by Alex Tabarrok
on November 13, 2009 at 10:46 am
in Economics, History, Law
Those who would sacrifice property rights to development end up with neither.
A good example of why local government is usually more corrupt and more inefficient than other levels of government. Developers are the source of local political contributions, and local government is not as well monitored as much or as well as other levels of government. That’s my opinion.
If you believe in markets, there are better uses for property where transactions should occur. There is an issue of hold up for the last parcel of property in which the last parcel holder extracts all the benefit of the project. It would probably be better for all concerned if the property holders all banded together and formed a cooperative to sell their collective rights and distribute the gain based upon appraisal and a bump based on the value of the transaction. But, just letting developers use the power of eminent domain is not fair and should be limited to China.
In my limited experience local government support for development is almost a religion among local politicians. At a meeting when I brought up that a project could be funded privately they looked at me like I was insane. They simply did not comprehend the concept.
I bet the hold up for the last parcel of property is mostly a myth. And even if not, there are ways around it that are so easy that I wonder if people prefer the myth to stay alive. I wonder more about the first parcels to sell.
Actually, the Rangers stadium is still there. (http://www.nytimes.com/2002/07/16/opinion/bush-and-the-texas-land-grab.html)
Keep your eye on the town of Dennis, Cape Cod where the town planner and Eco Dev Committee want to replace a cottage colony on Nantucket Sound with a high end resort for all the same tired reasons plus getting rid of the septic systems for one big sewer system. Envirofascism of a sort …
Those who maintain property rights and expect development also lose, if we’re to judge by the endless vacant malls throughout the USA.
It’s sort of shameless how Tabarrok is appealing to your confirmation bias with an anecdote.
There are good economic reasons why holdouts give sub-optimal results. Takings can be very economically useful. If this problem leads to private corruption of local government, then solve the problem in a way the eliminates the corruption, such as a law enabling private takings through a civil suit for the last 5% of holdouts.
Absolute property is an idiotic idea.
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