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Eminent Domain, Communists, and the Little Guy

Raymond J. Keating

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Raymond J. KeatingThe story has become tragically familiar. The government, in cahoots with powerful, politically connected special interests, tramples all over the property rights of the little guy.

Individuals see much of their life and livelihoods disappear, as their property is seized for larger development projects. Their most valuable assets are taken, and compensation comes up woefully short. People are justifiably frustrated and outraged.

Unfortunately, this story is being played out both in the United States of America, the land of freedom and opportunity, and in China, which is still ruled by communists.

When I recently came across an Associated Press report that essentially told the story of widespread eminent domain abuse in China, my reaction was: Well, what do you expect in a communist country? I could not decide if the notion of eminent domain abuse under communism was either redundant or meaningless.

However, the AP report by Elaine Kurtenbach revealed how deeply rooted the idea of property ownership runs within mankind. Here is a nation under the rule of communists for nearly six decades, and yet there are widespread protests over seizures of farmland.

As reported, Chinese Premiere Wen Jiabao noted in a speech on January 20 that "one of the greatest threats to stability stems from seizures of farmland for property development and other construction projects." Wen stated: "In some areas, illegal seizures of farmland without reasonable compensation and resettlement have provoked uprisings. This is still a key source of instability in rural areas and even the whole society."

AP noted reports about property-related uprisings leading to police killing protestors. The story also noted that the central government has been urging local officials to clean up abuses, but went on to point out that "it is unclear how much progress has been made, given rampant corruption and vested interests at the local level, where officials can often reap huge profits from lucrative property deals."

Doesn't this all seem frighteningly familiar?

In the aftermath of the U.S. Supreme Court's June 2005 ruling in Kelo v. the City of New London -- in which a narrow Court majority gave a green light to government officials across the nation to seize property for pretty much any reason as long as it's labeled "economic development" -- much-needed attention has been drawn to eminent domain abuses in this country.

Local government officials often have grandiose development schemes that involve taking property from individual homeowners and small businesses, and handing that property over to another private entity, usually a large or high profile business or developer. That was the case in Kelo, and contrary to what is clearly laid down in the U.S. Constitution, the Supreme Court gave thumbs up to such theft.

But unlike the Communist Party in China, aren't we Americans supposed to grasp the importance of government protecting, rather than abusing, private property? Unlike communists, aren't we supposed to grasp that without substantive protection of private property, economic growth and development is frustrated, lagging well behind its potential?

Indeed, history shows that one of the fundamental reasons why Western Europe and later the United States leaped ahead of the rest of the world in terms of economic development -- particularly starting in the seventeenth and eighteenth centuries -- was the development and enforcement of a rigorous system of private property rights.

Economic growth does not result from government central planners running or guiding the economy, but instead through private players competing, inventing, innovating, investing and taking risks in the free market in order to, ultimately, best serve consumers. Even some communists in China have started to catch on, but various U.S. politicians, seemingly along with five Supreme Court justices, just don't get it.

Let's hope that enough politicians -- at the federal, state and local levels -- around the nation still recognize the need to protect private property, and roll back the damage done in the Supreme Court's Kelo decision.

This column may be reprinted with appropriate credit.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Read the entire article on the Small Business & Entrepreneurship Council (SBE Council) website (new window will open).

Posted: 28-Jan-06

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