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February 4, 2007
Federal Reserve Finding: Eminent Domain for Private Development May Do More Harm Than Good
Institute for Justice
When the government uses eminent domain to take private property for private development projects, it “usually results in zero-sum gain and may actually hinder the area’s development.” That is the finding of an important new report released this month by the Federal Reserve Bank of St. Louis.In “The Taking of Prosperity,” authors Thomas Garrett and Paul Rothstein write, “[T]he taking of private property from one person and giving it to another for economic development . . . is unlikely to create a net benefit to society. It is more likely to create economic inefficiencies and to reduce economic growth.”
Demonstrating an understanding of markets that seems well beyond that of local government officials who abuse eminent domain for private gain, the report states, “When governments interfere in the private market, whether it be a market for apples, cars or property, the likely result is greater economic inefficiency and less economic growth. The reason is that even the most well-intentioned policymaker cannot comprehend or replicate the complex interactions of buyers and sellers that occur in free markets.”
Posted by amy at February 4, 2007 12:23 PM