Some Straight Talk on Eminent Domain at Reason

At Reason, Nick Gillespie (“Donald Trump, Jeb Bush, Eminent Domain, and the Keystone XL Pipeline,” Feb. 7) offers a welcome bit of thoughtful discussion of the Keystone XL pipeline project insofar as it involves the issue of eminent domain. To be sure Reason has published a few pieces in recent years that mentioned both eminent domain and Keystone, and at least suggested that eminent domain might be a problematic aspect of the project. But by far the majority of their Keystone articles haven’t mentioned eminent domain, and vice versa. And their articles on Keystone that didn’t tie it to the question of eminent domain have been generally favorable to building the pipeline — particularly those by Ron Bailey, who has been a one-man cheerleading squad for Keystone and tar sands (and Peak Oil naysayer, despite the fact he hardly even understands what the theory is). At any rate, Gillespie’s is by far the most in-depth and serious look at Keystone’s dependence on eminent domain. His, I think, is the first to squarely face the floating, um, object in the punchbowl. “The Keystone XL pipeline isn’t getting built without yuge amounts of eminent domain.”

“The real question, and one that Trump raises, is whether using eminent domain to build a privately operated pipeline such as Keystone XL constitutes a legitimate use of the process or not…

“[I]f Jeb Bush and all the other pro-Keystone XL candidates onstage last night agree the pipeline should be built, then they’ve got a tough question to answer … Should all the people booing Trump last night be forcing their favored Republican to explain whether he thinks the project should only go forward without using eminent domain?”

Trump, an unqualifiedly enthusiastic supporter of eminent domain, put other Republican Keystone backers in an awkward position by insisting — in the face of Jeb Bush’s hemming and hawing that it was a legitimate “public use” — that “it’s a private job.” And he’s right. If Keystone is a “public use,” as Bush maintains, the very distinction between public and private has no meaning. It may very well be in the collective interests of capital — or at least large industry, nationwide wholesale and retail, and urban real estate — but the interests of business are not coextensive with those of the public.

Eminent domain is a clear example of the phenomenon James O’Connor described in The Fiscal Crisis of the State: the state socializing, at general taxpayer expense, the basic input costs of capital in order to keep it profitable when it otherwise would not be.

Keystone supporters who also (rightly) decry the Supreme Court’s Kelo decision are forced to do an intricate little dance, quibbling about “legitimate” use of eminent domain vs. “abuse.” And some writers at Reason do the same little dance themselves. See, condemning private property for the use of a single business, to grow the tax base, is “abuse.” It’s “crony capitalism.” But using eminent domain to create an entire subsidized infrastructure, on the state’s initiative, that will make some industries artificially competitive at the expense of the others, promote some business models at the expense of others, and create fundamental structural shifts in the economy — something that is corporatist at its core and always has been, going back to the Whig “internal improvements” and railroad land grants — well, that’s a “public use.”

But saying it don’t make it so. The state tipping the balance between alternative economic mega-structures is not “libertarian” in any way, shape or form. Some people, like industrial historian Alfred Chandler, have argued that state-created infrastructure results in “increased efficiency” by facilitating “economies of scale.” But “economies of scale” that are apparent only when part of the cost side of the ledger is shifted to third parties are false efficiencies. The costs are still there, and should be part of the total cost-benefit calculation of an activity, even if those engaged in the activity don’t pay them.

Years ago, Tibor Machan (“On Airports and Individual Rights,” The Freeman, Feb. 1999) wrote that “of course” eliminating eminent domain would “of course” make large airports and other big infrastructure projects impossible — but so what? It was entirely proper that “human aspirations” be “moderated” by the need to obtain others’ consent without forced “cooperation.”

The distinction between “legitimate” and “abusive,” and “private” and “public” use, is simply nonsense. All eminent domain is for private benefit. All of it socializes the costs of big business, and privatizes the profit. Assertions to the contrary depend on the unstated — and false — assumption that the interests of capital are the “national interest.”

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