On Friday, the Michigan Supreme Court overturned its 1981 Poletown decision. So what does that mean? Plenty. It means that some sanity has been restored to legal doctrine and economic development practices.
Under the principle of eminent domain, government is able to seize private property (and give some compensation to the owner) if it is for the public good. Traditionally that has meant roads or schools, but lately that definition has been expanded to include destroying modest homes to make way for luxury condominums , draining a lake to make way for a Wal-Mart store, and shoving out a family-owned auto repair shop to make way for a hardware store. (In the latter case, eminent domain would involve replacing one retail establishment with … another retail establishment.)
The most famous case in the country may have been Poletown, in which the City of Detroit and the Michigan Supreme Court seized 1,000 homes and 600 businesses to benefit one corporation–General Motors.
On Friday, the court reversed its 1981 decision, saying “We overrule Poletown in order to vindicate our constitution, protect the people’s property rights and preserve the legitimacy of the judicial branch as the expositor, not creator, of fundamental law.”
Good for them, and good for all of us.
Alan Ackerman, who was the lead attorney in the case Wayne County v. Hathcock issued this press release, calling the unanimous decision “a significant victory for private property owners in Michigan and elsewhere.”
Expanding eminent domain’s use is wrong on several levels. Of course, as the court pointed out, it violates property rights.
It also opens the way for crony capitalism: a company with strong connections in city hall can leverage government power to acquire that prime piece of real estate.
It disrupts communities–most obviously in the Poletown case–by vacating homes and family-owned businesses to make way for out-of-town or otherwise large corporations. (Government should not take extra steps to keep family-owned businesses in business; on the other hand, it should not take active measures to forcibly move them, which is sometimes fatal to a company’s business prospects.)
It says that the public purse is more important than the right of the individual to be secure in his own home. In this way, it changes governnent’s function from that of protecting the individual and establishing an environment for peaceful life and commerce into managing the economy and the public fisc. Everything must go for the sake of enhancing tax revenues. Foregone, then, are the peaceful means of restructuring, reinventing, and refocusing government on its core functions.
Finally, eminent domain abuse of the kind curtailed by the Michigan Supreme Court is based on a faulty economic model. In this model, government planners can make better decisions about what is better for the economy than the private sector. Governmnent planners, in this thinking, can see enough of the big picture to know that business X is better for the economy than business Y. This what economicst Friedrich Hayek called the “fatal conceit,” and its track record is, to put it charitably, mixed. Even the Poletown development didn’t work out as planned.
(For further treatment, see my essay for the Detroit News weblog.)