One interesting feature of the Sotomayor hearing was the number of questions she was asked about Kelo. I am not a property scholar (I find that blogging often requires me to qualify comments by saying “I’m not an expert on this”), but I find the policy debate over Kelo perplexing. Let us assume that Kelo was right in holding that a constitutional “public use” if a state or local government takes property (say, somebody’s house) for a private development project such as a shopping mall. Should state law be amended to bar that practice?
Well, the ongoing foreclosure crisis suggests that the answer is no. There are many cities that now have swaths of empty homes (including the house next to mine.) And this is imposing significant costs on communities, including a loss of tax revenue, declining property values, and higher levels of crime. If a private developer wants to use a block of these houses to build a commercial project, why should the use of eminent domain to facilitate that be prohibited? Put another way, which is more problematic — the harm that results when people who live in homes are forced to move against their will (and might be cheated on the value of that property, as often happens when “just compensation” is awarded) or the harm that results from empty houses that just sit there when a transaction cost solution (i.e. eminent domain) would bring them back into productive use?