Friday, June 24, 2005
Kelo and “Fair” Value
I essentially wrote my next planned Kelo post as a comment to this post over at PoliBlog, in which Steven Taylor links to the good Stephen Bainbridge TCS article on Kelo and, among other things, the effective transfer of property value from forced seller to the government-aided new owner.
I’d been thinking about those implications as well, and even about my old college paper on value. Particularly the title/intro saying “the value of a thing is what that thing will bring.”
Anyway, here is what I wrote over at PoliBlog, since it’s basically what I had in mind besides the intro:
I haven’t written my seventh Kelo-related post yet, but I planned one on the valuation and “fair” price angle.
The perceived problem people have with allowing the market to work is that someone’s price to budge may seem totally out of whack, influenced either by considerations like nostalgia, or by taking advantage of knowing they are the holdout preventing the thing from happening at all or in recognizably the desired way.
However, a transaction and judgment of value is between two parties. It is not imposed by one on the other, even attempting to be “fair” and extrapolate from what is typical for the objective attributes of the property.
Allowing the political process to intervene in acquiring property for private purposes is a short circuiting of market forces, however capricious they may seem. Because it is a private transaction, the market, and the subjective value of the prospective buyers and sellers, should always prevail. To do otherwise pushes the United States as originally conceived, and as we’ve more or less known it, rapidly toward its demise.
As long-time readers may recall, even the core concept of eminent domain bothers me, but I can live with it for things like roads that are run by the government. We’re not societally tabula rasa, and such a state is seldom if ever going to become available to people, so wishing roads were all private or obviated by technology isn’t gong to make it so any time soon. As things are, a transaction between a unit of government and an unwilling seller of real estate will never be a market transaction. All we can hope for is minimal and carefully thought out need, and reasonable compensation. At least another private owner will not reap subjective or future increases of value lost to the victim of the taking.
There is no compelling need for government to intervene to plan or obtain property for private developments. If the rationale is increasing tax revenue, that’s purely statist. If the rationale is to help create jobs in a participatory way, rather than by stepping aside and making economic development easier, that’s purely statist. But I digress. The point is to let the market be the market, such as it is. There’s no other way for the value to the seller and the buyer to be “fair.â€?
Kelo-related posts:
Will The Supremes And Bad Lawyering Perpetrate A Constitutional Travesty?
United States Constitution, 1788 - 2005: Promise Unkept
Bad Precedent
Additional Kelo Fallout Thoughts
Will the Money Be Followed?
Kelo and Raich: The Root of the Supreme Court Problem?
Olek V. New London Case
Kelo and "Fair" Value
Boycotting Can Be Hard
Becker and Posner on Kelo and Eminent Domain
Kelo, IOLTA and Drugs - Oh My
Sama on Kelo, Disney, and Boston's West End Tragedy
Was Kelo The Lost Battle That Won The War?
You Thought The Kelo Outcome Couldn't Be Worse?
Update:
Added to today’s Beltway Traffic Jam.