target individual economic development projects, local governments should ask the fundamental question as to why the desired level of economic growth is not occurring in the local area without significant economic development incentives. For example, are taxes too high, thus creating a disincentive for business to locate to the local area? Do current regulations stifle business creation and expansion? All of the targeted economic development in the world will not compensate for a poor business environment. From a regional perspective, local governments should focus on creating a business environment conducive to risk-taking, entry and expansion rather than attempting targeted economic development through eminent domain or other means."
To read the report, click here: http://www.stlouisfed.org/publications/re/2007/a/pages/prosperity.html. Then forward the link to your state legislators, who have done nothing to rein in eminent domain abuse.
posted by Randy Bergmann at 7:35 PM
1 Comments:
I think the study got the point. If the community is poor there is a reason, and tearing down the community will not solve the fundamental problems people living in suffering communities face.
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