big-government supremes

Well, the era of the free market is over. No kidding; the Supreme Court declared it.

(P) There are lots of fun assumptions that economists have cobbled together to create a perfectly functioning market economy. Capitalism, as we like to call it. Personally, I think the cases when those assumptions fail are much more interesting than the times when they hold true, although if you think that the markets for pencils or chewing gum or wheat are exciting, more power to ya. For example, economic theory assumes there is perfect information. In other words, pharmaceutical companies shouldn’t withhold studies saying their drugs are dangerous, while used car salesmen should disclose all the bad stuff about the lemon they’re trying to push on you. Yeah, like that’s gonna happen. Costless bargaining is another good one. A group of citizens breathing dirty air should be able to reach an amicable agreement with the local coal power plant to reduce emissions. Trouble is, that takes a great deal of time for a large group of people to coordinate their efforts (like the problem of “collective bargaining”, if you prefer political science jargon). And then of course there’s the court system; let’s just say that things like lawyers and permits aren’t exactly free. Since the real world often crushes the premises of the theoretical one, government sometimes (and I emphasize sometimes) must get involved. By the way, don’t let anyone tell you Adam Smith was a laissez-faire anarchist; he specifically wrote about the role that government should play. In fact, he quite likely would have looked upon the modern corporate conglomerate with a disdain similar to that he applied to the woes of an excessive state, but that’s for another post.

The assumption I discuss today is that of clearly defined property rights. Ownership is a good thing; it’s a way we determine who can use a resource, whether it be a couch or a banana or even our own bodies (very fascinating, by the way—rape, abortion, fertilization clinics, prostitution, drug use, even patenting individual genes). We even use it metaphorically, as in, “taking ownership” of a project and doing it very well. The whole point of private property is that the owner can do whatever she wants with it. Ownership, by definition, is the freedom to make a bad choice. After all, if it’s a good choice, the owner doesn’t need protection from society to carry out her wishes.

This week, five of the Justices of the United States Supreme Court made a rather straightforward pronouncement about the 5th Amendment. Local governments may confiscate private property—as long as they pay fair market value—for private property, so long as it is still for the public good. Significantly, the local government gets to determine whether it benefits the public. This is a huge change from how the process of eminent domain has traditionally worked. Before, in order to be for the public good, it had to be, you know, public. Schools and interstate highway systems are critical to the economic success of the country; naturally, some private property may have to be taken to make the system as a whole function properly. But with the Supreme Court ruling, cities can declare private projects by private developers to be for the public good. The actual case, from Connecticut residents, dealt with something so profound as a hotel, health club, and office space. In other words, the Supreme Court has declared that government (which is disproportionately influenced by wealthy developers on these issues) can take your stuff and give it to somebody else.

This matters for two main reasons. First, it means you could literally be kicked out of your house so that a billionaire can build a Motel 6 on your land. But more than that, it sets a really interesting precedent. Government may supercede your property rights, so long as it can find a way to say that the confiscation is being done for the public good. You think that’s very hard to do?

To say it differently, owning something is your signal of value. If your preference is removed from the equation, all of a sudden society will see telling you to do all sorts of things as for the public good. Exercise is an obvious one; in terms of health care costs and absenteeism at work and school, it is clearly in the interests of the public good to have exercise police come forcibly remove you from your home and do 20 minutes of cardio every day. Motorcycles are another good example. As is alcohol. A case could easily be made for things like TV, as well. But it’s not just lifestyle choices. Imagine the owner of a hotel convincing the city it should take a piece of artwork that’s been in your family for generations because it should be displayed in the hotel’s lobby. Or maybe a sporting goods store promises to move in to a new shopping mall—if the city rounds up a bunch of autographed memorabilia signed by local athletes. The danger isn’t commodity goods like pencils or wheat. It’s in unique or specialized property, such as the real estate that’s involved in the case from Connecticut. If an owner can no longer have a reasonable expectation of defending her property rights, that pretty much destroys the whole free market thingy.

It’s interesting, as well, the Justices who favored the ruling and those who dissented. You’ve got liberals deciding for wealthy real estate developers while conservatives are scared of the precedent it sets. (Remember, those are the same states’ rights conservatives who decided a presidential election by overruling a state’s supreme court while making the absurd claim that their ruling didn’t set any precedent and thus couldn’t be used in other matters).

To put it another way, when Savantelle and I agree on a Supreme Court ruling, something fishy’s going on.


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