Has the Supreme Court Killed Capitalism?

Local governments seem to have carte blanche on eminent domain

Time magazine’s “Persons of the Year” issue celebrates the philanthropic efforts of private individuals and charities the world over. Bill and Melinda Gates and U2’s Bono were selected because they are high profile individuals leading unprecedented private efforts to rein in poverty, disease and human misery during a disaster-ridden year.

In stark contrast, five Supreme Court justices probably deserve a nomination for an award by the Democratic Socialists of America (DSA) for doing more to destroy private land markets and housing than more than a century of socialist ideology and thinking.

Politically, even the DSA admits the high water mark of the American socialist movement was 1912 when Eugene Debs captured 6 percent of the presidential ballot and more than 1,200 socialists were elected to public office throughout the nation. The movement went into decline after that, focusing more on the hearts and minds of America’s intellectuals and labor leaders.

Yet, some of those ideas apparently found a home within the minds of America’s leading legal scholars.

The decision was Kelo vs. City of New London, and the principle at stake was whether individuals had a fundamental right to private property that could prevent the democratic majority from taking their homes or businesses. Our Founding Fathers believed private property rights were fundamental for securing liberty: the phrase “your home is your castle” wasn’t a flippant deference to ego. The castle was a protective fortress from covetous and arbitrary actions by government and your neighbors.

In Kelo, however, the Supreme Court said the government could seize the property of private homes and businesses and hand them over to private developers. One of the concurring justices, Anthony Kennedy, was more explicit. He believed the property could be taken because the city had a well considered development plan to justify the redevelopment.

Thus, in effect, the U.S. Supreme Court said your home was no longer your castle. If the majority didn’t approve of who was living in it, how it was made, or what it was used for, and the city had a better plan, the government could take it and give it to someone else. Majority rules.

Of course, we haven’t lost all our rights. We still have basic rights to speech, religion, trial by jury, protection from unreasonable searches and seizures, and others, but the idea that “your home is your castle” went out the window. We lost a big one. And, at least the government still has to pay for your home if they take it. But that’s little consolation to families and small businesses thrown out because your local government and well-heeled property developers they’ve got better ideas about how it should be used (and who should live or work there).

But the urban landscape has been fundamentally altered. Why should a company privately negotiate with property owners when they can go to the government and have it take it for them? The government can do it cheaper, and it often sells the property at a subsidized price. (Otherwise the private company would do it itself to control the conditions of sale).

True, the private sector has not technically been excluded from developing property. The politics and dynamics of redevelopment, however, make this result inevitable, even if unintended.

And the effects are real. Take the opening line from an article by Joshua Ackers in the Albuquerque Journal: “There is a lot of money to be made in Rio Rancho’s Unit 10, and Rio Rancho’s City Council soon might put itself in the position of deciding who is going to make it.” The city is going to condemn two square miles of the city and offer it to private developers for redevelopment.

These kinds of actions now have carte blanche in America’s cities thanks to Kelo v. New London, and the pragmatic socialist perspectives of five Supreme Court justices. The idea that they were encouraging the overthrow of capitalism was probably not obvious when the Supreme Court justices sided with the City of New London. After all, their homes weren’t being taken. But that’s the effect.

Socialists of the world unite!

Samuel Staley is director of urban and land use policy at Reason Foundation.