Monday, July 16, 2012

#197 / Property #2

Blackstone's point about "private" property has been validated, time and again, by the United States Supreme Court. The "rights" that inhere in the private ownership of property are relatively few, and the public retains great power to affect the use, and even the ownership, of the real estate we think of as "Private Property."

Property ownership does include the right to exclude others, as Blackstone noted in the first quotation I cited in yesterday's blog entry. You can put up a chain link fence around a property you own, and keep others off (as long as you comply with local zoning rules, of course).

Property ownership also means that the public can't "take" someone's private property without paying "just compensation." However, the public can regulate private property extensively, and the public does have the "right" to buy private property, over the property owner's objection, just so long as the public pays a fair price, and thus complies with the "just compensation" provisions of the Fifth Amendment.

Popular conceptions about what "private property" really means, and about what "property rights" really mean, tend to overstate the "rights" that are thought to go along with "ownership."

On Thursday, July 12th, the editorial columns of The Wall Street Journal inveighed against a proposal that local or state governments use their eminent domain powers to buy out mortgages on properties that are vacant, unused, and "underwater," meaning properties where the value of the property is less than the amount of money that is supposedly secured by the property. If the federal, local, or state government actually did that, the governmental agencies making these eminent domain purchases would absolutely be respecting "private property rights," as long as they paid the current fair value, or "just compensation" for the property. IF a government did that, it could then resell the property to real people who would use it, perhaps with a governmental loan guarantee, thus ending the massive blight and economic asphyxiation that is so evident around the country, and that is arguably a main cause of our continuing economic stagnation.

To go even beyond what is actually being proposed (and to add an element that The Wall Street Journal would undoubtedly hate even more than the current proposal), the government could impose a condition, when the government sold the property that they had acquired through eminent domain, that the future "resale" of the property would always be at a price that could be afforded by a family with an average or below average income. This would remove a portion of the housing market from the kind of speculation that led us into our current economic collapse, and would provide long term affordable housing opportunities.

What does the Journal say to an idea that would have our governmental agencies start working for the interests of ordinary people, instead of the interests of the financial elites that form the 1%? What does the Journal say to a proposal that would focus on the public interest, not private interests, and that would abandon the unspoken rule that governmental policy will always ensure that "no banker is left behind?"

As you might imagine, The Wall Street Journal says that this plan would ignore "property rights."

I'm with Blackstone. I don't think so!


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