Implications of the Kelo Decision

The Kelo Decision, which has effectively taken away private property rights, is getting heated attention in the blog-sphere, but only passing attention in the main-stream media. Inc.com has yet to even run a story on this decision, which has more impact on the fundamental rights of small business than any other decision in recent memory.

Why the fuss? Justice O'Conner captured the magnitude of the impact of this decision in her writing for the dissent:

"Today the Court abandons this long-held, basic limitation on government power. Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded--i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public--in the process. To reason, as the Court does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings "for public use" is to wash out any distinction between private and public use of property--and thereby effectively to delete the words "for public use" from the Takings Clause of the Fifth Amendment."

Up until this decision, government could only take private property for what was considered truly "the common good," such as roads, hospitals, military bases, or utilities. Now those limitations are gone. Large corporations (such as the Best Buy case I wrote about yesterday) and developers with deep pockets can collude with local governments to hatch all kinds of plans to take away property. Some are arguing that governmental officials will surely use common sense. But we know better.

Again from Justice O'Conner:

"The Court rightfully admits, however, that the judiciary cannot get bogged down in predictive judgments about whether the public will actually be better off after a property transfer. In any event, this constraint has no realistic import. For who among us can say she already makes the most productive or attractive possible use of her property? The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

But, there is a glimmer of hope in all of the gloom that surrounds this decision. The door was left open for states to enact laws that specifically restrict seizing property in the name of private economic development. A handful of states already have such laws. It is my hope that groups like NFIB and the Office of Advocacy of the SBA lead the same kind of charge that they have for regulatory flexibility. We need a national movement to block the effects of the Kelo Decision state-by-state, so that all small business owners and home owners can regain their rights to private property.