Eminent Domain

I'm sure by now you've read or heard that the U.S. Supreme Court ruled in favor of corporations in the matter of eminent domain. What this ruling means is that McDonalds or Wal-Mart can come to town and if they can prove that they can derive more economic benefit from your property than you can, then they can condemn your property, pay you what they think it is worth and move you out.

Believe me, they will not pay you what you feel it is worth. They will use some smoke and mirror method of valuation, kind of like our government uses when they calculate inflation or cost of living numbers.

It seems that everyone is up in arms over this most recent Supreme Court ruling. In looking at the case, it appears that the court ruling was partially right and a little wrong at the same time.

First of all, the matter of eminent domain is a state matter, not a federal matter. That means that this has to be dealt with at the state level. If you look back in history to the birth of our country, you will see that the states and their constitutions were in place long before the federal government came into being. The only way that the framers of the constitution were able to get the state to ratify the constitution and form the union was by guaranteeing state sovereignty. Had the constitution not contained language to allow succession, the union would have failed. No state would have ratified the constitution. That said, the federal government originally was severely limited in power. We now see that that is not the case. Our wonderful government has figured out all sorts of ways to get around the original wording of the constitution. However, in this case, the Supreme Court is right in deferring to the state decision regarding eminent domain.

There are however two important tests that must be met before a state can condemn and take property from an owner. First, the stated usage of the property must be for public use only. This prevents rich, powerful individuals and corporations from taking property from less fortunate individuals. Second, the state must pay a fair market price for the property. So, if a state determines that they need property for public use, let's say a highway, then they must through generally approved valuation methods, arrive at a fair price for the property. If both of these tests are met, then things would work ok in the real world, but many times, both of these tests are seldom met.

First of all, it is hard to arrive at a value to which both parties agree. What is fair to me may not be fair to you. Maybe your property has been in your family for hundreds of years. In many cases it becomes nearly impossible to place a fair valuation on the property. And don't let anyone tell you that such actions have greater "social value" than the value an individual places on personal property. There is no accurate way to determine social value. There isn't even an accurate way to determine individual value. All value is imputed, that is, it si subjectively determined. There is no objective way to measure value.

Since there is no conceivable scientific way to say which use of a property best benefits society, government cannot determine value. Value has to be determined by the individual. How much will I accept for my property? You will never get an economist or the governments that employ them to admit to this simple fact because to do so would put them all out of business. It would relegate their theories to the trash heap. Think about this, if governments cannot make accurate interpersonal comparisons of value, then how can governments justify or prove any value in taxing wealthy citizens and redistributing that money to the poor? See what I mean? It opens a whole can of worms.