An Atlantic City resident is fighting the New Jersey Casino Reinvestment Development Authority’s plan to seize his property and resell it for undisclosed private purposes.
For the past three years, retired piano tuner Charlie Birnbaum, 68, has been fighting the state economic development agency’s plan to use eminent domain, the seizing of private property by government agencies for public use, to demolish his home and resell the property to private developers.
‘Fairly Weak’ Protections
Ilya Somin, a professor of law at George Mason University, says New Jersey’s property right protections are weak.
“Although some of the states passed strong laws limiting or banning transfers of property from one private individual to another for economic development, in other states, including New Jersey, the laws are still fairly weak,” Somin said.
“The issue that arises in this case is somewhat different from the issue in Kelo,” Somin said, referring to the 2005 Supreme Court case Kelo v. City of New London.
In that famous case, the Supreme Court ruled governments could take private property for “private benefit” in addition to “public use” as originally set forth in the Fifth Amendment to the U.S. Constitution.
“The [New Jersey] government doesn’t actually have a clear plan as to what it is going to do with the condemned property,” said Somin. “Some courts in other states have said if you condemn property, you have to at least have some sort of plan [for] what’s going to go on that land.”
Economic-Benefit Claims Disproven
Dean Stansel, an associate professor of economics at Florida Gulf Coast University, says arguments supporting private takings aren’t backed by evidence.
Stansel and his colleagues studied data from all 50 states to determine the validity of the proponents’ claim of economic benefits for a 2014 study.
“The arguments proponents of eminent domain make are that it expands the economy, creates jobs, increases income, and so on,” Stansel said. “If these arguments were valid, we [should] see increases in government revenue. So we examined the available data in all 50 states, did the regression analysis, and checked for robustness in the data, but [we] couldn’t find any consistent positive relationship to support the argument.
“In fact, when we looked at the growth of revenue, we found some pretty solid evidence of negative relationships, slower growth in the future that contradicts what proponents argue,” Stansel said.
“In Kelo, there was a plan in place, and it still failed,” Stansel said. “It seems like in the New Jersey case, because they don’t have a definite plan, there is a greater likelihood of failure.”
Stansel says entrepreneurship depends on government respecting property rights.
“When you don’t have security in property rights, you don’t get entrepreneurship,” Stansel said. “You don’t get people taking risks with their efforts or money, because it might be taken the next day. Property rights are fundamentally important for economic development and prosperity.”
Tony Corvo ([email protected]) writes from Beavercreek, Ohio.
Carrie Kerekes and Dean Stansel, “Takings and Tax Revenue: Fiscal Impacts of Eminent Domain,” Mercatus Center: http://www.heartland.org/policy-documents/takings-and-tax-revenue-fiscal-impacts-eminent-domain/