Eminent Domain and the Free Market

The fallout over Kelo vs. New London has become a topic of conversation throughout many discussion boards, including my350z.com. In the latest tussle, one member asked, Do you think the free market is always the perfect solution? Can you think of any circumstances in which the free market produces unsatisfactory results?, in response to a flurry of attacks on government seizures of property. One particular response (free registration required) is worth noting, from member plezercruz:

The free market always produces the most efficient solution, with some rare exceptions. These exceptions are the standard Coasian transaction costs: search costs, lack of information, spite, etc. Where there is a transaction cost that surpasses the profit gain of a transaction, the most efficient transaction will not happen. If for example, your Saudi landlord won’t sell out of sheer spite, inefficiencies arise. If it is simply too difficult for a buyer to negotiate with all of the owners of a parcel of land, making it too expensive to buy it, inefficiencies arise.

The fact that these ineffiencies occur is the reason why we have governments, and the reason why we have eminent domain. The idea is that by cutting through all the haggling, spite, and sentimental attachments, we can more efficiently produce the results that we want as a society. However, these results are almost always INEFFICIENT because they occur contrary to market forces by government fiat.

The real problem with eminent domain is that it attempts to apply an objective standard to valuation, and value is a subjective determination. We can measure with some accuracy how much land OUGHT to be worth, but we cannot measure how much it is worth to the owner. The solution government has come up with is to outright ignore subjective value, and allow the buyer (government) to determine the fair market price, which (surprise surprise) almost always turns out to be far less than the owner thinks its worth and significantly less than the market would actually bear. I forget the case, but I remember reading in Con Law that government doesn’t even have to pay prevailing market price, it only needs to pay a price high enough that it isn’t completely unreasonable.

Another thing that eminent domain takings overlook is that forced sales necessarily should come at a premium price, not at fair market price. There is a difference between buying land that has come on the market volunatarily and trying to buy land when the owner is not eager to move. The price to buy a parcel of land RIGHT NOW should be significantly higher than fair market price. Eminent domain practice ignores this fact.

All this results in takings which are unjust, unfair, and extremely unpopular. It did not have to be so. If, for example, the Supreme Court had used it’s common sense and realized that taking price should exceed fair market value, then the governments of this country would have to pay a premium to seize land (which is only proper). If that were the case, MOST people would be EAGER to have government take their land. Government would show up and say “We’ll offer you twice what your land is worth” and people would throw parties because the government took their land. That’s the way it ought to be done…if the government “needs” your land badly enough, let THEM pay the premium. You shouldn’t have to be screwed.

I personally hope they take Souter’s home and I hope they give him half what it’s worth. That’s how the rest of us live…why should he be special?

Well said!

Flag Burning Again?

When I was young, I was puzzled as to why we would pledge allegiance to a flag. So, once in a while, I’d “forget” to mention it, along with my more frequent pauses while others intoned “under God”. As I’ve grown older, I’ve come to appreciate the importance of symbols; and seeing re-enactments of the raising of the Stars and Stripes at Iwo Jima gave me the kind of chills that Francis Scott Key must’ve had while watching the shelling of Fort McHenry. Still, to my mind, America is an idea much more than a symbol, and symbols don’t always last forever. I have great respect for the flag, but even greater love for our Constitution, and the history and ideals that make us Americans.

So whenever politicians try to bring back some sort of flag-burning amendment, such as the one that recently passed the US House of Representatives, I become dismayed. Why? Because it goes against the very first amendment, which holds that “Congress shall make no law … abridging the freedom of speech …”

But aren’t certain acts, certain speech, hateful by their nature? Yes, but not necessarily dangerous, as in the proverbial crying of fire! in a crowded theatre. Hatred is an emotion, and so long as it does not break out into discrimination or violence, is protected. It is part of the full spectrum of human feelings. To outlaw hatred is to outlaw humanity. Even when it galls, nay, pains us, to hear the contempt with which some people treat the symbol that has helped rally our people no less than our fighting men, the symbol which, simply by being there, through the perilous fight, gave us hope and the will to go on, it is nevertheless part of the very package, the very set of freedoms, for which it stands.

And, beyond the fact that such an amendment would undermine the very spirit of the Constitution, there are two benefits for continuing to allow people to burn or otherwise descrate the flag:

  1. The energy and calumny spent in attacking the flag takes away from energy spent in sabotage.

  2. It’s better to be able to figure out who the kooks are by their own words, so that one may treat them with the cold contempt they deserve.

But, of course, leave it to the Republicans to come up with this sort of amendment. For all the statist socialism of the Democrats, the Republicans are no better when it comes to attempting to foist their sensibilities upon the rest of the nation as an amendment to the Constitution.

[Cross-posted at Between Worlds]

I Suppose They Didn’t Get the Word That the Warsaw Pact Countries Aren’t Communist Anymore

I wasn’t any too thrilled with World Police. A savage lampoon of Hollywood politics, sure, but I already knew that those guys out in Tinsletown were hopelessly Left. I did think that the technical art shown by making a movie using marionettes was impressive, but it wasn’t enough to carry the entire film.

In case you didn’t see it, the movie is about a plot by North Korean dictator Kim Jong Il destroy the world, aided by clueless Lefty actors.

Now North Korea is making demands to the Czech Republic to ban the film, saying that it harms the image of their country.

The Czech Foreign Ministry pretty much told NK to get bent.

“We told them it’s an unrealistic wish,” ministry spokesman Vit Kolar was quoted as saying. “Obviously, it’s absurd to demand that in a democratic country.”

You tell ’em, Kolar.

Fighting Terrorism as a “Lesser Evil”

Michael Ignatieff�s theories are grounded in an attempt to understand human nature for only that leads to the doable. His vision is tragic � he acknowledges the great ironies and paradoxes of being human. Of Blood and Belonging examines the powerful ties of kinship and our desire to belong � ties important in ways that can both comfort and destroy us. Reading it, I remembered a local Serbian economist who was one of the customers at my little business; in 1990 or so I remarked (in my naivet�) that Yugoslavia, [here I reveal my slovenliness; looked it up a week later and he is Hungarian – though obviously our conversation was about Yugoslavia; sorry] with its lovely coastline, would surely not tear itself apart in the coming years because it had so much going for it in terms of tourism, beauty, a bright economic future. He did not laugh, though he treated my stupidity with polite condescension: I teach economics, that is my intellectual life, he said; but people, to them, money is not important – they act from the passions of blood and the heart, of who you are and who �they� are.. He was right of course. (And the course supplement we sold, heavy on Hayek, was my superficial introduction to what economics was � or could be – about.) Ignatieff, like that economist, understands what Faulkner describes as �the old fierce pull of blood�. That old Mississippian understood the heart counters this pull with another, the magnetic universals that transcend our tribal loyalties – abstractions he saw embodied in the law and reaching toward a justice and truth independent of the subjective. Ignatieff, the Canadian, uses similar tensions and arrives at similar conclusions. In The Lesser Evil, he argues those passions must be woven into a world of laws, without which governance is chaotic and brutal; it is, he would argue, �prepolitical.�

He is in the internationalist tradition, one given to US-bashing. Clearly, people like Anthony Lewis welcome this as central to Ignatieff’s vision. But The Lesser Evil argues, for instance, that giving any quarter to the kind of terrorists who have become nihilists is wrong. Often, he surprises. I’m looking forward to other’s, probably broader, contexts for the work I quote from below:

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