Friday, October 14, 2005

Stratford Says Yes to Eminent Domain for Economic Development

The Town Council in Stratford (Conn.?) defeated : a proposed ordinance to ban the use of eminent domain for economic development.
"Fearing it might stop development in Stratford, the Town Council said no to the eminent domain ordinance Tuesday.
The ordinance, which would have banned the town from condemning private property by eminent domain for economic development purposes, died in a 5-4 vote. Although it received five votes, it needed six for approval.

[ . . . . ]

Town Council Chairman Joe Crudo, R-at-Large, who cast the last no vote to defeat it, called the ordinance shortsighted.

It doesnt allow development for the benefit of all citizens, said Crudo, whose final vote killed the ordinance." [Deanna Holgerson, "Eminent domain ordinance fails," Stratford Star, October 13, 2005]
I'm at a loss to understand Chairman Crudo's assertion regarding "for the benefit of all citizens." The policy controversy involves taking private property from one person just to have the property owned privately by another person. Since the original owner did not agree to terms for such a property exchange, the implication is that at least the original property owner is not enjoying a benefit. Clearly not ALL BENEFIT when the power of eminent domain is used in such cases.

But, it is not even clear that most in the community will benefit. If economic development polices of local governments are to be expected to provide "benefits for all," or even benefits for most, then it should be the case that there is some source of market failure, or some economic reason to believe that market incentives do not adequately provide for private actions to voluntarily advance economic prosperity. The sorts of reasons typically given in support of local government policies in the name of economic development do frequently sound like the market failure of positive externality is present, but my conclusion has been that in general such assertions are incorrect.

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