Since the controversial Kelo v. New Londoncase in 2004, 42 states have passed some restriction on the practice of eminent domain on the behalf of private developers. Critics argue that such restrictions harm the economy. A new study from the Institute for Justice finds that such claims have no grounding in reality. The Wall Street Journal reports:
First, the report assigns each state to one of three categories according to the level of reform implemented after Kelo: “strong,” “moderate” or “none.” Then it compares the data for construction jobs, building permits and property-tax revenue before and after the effective dates of the reforms for each state. The verdict: So far, there has been no discernable hit to economic activity from the restriction of eminent domain, even in those states with the broadest reforms.
This result isn’t surprising. Developers love eminent domain because it’s easier to snap up land when government forces owners to sell — no unpleasant dickering over price, etc. Local politicians likewise believe they are best positioned to pick winners and losers and to shape the future of their cities.
But private development went along very nicely for two centuries before politicians began seizing one person’s property for the benefit of another private citizen. Sometimes the marketplace adapted in amusing ways, as when major building projects were forced to go up around, or even on top of, older buildings. But in the absence of the coercive state, buildings still got built.
The full report is available here.