Private Gain
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Private Gain
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Dana Berliner
Senior Vice President and Litigation Director
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As early as 1795, the U.S. Supreme Court described the power of eminent domain—where the government takes someone’s property for a “public use”—as “the despotic power.” Eminent domain has the potential to destroy lives and livelihoods by uprooting people from their homes and businesspeople from their shops. With eminent domain, the government can force a couple in their 80s to move from their home of 50 years. Eminent domain is the power to evict a small family business, even if that means the business will never reopen.
The danger of such an extreme power led the authors of the U.S. Constitution and state constitutions to limit the power of eminent domain in two ways. First, the government had to pay “just compensation.” And second, even with just compensation, the government could take property only for “public use.” To most people, the meaning of “public use” is fairly obvious—things like highways, bridges, prisons, and courts.
No one—at least no one besides lawyers and bureaucrats—would think “public use” means a casino, condominiums or a private office building. Yet these days, that’s exactly how state and local governments use eminent domain—as part of corporate welfare incentive packages and deals for more politically favored businesses. This is the first report ever to document and quantify the uses and threats of eminent domain for private parties. We have compiled this information from published accounts and court papers covering the five-year period from January 1, 1998 through December 31, 2002. The results are chilling.
Economic Liberty | Eminent Domain | Private Property
The Brinkmann family owns a chain of hardware stores in Long Island and purchased property with the hope of opening a new store. The town now wants to take the land through eminent domain, simply…
Imagine if two of your neighbors got together, claimed they established a new town, and then “voted” to take your property from you using eminent domain. Crazy, right? Not in Colorado, where the owners of…
A pipeline company abused eminent domain to take property from the Erbs without paying them for the taking. IJ petitioned the Supreme Court to take the Erbs’ case, but unfortunately the court declined to hear…
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Firefighters applaud medical workers in Manhattan, New York, on 7 April 2020. Photo B A Van Sise/NurPhoto via Getty
is an economic historian and wellbeing economics advocate who teaches public policy and history at Duke University in North Carolina. He is also a senior fellow at the Kenan Institute for Ethics. His most recent book is The Little Big Number: How GDP Came to Rule the World and What to Do About It (2015).
Firefighters applaud medical workers in Manhattan, New York, on 7 April 2020. Photo B A Van Sise/NurPhoto via Getty
Adam Smith had an elegant idea when addressing the notorious difficulty that humans face in trying to be smart, efficient and moral. In The Wealth of Nations (1776), he maintained that the baker bakes bread not out of benevolence, but out of self-interest. No doubt, public benefits can result when people pursue what comes easiest: self-interest.
And yet: the logic of private interest – the notion that we should just ‘let the market handle it’ – has serious limitations. Particularly in the United States, the lack of an effective health and social policy in response to the coronavirus disease (COVID-19) outbreak has brought the contradictions into high relief.
Around the world, the free market rewards competing, positioning and elbowing, so these have become the most desirable qualifications people can have. Empathy, solidarity or concern for the public good are relegated to the family, houses of worship or activism. Meanwhile, the market and private gain don’t account for social stability, health or happiness. As a result, from Cape Town to Washington, the market system has depleted and ravaged the public sphere – public health, public education, public access to a healthy environment – in favour of private gain.
COVID-19 reveals a further irrational component: the people who do essential work – taking care of the sick; picking up our garbage; bringing us food; guaranteeing that we have access to water, electricity and WiFi – are often the very people who earn the least, without benefits or secure contracts. On the other hand, those who often have few identifiably useful skills – the pontificators and chief elbowing officers – continue to be the winners. Think about it: what’s the harm if the executive suites of private equity, corporate law and marketing firms closed down during quarantine? Unless your stock portfolio directly profits from their activities, the answer is likely: none. But it is those people who make millions – sometimes as much in an hour as healthcare workers or delivery personnel make in an entire year.
Simply put, a market system driven by private interests never has protected and never will protect public health, essential kinds of freedom and communal wellbeing.
Many have pointed out the immorality of our system of greed and self-centred gain, its inefficiency, its cruelty, its shortsightedness and its danger to planet and people. But, above all, the logic of self-interest is superficial in that it fails to recognise the obvious: every private accomplishment is possible only on the basis of a thriving commons – a stable society and a healthy environment. How did I become a professor at an elite university? Some wit and hard work, one hopes. But mostly I credit my choice of good parents; being born at the right time and the right place; excellent public schools; fresh air, good food, fabulous friends; lots of people who continuously and reliably provide all the things that I can’t: healthcare, sanitation, electricity, free access to quality information. And, of course, as the scholar Robert H Frank at Cornell University so clearly demonstrated in his 2016 book on the myth of the meritocracy: pure and simple luck.
Commenting on how we track performance in modern economies – counting output not outcome, quantity not quality, prices not possibilities – the US senator Robert F Kennedy said in 1968 that we measure ‘everything, in short, except that which makes life worthwhile’. His larger point: freedom, happiness, resilience – all are premised on a healthy public. They rely on our collective ability to benefit from things such as clean air, free speech, good public education. In short: we all rely on a healthy commons. And yet, the world’s most powerful metric, gross domestic product (GDP), counts none of it.
T he term ‘commons’ came into widespread use, and is still studied by most college students today, thanks to an essay by a previously little-known American academic, Garrett Hardin, called ‘The Tragedy of the Commons’ (1968). His basic claim: common property such as public land or waterways will be spoiled if left to the use of individuals motivated by self-interest. One problem with his theory, as he later admitted himself: it was mostly wrong.
Our real problem, instead, might be called ‘the tragedy of the private’. From dust bowls in the 1930s to the escalating climate crisis today, from online misinformation to a failing public health infrastructure, it is the insatiable private that often despoils the common goods necessary for our collective survival and prosperity. Who, in this system based on the private, holds accountable the fossil fuel industry for pushing us to the brink of extinction? What happens to the land and mountaintops and oceans forever ravaged by violent extraction for private gain? What will we do when private wealth has finally destroyed our democracy?
The privately controlled corporate market has, in the precise words of the late economics writer Jonathan Rowe, ‘a fatal character flaw – namely, an incapacity to stop growing. No matter how much it grew yesterday it must continue to do so tomorrow, and then some; or else the machinery will collapse.’
To top off the items we rarely discuss: without massive public assistance, late-stage extractive capitalism, turbocharged by private interest and greed, would long be dead. The narrow kind of macroeconomic thinking currently dominating the halls of government and academia invokes a simpleminded teenager who variously berates and denounces his parents, only to come home, time and again, when he is out of ideas, money or support. Boeing, Goldman Sachs, Bank of America, Exxon – all would be bust without public bailouts and tax breaks and subsidies. Every time the private system works itself into a crisis, public funds bail it out – in the current crisis, to the tune of trillions of dollars. As others have noted , for more than a century, it’s a clever machine that privatises gains and socialises costs.
When private companies are back up and running, they don’t hold themselves accountable to the public who rescued them. As witnessed by activities since the 2008 bailouts at Wells Fargo, American Airlines and AIG, companies that have been rescued often go right back to milking the public.
By focusing on private market exchanges at the expense of the social good, policymakers and economists have taken an idea that is good under clearly defined and very limited circumstances and expanded it into a poisonous and blind ideology. Now is the time to assert the obvious: without a strong public, there can be no private. My health depends on public health. My freedom depends on social freedom. The economy is embedded in a healthy society with functional public services, not the other way around.
This moment of pain and collapse can serve as a wakeup call; a realisation that the public is our greatest good, not the private. Look outside the window to see: without a vibrant and stable public, life can quickly get poor, nasty, brutish and short.
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IJ defends the right of all Americans to own and enjoy their property free from unjust seizures, searches, and fines.
IJ fights for the right to speak freely about the issues that matter most to ordinary people and to defend the free flow of information essential to democratic government and free enterprise.
IJ stands for the idea that every child deserves a chance at a great education and that all parents, regardless of means, should enjoy the freedom to direct their children’s education.
IJ believes that all people have the right to earn an honest living in the occupation of their choice without arbitrary, unnecessary, or protectionist government interference.
IJ is in court nationwide defending individual liberty. Check out some of our latest cases.
We fight for our clients at every level of the legal system, and we’ve been to the U.S. Supreme Court 10 times to date.
IJ occasionally participates in cases that we aren’t litigating, but that have important implications for our mission.
A look at every case we have filed, past and present.
IJ files cutting-edge constitutional cases in state and federal courts to defend the rights of our clients and set legal precedent that protects countless others like them.
IJ produces one-of-a-kind, high-quality research to enhance our effectiveness in court, educate the public, and shape public debate around our key issues.
IJ provides principled advocacy and issue-area expertise to support legislation that expands individual liberty and protects vital constitutional rights.
IJ trains and mobilizes the public to be advocates for freedom and justice in their own communities.
Get the latest on IJ’s cases and activities.
Breaking news from IJ, including case updates.
Listen to IJ attorneys and guests discuss the freedom, justice, and the law.
Highlights of news outlets’ coverage of IJ’s work.
Read about IJ’s most important work with stories directly from the people in the trenches.
See our clients talk about their experiences and learn how we are fighting for their rights—and yours.
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IJ Report Documents 10,000-plus Eminent Domain Abuses Across U.S.
Most people don’t realize that the government often takes people’s homes and businesses not for a public use, such as for a post office or a police station, but for the benefit of private developers. For years, the Institute for Justice has been saying this is a nationwide epidemic, but whenever someone asked, “how often does this really happen?” we had no answer. There is no official data on the use of eminent domain for private parties, so we had to rely on examples. That’s why for the past couple of years we have been working on a report documenting just how often state and local governments across the country use their eminent domain power for private benefit. We added up the numbers from published news articles and court documents, and the results were even worse than we suspected.
Over the past five years, governments have condemned or threatened more than 10,000 homes, businesses, churches and private land for private business development. More than 4,000 of these properties are currently under threat of condemnation for private parties.
Among many examples, the report found that in the past five years, governments have:
Condemned a family’s home so that the manager of a planned new golf course could live in it;
Evicted four elderly siblings from their home of 60 years for a private industrial park;
Removed a woman in her 80s from her home of 55 years supposedly to expand a sewer plant, but actually gave her home to an auto dealership.
Private developers love eminent domain. By cozying up to local bureaucrats, they can secure land on the cheap without the hassles of negotiating with individual owners. And local officials get to trumpet exciting projects promising new jobs and taxes. But because everyone’s hom
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