Posted on 02/09/2016 2:32:45 AM PST by Cincinatus' Wife
Memo to The Donald: There are ways to acquire property without using government force.
"Eminent domain is an absolute necessity," said Donald Trump during Saturday's Republican presidential debate. "Without it," he claimed, "you wouldn't have roads, you wouldn't have hospitals, you wouldn't have anything. You wouldn't have schools, you wouldn't have bridges. You need eminent domain." In fact, though, we would still have roads, bridges, schools, and hospitals.
It's a relatively new phenomenon for the government to seize property on behalf of private development projects. And yet, so very many of these projects somehow used to get done. Only one thing is certain when it comes to eminent domain: Those who have their property seized don't get paid enough for it.
Admittedly, trying to clear out all the homes from a certain area can be a seemingly insurmountable challenge. But there are free-market solutions.
Suppose that Trump wants to build a skyscraper and has to tear down the houses on an entire block. The obvious approach is to buy everyone's house, but this doesn't always work. Because of sentimental attachment, some homeowners will refuse even offers that far exceed the fair market value.
Other homeowners might act strategically, refusing early offers in the hopes of enticing much higher bids. This presents a complex problem, for a single holdout could stop the project in its tracks. Eminent domain seeks to solve this problem by forcing owners to accept a "fair market value" price. The government determines this price by seeing how much similar houses in the neighborhood have sold for. If the homeowner refuses, the government can pay this price anyway and seize the property.
RELATED: Kelo v. City of New London Ten Years Later
Until 2005, eminent domain was usually invoked only for government projects such as highways and railroads. But in that year, the U.S. Supreme Court decreed, in Kelo v. New London, that eminent domain can be enforced for private development projects. So long as local authorities believe that the project will benefit the wider community, there is no problem.
Unfortunately, the "fair market value" price is typically too low. If people only valued their homes at the market price, they would have already sold them before receiving the developer's offer. The fact that they haven't means that they value their abodes more than what is being offered on the free market. The real difficulty lies in figuring out how much more. If the government takes the property of someone who values the property more than does the person who is getting it, society is poorer.
Fortunately, there is a solution - one that businesses used for years before they gained access to eminent domain. Whether they seek to build a pipeline, a road, or a building, companies almost always consider multiple possible locations. For decades, Koch Industries, the largest privately owned company in the United States, built natural-gas and oil pipelines, just like the Keystone Pipeline, across many thousands of miles without using eminent domain.
Their approach was to offer a contract to property owners along different possible routes; the deal would go to whichever complete set of property owners signed the contract first. The owners might be offered, for example, 25 percent above the fair market value. If they value their property more than that, they don't have to sell. But the Kochs' approach discourages people from indefinitely holding out for better offers. If the homeowners wait, they risk losing this 25 percent profit. This is clearly a better alternative to forced sales at prices that, in reality, are anything but "fair."
Trump's claim that "The Keystone Pipeline, without eminent domain, it wouldn't go ten feet" is just wrong. Nor was Jeb Bush right that eminent domain is necessary for the government, which faces the same alternatives.
During the Saturday debate, Trump was asked about his attempt to seize the house of an elderly woman in Atlantic City, N.J., because he wanted a place to park limousines for his casino.
Trump claimed: "The woman ultimately didn't want to do that. I walked away." In fact, Trump didn't simply accept the woman's decision not to sell him her property. Trump neglected to mention that the Superior Court of New Jersey upheld the woman's right to keep her home.
Once again, the Atlantic City case raises the important point that there are almost always different places that a parking lot or a building or a pipeline can be built.
Trump should follow the Kochs' example. For that matter, the government itself would be well advised to use this market-based approach.
John R. Lott Jr. is the president of the Crime Prevention Research Center and the author of Freedomnomics (2007).
Ted Cruz and his sleazy anonymous money laundered donations:
http://www.cnn.com/2016/02/06/politics/ted-cruz-super-pac/index.html
Goldman Sachs Values indeed.
99.9% of eminent domain is not exercised by any force except a buy out
As trump correctly points out almost every highway and commercial development came about because government or business purchased the land and benefited the original owner
The exceptional cases get a lot of publicity because they are exceptional
How many development projects has Lott worked on? My guess is zero. As far as Atlantic city, Trump did not seize anyone’s property and in fact offered well over fair market value to the owner. She said no and Trump moved on. Of course later she sold it for much less.
Lott, is like Cruz, book smart but no sense of how to run a business. No executive experience.
“....That $100,000 gift from Trump to the Boehner-allied super PAC was twice as big as his next-biggest contributions. [Trump’s] given $50,000 .. to Karl Rove’s American Crossroads (2010) [and $50,000 to] the pro-Mitch McConnell (R-Ky.) Kentuckians for Strong Leadership (2013)...
And then Trump gave McConnell’s PAC another $10,000 in Nov 2014.
Mr Single a payor 2000.. Did that woman have to go to court before he walked away? If not, how was the court involved? To my knowledge they just don’t randomly pick would be cases. Trump took her to court, lost, then claims to have walked away.. True or not true?
Trumpeteers forget the facts... How convenient.
Bookmarked
“Lott, is like Cruz, book smart but no sense of how to run a business. No executive experience.”
He does not cite his own theoretical ideas; he highlights an actual, real life example of a better practice which uses only carrots...no sticks. His own experience is a point most moot.
In spite of Cruz’s dishonest ad, Trump’s use of eminent domain never made him rich.
Sununu and Bush Sr are supported Souter.
Please, go back to bed.
I have a huge easement that I must maintain under gov threat
get out of mylife!
She was influenced by her son(or son in law)...and I believe she actually moved in with him.
Sonny boy and whoever else would have benefitted lost. Just plain dumb.
I don’t know how you get single payer from not wanting people to die in the streets. I guess you have a vivid imagination. I actually think Trump’s medical ideas are great. There is no reason that just because you lose your job that you should lose insurance. You should be able to buy insurance from any state. We are able to do that with car insurance. My insurance company for my car insurance is located in Texas....USAA. Why shouldn’t medical be the same way. Cruz just wants the same thing as Obama but under a different name.
In our area, it's called urban renewal....and it works.
yeb's brother, jorgeW, used eminent domain in the acquisition of the land for his baseball park. I'm not crazy about eminent domain but it is necessary.
Wifey, take your meds today, drink some corn likker, smoke your corncob pipe and don't say or do anything to further hurt Ted Cruz.
Stop helping him with your repetitive, insulting articles and he might have a chance.
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