Natural Justice, Eminent Domain, and Corporate Welfare

Since the 1960s, judicial activism has long exercised the patience of many Americans with their judges. Normally this is associated with concerns about courts identifying and promoting various “rights”—such as an alleged constitutional right to privacy—that even some of their most passionate supporters freely concede cannot be derived from the American Constitution.

Judicial activism, however, took a new step on June 23, 2005, when the United States Supreme Court decided in Kelo v. City of New London to expand the definition of what is known as “eminent domain.”

This concept, well-established in common and statute law long predating the American founding, allows governments to assume ownership of private land in order to promote a particular aspect of the common good. This has always been understood as being limited to very specific functions, such as building essential public facilities, and it was assumed that the original owners would be properly compensated.

In Kelo, however, the Supreme Court decided that it was constitutional for the local government to seize specific property-holdings and force their owners to sell their property to other private entities. The result has been not only uproar that traverses the political spectrum, but also a scrambling by legislatures in nearly 36 states to pass legislation that limits local government’s ability to use this expanded definition of eminent domain.

The economic reasons to restrict local government’s ability to invoke eminent domain are easy to understand. People’s willingness to buy property in any area is influenced by their confidence that their property will not be arbitrarily taken from them. In other words, if the law cannot guarantee that private property will be protected against unreasonable usurpation by other private individuals or the state, people are likely to buy property elsewhere.

There are, additionally, powerful moral reasons why Kelo’s definition of eminent domain should be contested. This has to do with its potential to violate basic norms of justice concerning property.

From the standpoint of natural law, private property has never been considered an absolute right. The goods of the earth are supposed to serve human beings. Since the preservation of human life is always more important than things, there are instances where property rights must yield to other principles, such as the preservation of human life from imminent death.

Natural law also specifies that there are instances in which the state may legitimately take private property so that it can fulfill its particular responsibilities to the common good. The taking of land to build military bases in the interests of national defense is a good example. The fact, however, the law has always insisted that adequate compensation must be given to the original owners reflects a basic demand of natural justice. Another is the specification that such seizures must be grounded on a reasonable case for public use (like roads) rather than private use.

By expanding the concept of eminent domain to embrace the notion of “economic development,” Kelo overrides all these limitations. First, the public use requirement is rendered meaningless. In the name of what it decides constitutes “economic development,” local government can transfer one piece of property from one private person or business to another private person or business.

Second, it suggests that the basic justification of ownership is no longer found in the fact of legitimate possession, but rather in which private individual or business is deemed more likely by local government to use the property in economically productive ways.

And here we find potential for very disturbing developments. St. Thomas Aquinas once wrote that private property was a great bulwark against undue expansion of state authority, precisely because my ownership of a property means that I, rather than government officials, make most of the decisions about how to use it. Kelo’s expansion of eminent domain undermines this very basic protection against excessive government power.

Worse, it creates tremendous incentives for businesses seeking to expand their holdings to disdain the normal methods of acquiring another’s property, such as offering to buy it from the owner. Instead they can aggressively lobby local government officials to invoke eminent domain and use the state to take another’s property for their own use. Such behavior is as much an instance of corporate welfare as tariffs and subsidies. Moreover, like all forms of corporate welfare, it is a recipe for corruption.

Dissenting from Kelo, Justice Sandra Day O’Connor observed: “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.” While Kelo’s jurisprudence prevails, it seems, our homes will be a little less our castles.

[Editor's Note: This article was originally published on October 12, 2005.]
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Dr. Samuel Gregg is Director of Research at the Acton Institute in Grand Rapids, Mich. He is the author of Economic Thinking for the Theologically Minded (University Press of America, 2001) and On Ordered Liberty: A Treatise on the Free Society (Lexington Books, 2003).