It is hard not to gloat over the aftermath of the Supreme Court’s infamous Kelo decision. As the Wall Street Journal pointed out recently, the city of New London, Connecticut spent $78 million condemning people’s homes and bulldozing them away, and the development that was supposed to happen in that area has flopped and looks like it may never take place. (With the help of many supporters, Kelo’s own home was disassembled and moved to a new location.)
Pfizer, the company whose “world-class” research and development offices were driving New London’s plan for condos and other trendy developments, recently merged with another company and has announced it is moving out of New London. As a result, even after the economy recovers, the development that New London wanted to put on Susette Kelo’s neighborhood will probably never happen.
The Supreme Court, of course, said it was perfectly okay for New London to take people’s land and give it to a developer because the city had written a “comprehensive plan” that “it believes will provide appreciable benefits to the community.” This decision gave enormous power to urban planners.
Of course, someone will always say that planners could not have foreseen the recent recession, Pfizer’s merger with another company, or its decision to move out of New London. But that’s the whole point: planners are no better at predicting the future than anyone else, and it was simply wrong for the Supreme Court to give cities power to take people’s property based on a comprehensive plan.
viagra purchase canada These last a week, a month, and over a month, respectively. These pills are usually made from natural ingredients like herbal cost of viagra pill extracts. You start viagra spain relating to those men displayed in ads. These side effects usually go away after a few weeks of usage my hair started falling again in the decoction of gokhru, musli buy cialis downtownsault.org sya, ashwagandha and bala. Friedrich Hayek called the idea that government planners could make decisions for us better than the market “the fatal conceit.” It is amazing that there are still people who believe this idea, but if there were not, there would be no need for this blog.
The people who wrote the Bill of Rights were well aware of the dangers of this conceit. They did not guarantee freedom of speech or freedom of the press “provided that freedom does not interfere with comprehensive government plan.” Nor did they say, “nor shall private property be taken for public use, without just compensation unless a city has written an economic development plan concluding that taking that property will benefit the community.”
The painful thing is that New London is far from the first example of planners taking people’s property for “urban renewal” projects that never take place. You can still find neighborhoods in Baltimore, Boston, northern New Jersey, and many other places that look like Berlin in June, 1945, and local residents will tell you that a local urban renewal agency took people’s homes and shut down their businesses to clear the land for redevelopment that never happened. But the Supreme Court pretended that every prior urban-renewal scheme was a complete success.
Nor is it likely that New London or any other city will learn from this. The urban-renewal scam has been cleverly designed so that the cities themselves are not liable for the money they waste. Instead, they create separate urban-renewal agencies that sell bonds that are to be repaid out of taxes on the new development. If the new development never takes place, the agency defaults on the bonds, but the city is not obligated to cover the loss. So the city typically waits until investors forget about the default and then do it all over again.
The political pendulum swings back and forth. Right now it is swinging the other way, but before the excesses of the planners and the politicians who support them put this country into bankruptcy, it will start to swing back. I just hope we remember the lessons this time for a little longer than the last time.
This will be spun by those in favor of central planning as too LITTLE planning. “See, now we need to consider forcing Pfizer to stay there.”
We could easily be on a slow trek toward basically the Chinese model of Communo-Capitalism. And of course, a few reading this are delighted at that thought.
Okay, Randal… Comprehensive economic and social planning can be equated to totalitarian communism (as reference by you linked last couple of words), sure, but customary urban planning, that enforces basic public safety and welfare whether through true transportation planning (auto transit systems need to be planned, too), building code enforcement, utility and infrastructure planning, and site issue mediation (whether through zoning regulations which you have debated or site improvement standards which function in practically the same way [excluding use controls] as is seen in Houston), all of which work within the confines of the market rather than attempting to completely manipulate them, cannot be so equated. And, frankly, this sort of “customary urban planning” are what an overwhelming majority of public sector planners do for a living.
The painful thing is that New London is far from the first example of planners taking people’s property for “urban renewal†projects that never take place.
Huh. I wonder why Randal didn’t mention taking people’s property for “urban renewal†projects that did take place: all the Moses road building projects.
Of course, someone will always say that road advocates could not have foreseen induced demand and the fact that the roads did not alleviate congestion forever but negatively affected quality of life, public health, etc.
It’s too bad the passionate thundering written down here is sieve-like in its structure.
DS
Dan wrote:
> Huh. I wonder why Randal didn’t mention taking people’s property for “urban renewal†projects that did take place:
> all the Moses road building projects.
>
> Of course, someone will always say that road advocates could not have foreseen induced demand and the fact that
> the roads did not alleviate congestion forever but negatively affected quality of life, public health, etc.
>
> It’s too bad the passionate thundering written down here is sieve-like in its structure.
Moses road building projects? Why just limit your bashing to the highways and parkways that were built under the new York State authorities that Robert Moses controlled? Is it because you have read Caro’s (in my opinion deeply-flawed) Power Broker?
What about all of the other high-voltage electric transmission lines, water, gas and petroleum pipelines, highways, airports, canals, railroads, subways and light rail lines that have been built since the founding of the republic in 1776? Yes, some of those projects (even the rail transit projects) also required condemnation of private property, and some of them might (might) even have caused so-called “induced” demand.
But returning to your assertions, many people have derived benefit from the infrastructure projects that Moses built. The same cannot be said for the failed economic development project in New London.
The recipe is proven: Intervene, fail, ignore negative consequences from intervention while blaming insufficient intervention, (loop back to intervene), etc. Lubricate with causally-disconnected circumstances, add liberal doses of mythological expectations, and Viola’! Another step down the path to Utopia.
It’s hard to deny that Kelo is a black eye for planning. I would say it’s planning at it’s worse. But I agree with TexOk, most professional planners don’t (or even have the chance to) engage in these types of eminent domain nightmare’s. To Dan’s point, eminent domain has been used for many horrible things, highway building being a big one. Here in Texas, where almost every piece of land is privately held, privately built toll roads have used eminent domain to build roads that will give these private companies financial gain. Eminent domain is brutal and rarely fair and is a poor way to plan.
My experience is that Eminent Domain usually pays at least 25% tooo much for land. The agency does not want to go to court and look in the jury box at sympathetic neighbors who may reward the property owner for all the trouble of moving, etc. And of course, the agency has lots of free money.
San Jose
Of course this is an egregious use of power, but remember the Supreme Court allowed a lot of this to occur with their 5-4 decision on “economic development” as being a good use of eminent domain. You’ve focused on just one aspect of eminent domain use in America presumably because condos and planners were involved to some degree. Let’s not forget the entire picture and use of eminent domain in America.
“…someone will always say that planners could not have foreseen the recent recession…”
Planners could not have foreseen the recent recession, true, but Austrian economists like Peter Schiff predicted it.
Frank,
Peter Schiff’s area of expertise is very narrow — so much so that I look with skepticism on the viability of his legislative campaign — but within that narrow range of expertise, he is the guy the others build statutes of. Ever since I first saw his 2006 YouTube clips predicting the mortgage mess and recession, and in such accurate detail, I have been a fan. I could do without his cozy-cozy relationship with Fox News, but you win a few and you lose a few.
RE Peter Schiff…
I know a lot of people also saw the housing bubble, and didn’t have to be a libertarian, Austrian economics true believer, or an objectivist to see the bubble for what it was, a repeat of a centuries-old feature inherent to mostly unregulated capitalism.
I knew it in 2004-2007 when there were a total of a half dozen “mortgage brokers” all in one small, cheap rent Vallejo office building (less than $1.00/sq. ft./month) where I had my location through the end of 2006; the average age of the “principals” was about 25, and the clerical staff, such as they were, about 20 or 21, fresh out of Junior College.
I would expand on ws’ excellent point and go all the way back to the USC decision Penna Coal which allowed a private company to destroy private land for profit. Kelo is not a planner’s dream. If you think planners started their evil scheme in the early days of the last century to grab private land for their schemes you are a dim-bulb. Many of these USC decisions benefit those that collect profit.
Land use is one of the hardest things to decide, and it is folly to point fingers all over the place without context. Kelo also failed to motivate the public to capitulate to a particular movement’s wishes, which should give some cause for reflection.
DS
“I … see the bubble for what it was, a repeat of a centuries-old feature inherent to mostly unregulated capitalism.”
Msetty, please. “Mostly unregulated capitalism”?
The US economy began its permanent decline from real capitalism with the establishment of the Interstate Commerce Commission in 1887. The Federal Reserve’s establishment accelerated the decline.
The very existence of a central bank shows the ignorance behind your statement.
“Unregulated” capitalism? The Federal Reserve manipulates interest rates. (And by creating cheap credit, the Fed encouraged malinvestment and the housing bubble — the explosion in the mortgage broker industry wouldn’t have happened had the Fed not set the prime rate below market level.)
“Unregulated” capitalism? The Federal Reserve issues paper notes, fiat money, which is backed only by government confidence.
“Unregulated” capitalism? The government taxes individuals and companies and redistributes the wealth to other individuals and companies. (NBER had demonstrated a 40% marginal tax rate for most workers.)
“Unregulated” capitalism? The government mandates the lowest wage employees can be paid.
“Unregulated” capitalism? The 2007 Code of Federal Regulations, many of which are focused on a facet of the economy, has 145,816 pages! (And the regulation burden grew under the Bush administration.)
OSHA, EPA, FDA, FCC, FERC, DEA, Department of Agriculture, ad nauseum. All heavily regulate the economy.
You’re perpetuating a myth indoctrinated in you by public schools’ statist history texts.
Wow! Dan made a comment that wasn’t snarky! Maybe, just maybe, he has intelligence and actually has facts and reasoned analysis to contribute.
OK, Frank, what we have here is socialism for the rich, but still highly regulated capitalism for small business and everyone else. Interesting how few corporate grifters have gone to federal prison lately, many who make Madoff look small.
The problem with economic ignoramuses like you who toss out the catch-all “statist” insult is that it’s impossible to tell whether you understand the difference between the corporatist system that dominates us, or are a true advocate for legitimate capitalism, e.g., the kind Adam Smith talked about. You’re quick to offer the insults, however.
I’ve seen many “progressives” who are also realistic advocates of legitimate capitalism, such as Dean Baker (http://www.prospect.org/csnc/blogs/beat_the_press). If you don’t believe me, read his e-book The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer at http://www.conservativenannystate.org, in which, among other things, Baker advocates increasing the immigration quota for doctors and other professionals in order to lower prices for services increasing far faster than inflation.
msetty,
Look closely; I did not insult you. While I called your statement ignorant, I did not call you stupid, nor do I doubt your intelligence. But your statement does reveal ignorance of the reality the current state of economic regulation. The root of the word ignorance is ignore, and your statement about “mostly unregulated capitalism” ignores fact.
Statist is not meant to descibe, not insult; statism–a legitimate term–is “the practice or doctrine of giving a centralized government control over economic planning and policy”. I called history texts statist, so I’m not sure why you personalized it. (We can have a discussion on history texts another time; in that area, I’m an expert.)
If you have read my posts, you should have seen my rants against corporatism–in which the Federal Reserve plays a fundamental role–and my advocacy for legitimate capitalism.
The American Prospect declares that “Prospect writers and columnists have written emphatically about the need for a decisive and ambitious response to the current economic crisis, about the urgency of universal health care as well as the options for achieving it, about the revolutionary possibilities of climate change legislation as well as the political obstacles to achieving it.” And Baker’s e-book page proclaims that “[s]ound economic policy should harness the market in ways that produce desirable social outcomes – decent wages, good jobs and affordable health care.”
“Desirable social outcomes”? Social engineering? These are calls for central economic planning–statism, the antithesis of legitimate capitalism.
Should read: “Statist is meant to describe…”
AP, can you add a feature to allow users to edit their own comments?
Frank, regardless of the official definition of “statist” many people who claim to be strong advocates of capitalism use the word as a pejorative. Your explanation is weak, at best.
The term is also used as a pejorative by many who wish to cover a pro-corporate agenda or are too stupid to realize they’re covering up a pro-corporate agenda (e.g., the “tea baggers” and their ilk), since in any case a lot of government action will be needed to undo pro-corporate “statist” policies, and to produce outcomes favorable to the average person–and that isn’t “unregulated capitalism” as history shows.
I seem to recall in history that there were plenty of economic bubbles occurring well before marginal steps were taken to curb corporate excesses, e.g., the ICC., that is, in periods of mostly unregulated capitalism.
What regulation was there of “credit default swaps” for example, the major factor contributing to the collapse of AIG? What about the hundred and one other “financial products” that Wall Street peddles to their rich customers, but still have the potential for new, destructive bubbles?
As for the “desirable social outcomes,” f— yeah!
I’d much rather have “central economic planning” aimed at improving things for the average person than the current situation aimed at improving things for the average multinational corporation and the top 5% of society. Otherwise there is a vaccum, in which steps the same cast of characters. If this is “statist” by your standards, I don’t care.
Induced demand is just a fancy term used to ignore the issue of market pricing.
“If this is ‘statist’ by your standards, I don’t care.”
It’s statist by the very definition of the 400-year-old word. If you didn’t care, you would be so offended when the word is used.
“…regardless of the official definition of ‘statist’ many people who claim to be strong advocates of capitalism use the word as a pejorative. Your explanation is weak, at best.”
And your reply invokes Loki’s Wager; the term can, and has been, succinctly defined regardless of how it’s used–or how some react to its use.
There have been periods of economic bubbles before, largely due to speculation and increasing the monetary supply; before the Federal Reserve cartel, individual banks inflated the money supply by overextending credit. The best, most effective regulation to prevent the business cycle would be to prohibit fractional reserve banking on the basis that it constitutes fraud.
According to D.W. MacKenzie of the Mises Institute, “AIG failed not because the CDS [credit default swap] market failed, it failed because they made bad decisions in the CDS market. That is the way this market works, if you make the wrong bets, you lose.”
The market doesn’t need external regulation; there are market forces that, without government interference, would regulate. Government needs to get out of the way and stop encouraging risk and then socializing risk by bailing out companies that are supposedly too big to fail. As far as other financial regulations placed on “Wall Street”, Peter Schiff has talked about the impacts of burdensome and multitudinous federal regulations on his brokerage firm. (One effect is that he has to employ five people to keep him compliant with the law.) At one point, Schiff describes the problem not as lack of regulation, but as too much government interference:
Back to your final point; in true capitalism, not corporatism or state capitalism, the same cast of characters would not exist as they do now. As long as government takes and transfers wealth, regardless of its intentions, there will be those who seek to gain from the parasitic, transfer-seeking economy. By endorsing social engineering, you’re still advocating for state capitalism, not true capitalism; the only differences is the beneficiaries.
If you truly want to improve conditions for the average person, then eliminate central economic planning entirely. It disproportionately hurts the working poor by robbing them of approximately half their earned income through direct taxation and though the invisible taxation of inflation, created by the Federal Reserve’s monetary policy.
Wow, busy weekend on the comments page.
Echo what Frank said. Msetty’s point about corporate socialism is a fair criticism of the mixed economy we have now (what Frank would call “state capitalism”) and not capitalism as it is supposed to exist, under which those companies would simply have failed.* And of COURSE corporate socialism doesn’t work. I can’t imagine why anyone would think it would. I am, in fact, becoming more and more convinced that Bush, Obama, etc KNEW the bailouts wouldn’t work, but implemented them anyway in order to line the pockets of their backers.
*Much wailing and gnashing of teeth has followed such pronouncements, accusing those who assert my argument of failing to understand the supply chain involved behind huge companies like GM and how the aftershocks of a GM failure would spread throughout the economy. Bollocks. Those other companies would find another buyer for their goods for the simple reason that there are other buyers in the market. A brief period of upheaval would be followed by restabilization. And for any of those companies who specialized too finely on components that only GM could use, for example, then THEY get to fail as punishment for the poor decision to put all their eggs in one basket.
I find the sorta support from Mike interesting.
The underlying problem I see is how do you prevent the economic “powers that be” from hijacking the government process and structuring the laws in such a way that favor their interests, e.g., the way that “corporate socialism” works now.
Peter Schiff may have complained about how much compliance with regulation costs his business, but be assured there were many other special interests that liked the laws they way there were, particularly the gutting of New Deal era regulation such as the Glass-Steagal Act.
The libertarian/objectivist/Austrian claim that “legitimate capitalism” strongly begs the question of how the law–an inevitable requirement to protect property rights but also society at large–is determined. What social elite decides and how is political legitimacy determined?
Hayek’s rather insulting “solution” of allowing only 40-something white men to vote once in their lives for the legislature would be accepted by the 95% of the population who don’t fit this description is a non-starter. The Randian “solution” that those who are commercially successful should also rule society is also a non-starter to the other 95%.
There is NO evidence that capitalists per se have any moral claim greater than anyone else; if the Bible is any moral guide, the evidence is quite the opposite. I’ll take the New Testament as a moral guide over Rand anytime.
So the question remains of should society decide who has political legitimacy, e.g., how do we decide who “the deciders” should be? On what basis is their claim to power just? I don’t think this is a rhetorical question, but actually goes to the heart of the matter.
“…how do you prevent the economic ‘powers that be’ from hijacking the government process and structuring the laws in such a way that favor their interests…[?]”
Limit government power. End the parasitic, transfer-seeking economy by ending redistribution of wealth.
And thanks AP for adding the editing option!
End the parasitic, transfer-seeking economy by ending redistribution of wealth.
That is: force people to not be people.
Yeah, that’ll work.
DS
I see a time limit on my edit. How is this different than using Firefox and waiting to post?!?
This is not to say I don’t like the preview below and the wide HTML allowance. Except I’d like [img src]. I’m not complaining.
…and I used the ‘Edit key’ to add ‘img’ comment…
DS
Dan,
Some would argue that it is in redistribution of wealth, not the prohibition thereof, that people are made into something less than people.
Some would argue the economy-talent fairies aren’t spreading enough recovery dust. Some would argue that certain brands of tinfoil attenuate the waves from black helicopters better than others. Some would argue that the socially inept adherents of a third-rate novel-turned-sect aren’t going Galt fast enough and moving far away from the rest of us.
That is: most would argue using “some would argue” is a failure of rhetoric.
DS
Frank wrote: The best, most effective regulation to prevent the business cycle would be to prohibit fractional reserve banking on the basis that it constitutes fraud.
Frank, it was non-bank financial institutions (non-regulated credit providers) like Bear Sterns that were over leveraging. So though one can always argue that the moral hazard of bailing out over-leveraged institutions will continue to induce them to take on excessive risk, there seems little evidence that in the absence of regulation free market institutions will leverage less (and thus control the money supply tighter) than the central bank already does. In fact, the opposite seems true because of cases like Bear Stearns.
In place of the FOMC, what mechanism should be used to provide adequate levels of currency? And when a country like China refuses to float their exchange rates, how would the free markets of currency accommodate that?
Dan,
So, your basic reply, as always, is, “I hate Objectivists, therefore I’m right.” If only you grasped what your statements reveal to your readers about you.
If only you grasped what your statements reveal to your readers about you.
My readers aren’t dumb enough to:
1. Make such a transparently idiotic mischaracterization.
2. Believe such a transparently idiotic mischaracterization.
HTH.
DS
Dan,
I wrote that you fail to grasp what your statements reveal about you.
You wrote that your readers would not make or believe such a transparently idiotic mischaracterization.
Um, that “transparently idiotic mischaracterization” would be of your statements. That was the subject of the clause to which you responded. Whether you realized it or not, what you actually just said was that your readers are dumb enough to make such a transparently idiotic mischaracterization. Take this for what you will, but calling your readers “dumb” has never been an effective persuasion tool, as far as I’ve known.
What you have just done to yourself is known in football (soccer) parlance as “scoring on your own goal.” Your teammates must be so proud.
Um, that “transparently idiotic mischaracterization†would be of your statements.
Yes, we’ve repeatedly pointed out that your tactic is to mischaracterize what I write, often mischaracterizing idiotically. Sometimes it is ham-handedly, other times puerilely, on occasion your mischaracterizations are comical. In toto, they are low-wattage and transparent.
(normally, here I’d insert ‘HTH’, but I don’t think that pertains to certain folk).
DS
Dan,
No matter how hard you try, you can’t evade reality. Your own statements have undone you, no matter how you hem and haw and twist. If we were in court, they would be admissible as statements against your own interest. You can try to spin that however you like (adeptly, I see: since that’s what you do for a living, no surprise there) but you won’t be able to undo the damage you’ve already done to yourself.
I don’t even have to say anything anymore. You take care of it yourself… apparently without even realizing it.
Children, children. I have to see enough finger pointing, pettiness, and name calling in the classroom.
Yes, Mike, Dan’s a bully. He was probably molested and bullied as a child, and now he uses this forum to feel superior and to take out his childhood frustrations. By responding, you’re regressing and feeding his ego.
Learn, young grasshoppers: When a wise man argues at length with a fool, it becomes difficult to distinguish who is the fool.
Mike said: Dan, no matter how hard you try, you can’t evade reality.
THWM: Dan isn’t evading reality.