Monday, August 08, 2005

Kelo's Implications Are Horrendous

Interesting commentary from Paul Craig Roberts on further potential dangers of the Kelo decision. Cross posted at the Liberty Zone.

Here's an exerpt:

In 1981, General Motors used eminent domain against the Detroit ethnic suburb of Poletown. To make space for a GM assembly plant, 1,400 homes, 140 businesses and several churches were destroyed. Today, the exemplar of this practice is Wal-Mart.

What if Poletown had been a Chrysler plant that GM wanted to eliminate as a competitor? Under the Kelo ruling, if GM could show that its cars are more successful and produce higher taxable profits than Chrysler's, and the eminent domain authority is not in Chrysler's pocket, GM could prevail.

Today, Toyota, for example, could seek to condemn Ford's River Rouge plant, which is known to be largely obsolete, in order to obtain the site for its own economic use. There appears to be nothing in Kelo to prevent this outcome.

Note some of the implications: According to economic theory, monopoly profits are higher than competitive profits. Kelo becomes a way to get around antitrust laws and increase concentration in the name of public benefit.

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