In the Weekly Standard, John Hinderaker (via Powerline) gives some interesting backstory on the development that lay behind the now infamous Kelo v. New London decision. For one thing, it appears that Pfizer actually had nothing to do with the matter other than triggering the idea for the development by buying some landfill property from the city to build an expansion.
Hinderaker asks one question that I think goes to the heart of the danger posed by Kelo:
If the project were publicly owned, no one could question that the associated condemnation proceedings would be in support of a “public use.” But are the rights of Americans any less imperiled by condemnation in support of publicly-owned projects? And, as a matter of policy, if a city wants, for example, to create more housing, does it make any sense to force it to pursue the long-discredited practice of building public housing projects, rather than facilitating the use of private capital and private management to achieve the same end?
I submit that it is precisely the use of private capital and private management that makes Kelo-enabled developments so politically dangerous.
Traditional uses of eminent domain consume state money, especially in the short run, which creates a built-in brake on the use of eminent domain. First, seized property must be paid for at a fair level. Second, since, traditionally, seized property became public property (roads, parks, military bases, etc.), the State loses any tax revenues the property previously generated. Economic benefits that produced increased tax revenues are long term and relatively diffuse. The political class must sacrifice some other governmental spending to pay for the seizure and to pay the subsequent political price. There is not enough positive economic feedback to create a feedback loop where the seizure of land drives the seizure of even more land.
The use of private capital to fund seizures does create such a feedback loop. Now the political class doesn’t have to sacrifice other spending to fund the seizures, and since the new development will be private and taxable, neither do they have to forgo tax revenues. Seizures may actually produce increased revenues in the short term, and those increased revenues will come from a concentrated and easily identifiable source. The political class will rapidly come to view seizures as a cost-free way of driving up revenues without any political tradeoff. The potential for abuse, even from the well meaning, is obvious.
Kelo is extremely dangerous because it destroys all financial limitations on the seizure of private property. It dangles a powerful temptation before every jurisdiction in the country. Inevitably, many will succumb. If not stopped, seizures for “economic development” paid for with private capital will become the norm. At that point, private property will cease to exist in any meaningful form.