Corruption

When Public Power Is Used for Private Gain

It's time for New York's highest court to say no to eminent domain abuse

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In December 2003, Bruce Ratner, a New York real estate tycoon and owner of the New Jersey Nets basketball team, announced his long-simmering plans to build a 22-acre "urban utopia" in central Brooklyn, featuring more than a dozen office and apartment towers rising as high as 60 stories, a 180-room hotel, and a fancy new basketball arena for Ratner's Nets to call home.

Dubbed the Atlantic Yards, this ambitious project faced several potentially ruinous obstacles. First, various private parties owned more than half of the 22-acre site, which meant time-consuming and possibly unsuccessful negotiations to acquire their land. Second, the size and scope of the project would violate numerous zoning restrictions on height, density, and use. And third, the powerful Metropolitan Transit Authority (MTA), which runs New York City's subways, buses, and commuter trains, controlled a crucial 8-acre rail yard at the center of the proposed footprint.

So Ratner did what most politically-connected elites do when they run into trouble: He turned to the government—including his old Columbia law school pal Gov. George Pataki—for a bailout. More specifically, Ratner partnered with the Empire State Development Corporation (ESDC), a controversial and embattled state agency with the power to bypass zoning laws and seize private property via eminent domain.

The result of that unholy union is Goldstein v. New York State Urban Development Corporation, which New York's Court of Appeals—the state's highest court—will hear next Wednesday in Albany. At issue is the ESDC's use of eminent domain to seize privately-owned homes and businesses on behalf of Bruce Ratner's Atlantic Yards.

It's a classic case of eminent domain abuse. Ratner isn't planning to build a bridge or a road or any other legitimate public project that might permit the forceful taking of private property. He wants to build a basketball arena, sell tickets to the games (not to mention sell broadcast rights, advertising space, concessions, and merchandise), and make a big fat profit. That's not public use, it's private gain.

Furthermore, state officials have gone out of their way to put those profits in Ratner's hands. Consider that when the project was officially announced in 2003 there was no mention of blight, which is the state of extreme disrepair frequently cited by the ESDC to trigger an eminent domain taking under state law. Two years later, however, Ratner and the ESDC started claiming that the neighborhood was "blighted." Yet by that point Ratner had already acquired many of the properties he wanted (thanks to eminent domain) and left them empty, thus creating much of the unsightly neglect he now cites in support of his project.

Moreover, the ESDC report counted minor things like "weeds," "graffiti," and "underutilization" as evidence of blight in the various holdout properties. Yet as the Institute for Justice argues in an excellent friend of the court brief it submitted, "A finding of blight premised on underutilization or the presence of weeds in a yard is not a finding of blight—that is, not a finding that property is causing harm to surrounding properties—it is simply a finding that the government does not like what a property owner is doing with a particular piece of property." If this "finding" is allowed to stand, few homes or businesses in New York would be safe from condemnation.

As for that 8-acre rail yard at the center of the proposed Atlantic Yards footprint, the MTA quietly struck a deal with Ratner as early as February 2005 without first opening the property up for competitive bidding. After a public outcry over this blatant act of favoritism, the MTA gave prospective developers a mere 42 days to submit their own "competitive" bids—another transparent attempt to privilege Ratner, whose plans had been in the works for years, over his competitors, who had to scramble to put something together.

Still, the real estate firm Extell submitted an attractive $150 million bid for the rail yard, a property which has been appraised at over $200 million. In response, Ratner bid just $50 million and won, with that figure later negotiated to a lump-sum payment of $100 million. This past June, the MTA decided to pour a little more sugar on the deal, allowing Ratner to pay a mere $20 million up front, with the remaining $80 million due over the next 22 years. Keep in mind that the allegedly cash-strapped MTA recently raised subway and bus fares and received a $2.3 billion bailout from the state.

So what should New York's highest court do about this corporate welfare boondoggle? Remember that New York is one of just seven states that has yet to pass any laws protecting property rights in the wake of the Supreme Court's notorious 2005 decision in Kelo v. City of New London, which allowed that municipality to seize private property on behalf of the Pfizer Corporation. As Robert McNamara, a staff attorney at the Institute for Justice, told me, "New York is one of the most egregious abusers of eminent domain in the country. With no meaningful change coming from the legislature, New Yorkers need the courts to start reining in these abuses. This case is a perfect place to start."

Damon W. Root is an associate editor at Reason magazine.

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90 responses to “When Public Power Is Used for Private Gain

  1. There is a mistaken concept that only government threatens rights and is an enemy to liberty. Well, private entities like Ratner is just a big of a treat to liberty as the government.

    1. But without the government, how would Ratner be able to steal the property from the other owners?

    2. What Jake said. Safeway, left to its own devices can’t take my property. It must use governemnt as the agent of taking. There is no violation without government. Just a rich guy, standing in front of my lawn wondering what could be.

  2. What Jake said.

  3. But won’t this have a negative impact on ACORN given that they hold title to land that will be used for this (ACORN as land speculator on the public dime. How cool is that?)?

    1. Racist!

  4. Snakes act like snakes. But the government allowing them too is the problem. Like Jake said.

  5. What all those people saying, “What Jake said” said.

  6. PS: what Jake said.

    Also, though, the government has a right to your property for the common good. Totally libertarian statement right there.

    1. Uh, no?

      “The government” does not have any “right” to anyone’s property “for the common good.” In fact, the Constitution expressly forbids the government from taking private property UNLESS it provides compensation to the property owners and the property will be put to “public use.” E.g., highways, bridges, etc. Not some connected fuck of a real estate speculator’s wet dream.

      What is libertarian about the notion of government taking private property “for the common good”?

      1. Okay I was going to go on, but it seems like your kind of pissed so I’ll just let you know that I was being completely sarcastic. I personally am one of the most libertarian people I know, with most of my philosophy being objectivism.

        1. Hence me posting as “John Galt”.

        2. Sorry – missed the [sarcasm] tag…

          We need winkies and smilies!

  7. What’s the “common good”? Who is the government to say it is “good” for the “common”?

  8. My guess is that Ratner is in tight with the New York media, for were he not, this would be on the front page every day. Nice article. This should get big play somewhere??!!

  9. Two questions:

    1: How do libertarians propose that 22-acre mega-projects get built in urban areas without eminant domain?

    2: Do you realize that eminant domain is not the same as eminant domain abuse?

    1. 1. They don’t get built, unless the developer can convince people to sell their property for that purpose. Very seldom do those mega projects ever deliver a public benefit. Instead they line the pockets of some fatcats who get the property for much lower than they’d have to pay if the market were the factor. It’s gotta be nice to be able to pay a grandma ten cents on the dollar from what you’d have to pay without the threat to just take it away and then turn around and make a gazillion dollars for yourself.

      2. We do, but Ratner’s bit is pretty clearly abuse and using the powers of the government to benefit himself without a clear public use. Actually, if you RTFA, you’d have noted this part:

      Ratner isn’t planning to build a bridge or a road or any other legitimate public project that might permit the forceful taking of private property.

      Which pretty much does recognize what you seem to think we don’t know. So until your reading skills improve to the point where you can read and comprehend basic statements, leave the questions to the adults.

    2. Then maybe you will care to explain how this case is a justifiable use of eminent domain powers?

  10. 1: How do libertarians propose that 22-acre mega-projects get built in urban areas without eminant domain?

    By buying the land needed for the development at market price. If the developer can’t afford to buy out all the land owners the project is unlikely to be a better usage of the land.

    1. You are failing to address the two massive market failures that would arise in this situation.

      1: The last few landowners would be monopolists, and seek monopoly rents.

      2: People are irrational….indeed, very irrational, when it comes to what they already own. Some people, out of a variety of emotions, would not sell at any reasonable price, let alone the “market” price.

      Please explain how you plan on addressing these market failures. The truth is, you have no plan, which is why these projects will not happen without eminant domain.

      1. Where did I say that I care one whit whether this project is public or private. I have no problem with eminant domain being used for private projects. I do have a problem with it being abused. They are not the same thing.

        1. Chav, you piece of fuck that your mother never bothered to clean off, if you are so worried about a monopoly in land ownership then why would you advocate government power to accelerate this process and on top of that allow these “monopolists” to pay less than market prices to acquire land?

        2. I suppose then that you wouldn’t care if somebody took your house for private gain.

      2. First, in general, your first post mis-characterizes the issues: you assume that a 22-acre mega-project is a “good thing” and that one would not be possible without eminent domain power in the government. Second, your second post implies that there is something wrong with a land owner who is one of the last to sell their land asking more than the first or prior sellers. Third, you further imply that a refusal to sell their property in this situation is wrong, being predicated upon irrationality and emotions; additionally, that those reasons for not selling are somehow illegitimate, compared with, oh, “the greatest good for the greatest number”; some other unspoken but presumably rational and unemotional motivation. Then you label your presupposed outcome – that the implicitly wonderful 22-acre mega-project wouldn’t be completed – as a market failure.

        In order. (1) Land ownership is, by definition, a monopoly as it relates to a specific parcel of land. As the number of hold-out owners decreases, the value of the land – to the project proposer! – increases. That fact is inherent in the “market” for these 22 acres, assuming that the project is of the “all or nothing” variety requiring all the parcels in the 22 acres. So the alleged “monopoly rent” is a function of the market for this piece of land and not a failure. If that assumption is incorrect, then the alleged “market failure” does not occur in any event.

        (2) That an owner or any owner of property may have a notion of valuation for his or her property which doesn’t match your view or mine or anyone else’s view of what the market price “ought” to be is irrelevant. It is their property and may not – from a libertarian viewpoint – be taken with or without compensation, in the absence of their freely given consent. A refusal to sell a piece of land under the hypothetical given does not amount to a “market failure”. If it were the only possible location for some defense facility which would be able to protect the entire city, county, state or nation – now, that would be a market failure as that term is defined in economics these days. That some event doesn’t meet your (or my or anyone else’s) subjective judgement of what should have occurred does not constitute a market failure. True, such an event is a different outcome than you would want to happen and you’re entitled to your opinion.

        Government intervention to cure market failure is never a success because what actually occurs is that the owner’s subjective judgement, however “irrational”, is superceded by another person’s subjective judgement, by force and without consent. What changes is the outcome and who gets to decide. The landowner has the moral and legal right to decide; not someone else.

        The short answer is that a failure of free market events to conform to an observer’s notions of what “ought” to happen or of what constitutes the “best and highest use” of some property is not a market failure. It is a result which should occur in a free nation with a free market, namely the protection by law of the rights of an individual against the preferences of others. Free enterprise is whatever happens when we are free to act with what is rightly ours without being compelled to act as others would have us act. This basic definition of freedom isn’t altered by anyone’s notions of what “ought” to be or “should” be. Not your notions, not my notions, not the notions of all the other inhabitants of whatever polity the owner inhabits.

        And, by the by, there is no significant difference between eminent domain and eminent domain abuse. By libertarian definition, they are identical as they are other people forcing someone to do what the others want the one to do with what is rightly the property of the one. Hope that is sufficient answer for you.

  11. The Michigan Supreme Court reversed itself on allowing ED for ecomnomic development. IJ article here.

    Here’s hoping NY justices follow suit.
    ________________________________________
    You used to be able to test your links in preview before posting. If you try that now, your yet to be posted comment goes away when you return from the test. If the wise and benevolent Squirrel (prasie be his name) could fix that, I’d appreciate it.

  12. 1: How do libertarians propose that 22-acre mega-projects get built in urban areas without eminant domain?
    In New Yorks case (and probably all others) they could sell swome public park. 22 acres = 2.6% of Central Park.

  13. When isn’t public power used for private gain? Isn’t that the whole point of running for office? Isn’t that the whole idea of campaign contributions? At every level of government, the exact same scenario plays out, day after day, month after month, year after year; exactly as you’ve described it. Only the names are changed to protect the guilty. And this isn’t some new 21st Century perversion of government; this is as old as government. How did we get the Cayuga Tribe of the Longhouse People League out of that valuable land in western NY state? Even though they were our allies in the Revolutionary War? Why, send in General Sullivan and burn ’em out! How do we get something resembling legal title to all that nice land? Get the NY legislature to pass a law! Just one example, multiplied by the years and the states and the counties and the cities. Freedom for the rich and for the connected; de facto slavery for those without the money or the connections.

  14. They don’t get built

    NYC needs another shitty “mega-project” like it needs a hole in the head. If poor Ratner can’t fork over enough money to assemble the plots to make up his little cash machine on his own, tough tittie.

  15. Concerning what happens if you require people who want to build “mega-projects” to buy the land they need, Chad said:

    1: The last few landowners would be monopolists, and seek monopoly rents.

    Three points:

    * You presume that “mega projects” are good. I don’t.

    * Options to buy can be very inexpensive. And if the developer can walk away from one block with only a few million lost in options, the “monopoly” landowners (not withstanding that ownership is a monopoly by definition) have less leverage.

    * Finally, with a little architectural inventiveness, the developer might find a way to make do with a slightly smaller, or oddly shaped parcel.

  16. : How do libertarians propose that 22-acre mega-projects get built in urban areas without eminant domain?

    You mean like DisneyLand in California?

    1. You may want to read up on the history of Disneyland. It was built well outside the city (at least what the city was at the time).

      http://www.justdisney.com/disneyland/history.html

  17. Ratner monopolies are superior to any small obstructive one. You suppose that if online, all of us Reason bloggers pooled our wealth to start a project that would involve eminent domain, that we’d be given the time of day? You are retarded.

    So go on with your talk of monopolies, dipshit.

  18. You may want to read up on the history of Disneyland. It was built well outside the city (at least what the city was at the time).

    Which changes the point how?

    When faced with having to buy land Disney decided that orange groves were cheaper than city center lots and he didn’t have to be downtown. What followed were a set of voluntary transaction between willing participants. This is good.

    A bunch of armed thug showing up to throw people out of the homes because some fat cat is tight with the city council is bad, Chad. Every time.

  19. I have no problem with eminant domain being used for private projects. I do have a problem with it being abused. They are not the same thing.

    No Chad. They are the same thing.

    To be clear: it is never, under any circumstances, acceptable for the government to take private property at gun point and give it to another private entity. There are no exceptions and no excuses.

    The Supreme Court’s nitwittery on the matter not withstanding.

    Any other position encourages corruption. In this case, Ratner has found it cheaper to buy the favor of the City of New York than to buy the property he wants. And who stands to gain, why Ratner and the rats who run the city government, of course.

  20. Chad you are wrong good sir, they are the same thing. Abuse is just plural amounts of eminent domain. So really the city gov could, by what you said, use e-dom every now and then for “private projects”. It would then be abuse, but really it’s a collection of individual e-doms that “aren’t that bad”.

  21. “I swear by my life, and my love of it, that I will never live for the sake of another man, nor ask another to live for mine.”

    Just out of curiosity, do any of you think that objectivism is not the best philosophy? And why?

  22. Still waiting for anyone to address the market failures. Quit preaching your religion and come up with a plan.

  23. Still waiting for anyone to address the market failures.

    Been address repeatedly. These things that you are claiming as market failures, aren’t.

    And I pointed you at the work arounds available to the prospective developer.

    Your bug report is closed and marked “by design”.

    Quit preaching your religion and come up with a plan.

    Our plan is for the project not to happen unless Ratner can arrange it without pointing guns at people.

    He can’t now, because people will block him out of spite, but all that proves is that he should have opened the bidding with money not threats.

  24. 1: How do libertarians propose that 22-acre mega-projects get built in urban areas without eminant domain?

    On their economic merits.

    Good luck.

  25. chad : ” Still waiting for anyone to address the market failures.”

    A little guy resisting the arrogant self-serving confiscation of property by a ultra-rich fat cat is market failure?

    Wow, who knew?

    If I call myself a developer , will you sell me your property at my price?

  26. Am I the only one who thinks the government has no right to take land for any use? Like bridges and parks and all that shit. I guess I’m just an anarchist now…

  27. Tostitos: Am I the only one who thinks the government has no right to take land for any use?

    No, you’re not alone in that. Building a bridge that is (supposedly) “for the public good” is not a legitimate nor moral reason for seizing someone’s private property against their will; whether or not they are compensated.

    As for the poster named “Chad” – In what universe is it a “market failure” when one party refuses to sell its privately owned land to someone else?

    If your neighbor offers to buy your property for the purposes of expanding his or her back yard, is it a failure of the market if you refuse to accept their offered price? I realize that most people today don’t have any real concept of what “free market” actually means, but…wow.

  28. “”nor shall private property be taken for public use, without just compensation.”””

    The Constitution doesn’t say they can’t take private property. It says that when it happens, you must be justly compensated. Whatever just means.

    I have no doubt that the definition of just will be define with equal clarity as the word infringed in the 2nd amendment.

  29. EscapedWestOfTheBigMuddy|10.9.09 @ 7:46AM|#

    Been address repeatedly. These things that you are claiming as market failures, aren’t.

    Not one of you has even attempted to make an argument as to how holdouts are not monopolists, nor how to resolve the situation without scrapping the project entirely. Or are you contending that monopolies are not market failures?

    I am sorry, but it is blinding obvious that markets do not work in these cases. Anyone could be a holdout and seek monopoly rents, any competitor could buy one square inch of critical land and put the project on hold, and any irrational idiot with a grudge could hold out indefinitely.

    You offer no solutions to this. NONE. You have’t even tried. Your “solution” is simply to let the project fail, regardless of its economic value.

    1. 1) It was pointed out several times that holdouts (as well as any property owner) are monopolists, by definition.

      2) Several workarounds were posed by EscapedWestOfTheBigMuddy at 9:27PM.

      3)Using the power of the government to force the project would be supremely unjust. Would you be willing to give up your home under these circumstances?

  30. P Brooks|10.9.09 @ 10:00AM|#
    1: How do libertarians propose that 22-acre mega-projects get built in urban areas without eminant domain?

    On their economic merits.

    What do “economic merits” have to do with holdouts? Out of greed or spite, these people seek monopoly rents and/or complete failure of the project through a form of mutally-assured destruction.

  31. Chad, you’ve neglected to answer my earlier question: How is it a “market failure” when a person has no interest in selling their privately owned property?

    You’re apparently assuming that any person who refuses to sell is either greedy or spiteful – but what if neither is the case? What if they simply do not wish to sell what they own at the price being offered? Even if some person was both greedy and spiteful, it is their right to refuse to sell their homes and businesses.

    Quote: Or are you contending that monopolies are not market failures?

    It’s a little off topic, but natural monopolies are not “market failures”. If you out-compete all your competitors, oh well – their loss. (If you feel inclined to make the “predatory pricing” argument, please include some documented historical instances)

    I’ll reiterate: Retaining ownership of one’s own private property is not a market failure by any stretch of the imagination.

  32. I’m puzzled by the notion that holding out for more money is somehow “bad”. Also, if you’re concerned about the land lying around unused all this time, let’s not forget who started all this.

  33. Me: Been address repeatedly. These things that you are claiming as market failures, aren’t.

    Chad: Not one of you has even attempted to make an argument as to how holdouts are not monopolists, nor how to resolve the situation without scrapping the project entirely. Or are you contending that monopolies are not market failures?

    Chad, holdouts are only a problem if you assume a priori that “mega-projects” are a good thing and have some pre-existing right to come to completion. In fact, they may or may not be a good thing, but certainly do not have a right to come to completion at all, much less on a plot that I own.

    There is no market failure there. There isn’t even the hint of a market failure.

    It is not a problem that the holdout stands to make more than people who sold early. Especially as he stands to make nothing if the whole thing falls through.

    Nor is it a problem that the holdouts’ extra profits are coming out of the developers pockets: that is what bargaining is about.

    Of course owners have a monopoly position on the disposal of their land: that is what ownership means. If you’re using a differnent definition you should say so up front.

    As to how to make a big project happen in a free market:

    The developer should either offer enough to get the land, or figure out how to do without it. And since certain core lots may be hard to work around, the developer should have thoughtfully secured options on those properties early in the process (so that they can pull out with fairly little loss). Their failure to do that is not the holdouts’ fault.

    By I already told you that.

    Important adage: Proper, prior planning prevents pisspoor performance.

  34. Escaped, your entire argument is essentially that monopolies are not a problem.

    If THAT is your logic, we have little to discuss. In your absurd defense of extreme libertarianism, you would allow vastly sub-optimal economic situations to arise.

    One monopolist holdout with a grudge could scuttle any project, regardless of its economic value. Therein lies the problem. As long as the monopolies exist, the “market” cannot set prices correctly. Yet you would still try to use it because of your absolute unwillingness to use any other form of measure.

    I don’t assume that these projects are good. They may or may not be. But we can’t use the market to figure that out, because the market is broken in this case. You present no solution to the problem, but rather insist that we use a broken tool and thereby willfully get the wrong answer.

  35. Wheem|10.9.09 @ 6:26PM|#
    Chad, you’ve neglected to answer my earlier question: How is it a “market failure” when a person has no interest in selling their privately owned property?

    You’re apparently assuming that any person who refuses to sell is either greedy or spiteful – but what if neither is the case? What if they simply do not wish to sell what they own at the price being offered? Even if some person was both greedy and spiteful, it is their right to refuse to sell their homes and businesses.

    Your right to refuse to sell becomes a lot more constrained the moment you choose to become a monopolist. When it comes to owning land, you are a monopolist by default. I suggest you get over it. And in any case, I consider “ownership” of land to be a lot less sacrosanct than ownership most other things.

    And no, it might not be greed or spite. It might (and often is) simply irrationality. Numerous studies have shown how people irrationally become attached to whatever they chose….kinda like your dog who will growl like mad when you reach for his bone, only to completely forget about it five seconds later. But it’s MINE dammit!

    1. If someone cannot be secure in the ownership of his own land, how can he be secure in his ownership of anything else?

      1. You shouldn’t expect to be absolutely sure of your ownership of anything. However, when it comes to your lucky undies, you can be as close to “absolute” as possible. Your car, less so. “Your” land…much less so, but still reasonably so. I put “your” in quotes, because unlike just about anything you own, land is not a human creation. There are some serious distinctions between land ownership, which is a highly fictional, and, say, the ownership of a Twinkie.

        1. Why should ownership of land not be as close to “absolute” as ownership of my underwear? Oh right, nobody in their right mind would be interested in buying my shorts.

  36. Your right to refuse to sell becomes a lot more constrained the moment you choose to become a monopolist.

    By which you means “right after some connected developer decides he has a better use for your land”. Because that is what we’re talking about here.

    The holdout property owner didn’t “decide to become monopolist[s]”, Chad. They were minding their own business, living their lives when Ratner decided to buy a bunch of land near their property.

    That was Ratner’s choice, and must have seemed like a good idea at the time, but his failure to plan ahead is not my problem. Nor is it the problem or the fault of the holdouts. It is his own damn fault and only a problem for him and any investors he conned into joining the scheme.

    I repeat, the choice to put himself in this bind was Ratner’s and Ratner’s alone. He deserves less than zero sympathy. You may envision me pointing and laughing.

    I have told you twice what a prospective developer needs to do to control his losses and prevent himself from getting this far into a project only to be hung out to dry by a holdout, and you’ve ignored me because it doesn’t fit with your screwy narrative.

    Ratner ignored this good advice because he figured co-opting the New York Police Department as his private goon squad would be cheaper (and sadly he was probably right). Which makes him a slimy son-of-a-bitch, and you a chump for defending him.

  37. EscapedWestOfTheBigMuddy|10.9.09 @ 9:21PM|#

    The holdout property owner didn’t “decide to become monopolist[s]”, Chad. They were minding their own business, living their lives when Ratner decided to buy a bunch of land near their property.

    It doesn’t matter if the land owner thinks himself a monopolist or not. The fact is that he IS an monopolist.

    Your solutions don’t solve the problem. They only mitigate the risk.
    They may be sufficient for medium-scale projects in moderate-density areas, where you are only dealing with a modest number of landowners, and probably have a couple options of where to build. They would not work in a higher density setting, as the odds of holdouts increases rapidly with the number of people you have to deal with.

    I am not cheering for Ratner. There were clearly cases of abuse in this particular situation. Heads should be rolling. But that doesn’t mean the system isn’t often necessary in order to get these projects done.

    1. Thats just it, forcibly taking private property to “get a project done” is inherently abusive.

  38. Me: The holdout property owner didn’t “decide to become monopolist[s]”, Chad. They were minding their own business, living their lives when Ratner decided to buy a bunch of land near their property.

    Chad: It doesn’t matter if the land owner thinks himself a monopolist or not. The fact is that he IS an monopolist.

    There is Chad’s position in black and white folks. You, yes you, can become an evil monopolist deserving of having your land stolen as a result of someone else’s decision.

    And, Chad, you are an immoral worm.

  39. It’s oh so terrible for an individual to be a “monopolist” owner of his home or private business, yet somehow less terrible for a fat cat like Ratner to be a monopolist over a much larger piece of land? Interesting…

    Chad: Escaped, your entire argument is essentially that monopolies are not a problem.

    While I’m not the poster you were responding to, I’ve already mentioned that natural monopolies are not a problem. If some business out-competes everyone else, it can develop such a monopoly – this is not a bad thing (unless of course you think everyone they do business with should accept either higher prices, lower quality, or both). The only way to keep such a monopoly, is to continue doing well; if you slack off in pricing or quality, new competitors will arise. This is why the whole “predatory pricing” argument is fantasy – I’m not aware of a single historical example of it actually happening.

    That’s all a bit off topic; though your use of the word monopoly does not indicate anything bad in this case either. I’m a monopoly owner of my toothbrush – is this somehow not a good thing?

    Chad: As long as the monopolies exist, the “market” cannot set prices correctly.

    Refusal to sell does not mean that prices were set incorrectly. If the market price of widgets was $20, and you were refused after offering me that amount for mine, it would not indicate that market pricing failed. Just because something is priced at $X, it does not mean that you have a right to it at that price; it simply means that persons/business who are seeking to do business with others will be paying/receiving that much.

    Chad: You present no solution to the problem

    He presented a solution, just not one that you like. Ratner could either increase his offer, alter his project, build somewhere else, or cancel the whole thing. Instead, he’s relying on government muscle to forcibly solve his problems. Too bad the people having their land seized aren’t as well connected as he.

    Chad: Your right to refuse to sell becomes a lot more constrained the moment you choose to become a monopolist.

    So by your definition, the moment a person “chooses” to own anything?

    Chad: And in any case, I consider “ownership” of land to be a lot less sacrosanct than ownership most other things.

    So a person’s ownership of land and the buildings on it doesn’t mean too much, and the government should be allowed to seize it for another party’s private use; but by God don’t you dare touch that guy’s chair…which is inside the house?

    Chad: And no, it might not be greed or spite. It might (and often is) simply irrationality. Numerous studies have shown how people irrationally become attached to whatever they chose….kinda like your dog who will growl like mad when you reach for his bone, only to completely forget about it five seconds later. But it’s MINE dammit!

    Yes, how unbelievably irrational of a person to want to live in the home that their family has owned for generations. Maybe they like the location; proximity to work, school, family, etc…Maybe it’s the “dream home” that they scrimped and saved in order to purchase. Maybe the land houses their business rather than residence; is the stadium for a crappy basketball team more important than someone else’s business venture?

  40. Chad: Implicit in your comments is that your definition of “market failure” is any outcome in the market for any commodity or service of which you don’t approve. In the case before the New York court, what makes Ratner’s preferred outcome of being able to buy whatever land his project requires at whatever price he thinks is fair superior to the landowners’ preferred outcome of not having to sell their land if they don’t want to sell it? What makes Ratner getting what he wants the optimum outcome and the land owner getting what he wants a “market failure”? As near as I can infer from your comments, simply your subjective opinion that the creation “mega-project” is preferable to the owner retaining his land. You offer no argument to support this implicit contention, only call for us to defend the property owner from your accusation of “monopolist”, as if that label were self-defined and of such a horrible import that it need be justified. The market for that 22-acre parcel is such that the value of the remaining sub-parcels – to the buyer, not necessarily to the sellers – will increase as the number of remaining sub-parcels approches zero. Inescapable, other than via the method Ratner chose to obviate the market result, that of eminent domain by the state which then deeds the property over to him or his corporation.

    Incidentally, your remarks to the effect that as the utility of a possession increases – as it relates to people other than the present owner – the less protection ought to be provided to that owner’s rights to that property is utterly disingenuous and proves entirely too much. What arguments do you advance to prove that particularly pernicious bit of convenient sophistry? To assert that my ownership of property ought to be protected in inverse relationship to the value of my property to other people is laughable on its face, so I ask for your arguments to support it. The eternal excuse of the tyrant is that it’s better for everyone, not just the stingy, selfish, money-grubbing, immoral owner, that his property be seized and use “for the common good”. Your response, sir?

  41. Oh, at last I see the problem! Mis-communication. Here is a quote from Chad which, for me, illuminates the difficulty we’re having. He writes, in part:

    “I don’t assume that these projects are good. They may or may not be. But we can’t use the market to figure that out, because the market is broken in this case. You present no solution to the problem, but rather insist that we use a broken tool and thereby willfully get the wrong answer.”

    Your first sentence, Chad, reveals the problem on your side of the discussion: in fact, you are assuming that these projects are “good” by whatever criteria you may use. If you do not so believe, then why is it automatically a “failure” of the market when one or a relative few landowners block such a project by refusing to sell voluntarily, thereby requiring the government to enter the picture and correct the “market failure”? The clinching sentence begins with, “You present no solution to the problem …”; implying that there is only a problem if the result is sub-optimal from the buyer’s point of view, using the market and the law without resort to eminent domain. And the second part of that sentence reveals where we have been misunderstanding you: “…but rather insist that we use a broken tool and thereby willfully get the wrong answer.” The “broken tool” to which you refer is private property rights protected from eminent domain and the “wrong answer” can only be the failure to create the mega-project. This is the part I haven’t realized you were saying, until I read that post. The “tool” isn’t broken, Chad, because if the project is insufficiently important to convince all (in the instance we’re fussing about) of the property owners to sell to Ratner, then that is the solution and no problem exists, other than some of us don’t like the result or disagree with it. The tool includes the market, private property law, and the owners’ rights. You’re viewing the issues through the wrong end of the telescope as it were. What the outcome is, absent the state’s intervention and absent force or fraud, is “correct”. That’s how we can tell: correct processes produce correct results. It is irrelevant that some of the property owners did or may have refused to sell for reasons which an objective third person might consider – or even does consider – to be irrational. It is equally irrelevant that you or I or a few people or many people may believe that the outcome was somehow “wrong”. That is the entire point of having “rights” as contrasted with “privileges”; rights guarantee the correctness of the process.

    Rationality is not a basis upon which to over-rule a person’s rights, which is why your arguments prove too much. The general welfare of all people is best advanced by scrupulously protecting their individual rights, not by allowing exceptions by which politicians might do favors for their friends or business “buddies” or political supporters. That is the higher good to which we libertarians subscribe, based on a review of history, and that method is the sole one by which that higher good can – not will or must, only can – be attained. It is, if you will permit, a necessary condition but not a sufficient one for reaching the higher good of everyone. That, in a nutshell, is what the Founders realized back in the 18th Century and that view is fully supported by a reading of history. Any approaches which denigrate individual rights in favor of group rights has inevitably resulted in both a loss of individual rights and a worsening of the “general welfare”. Also see my reply to your post originally asking for an argument on your two points re: market failure.

  42. The general welfare of all people is best advanced by scrupulously protecting their individual rights, not by allowing exceptions by which politicians might do favors for their friends or business “buddies” or political supporters

    Wrong. It is easy to demonstrate. Let’s say the project is in an urban area, and will bring $1,000,000,000 in net profit. (Of course we can’t know this, but we don’t need to for a hypothetical). Let’s say the project cannot be relocated without a substantial loss in profit, because of its intimate relation to either geography, transporation systems, or other local business. Let’s say one jackhole in the central area of the project refuses to sell at any price, because he hates the people running the project. So one person’s irrational, childish hatred causes a loss in the hundreds of millions.

    Clearly, the “general welfare” is not being served by sacrificing enormous value for one person’s pettyness.

    So your theory has holes in it, and it will need to be revised. Are property rights good things? Most of the time, yes. All of the time, no. This is not hard for anyone on earth to understand but a libertarian. It is precisely your absolutism that condemns you to being politically powerless.

    1. Your response in insufficient. First: you assume without even an offer of proof let alone evidence that your hypothetical project will produce $1 billion of profit. And blithely cover your assumption with “Of course, we cannot know this, but we don’t need to for a hypothetical.” Which evades the central issue: there is, in fact, no way to determine a priori whether any given project will be more profitable or more beneficial to anyone. Given that core fact, your “hypothetical” fails to advance your argument. If it were possible to determine in advance which projects would produce profit or benefit, you would be correct, in that hypothetical. In fact, all that is available in advance of the events is subjective opinion.

      The reason for the refusal to sell is irrelevant to any question of whether the refusenik’s rights ought to be respected and enforced against any other party. By analogy, my right to free speech and my right to exercise it does not depend upon the calm, quiet and respectful manner in which I do so. The right is both extant and enforceable, despite the manner of its expression.

      I appreciate that you may be running short of arguments, but ad hominem attacks never win reasoned debate; they merely reveal the paucity of your logic. Does it never occur to you that being politically powerful is not the end-all and be-all of human life? Does it never occur to you that such power is not even in the top 25? Projection, sir, is not an argument either, particularly when you appear to be projecting an unhealthy degree of an urge to power over others.

  43. As near as I can infer from your comments, simply your subjective opinion that the creation “mega-project” is preferable to the owner retaining his land. You offer no argument to support this implicit contention, only call for us to defend the property owner from your accusation of “monopolist”, as if that label were self-defined and of such a horrible import that it need be justified. The market for that 22-acre parcel is such that the value of the remaining sub-parcels – to the buyer, not necessarily to the sellers – will increase as the number of remaining sub-parcels approches zero. Inescapable, other than via the method Ratner chose to obviate the market result, that of eminent domain by the state which then deeds the property over to him or his corporation.

    You are saying the market failure is “inescapable”…thanks for conceding my point.

    Again, I am not arguing that in this particular case, the project is a good thing or bad thing. I am arguing that the “market” cannot determine this because of hold-outs, and therefore we need to use another mechanism. Messy as it might be, that is politics.

    1. Your reading skills appear to require remedial instruction. The word, “Inescapable” as used in my comment refers back to the previous sentence wherein I point out that the market for the remaining sub-parcels of land will inevitably increase in price as the number remaining decreases. Hardly a radical notion, as it is merely an application of the ancient economic “law” of supply and demand. Given an inelastic demand and a fixed supply, as the units of supply decrease, the value to a buyer of the remaining units increases. Inescapably increases.

      You have omitted to respond to the part of my comment which counters your final assertion here, that being that since the worth – economic or otherwise – of any project cannot be predicted in advance not even to the extent of being able to say it is profitable or unprofitable let alone good or bad, the economic market is a part of that a priori decision-making social mechanism which provides a decision while avoiding the use of force to usurp one person’s rights to advance another person’s objectives. Your response, sir?

  44. “So one person’s irrational, childish hatred causes a loss in the hundreds of millions.”

    Monetary value is not the only thing that people may rationally value. Some people put a great value on being an asshole, and it is entirely within their right as long as they have not actually taken anything. Ratfucker is the one doing the taking.

    In this case, some dumb developer bets his whole potential profit on the rational decisions of others who should be under no moral obligation to comply, and it is not their fault if Mr. Ratfucker is unable to obtain his profit.

    You are even worse than I thought you were before. You really are a “land ownership is theft” socialist, you fucking scumbag.

  45. Chad sez: “You shouldn’t expect to be absolutely sure of your ownership of anything.”

    I think that is the position from which all his other nonsense flows. The root of all evil, so to speak. Your “ownership” of anything is merely temporary, ready to be taken by those wiser and stronger than you, rule of law be damned. Hold on to your stuff, boys and girls, because Chad is out to take it all from you.

  46. Rhywun says: “…Hold on to your stuff, boys and girls, because Chad is out to take it all from you.”

    I doubt it, Rhywun. He gives me the impression of being like most of the left and many of the right: he wants to have his muscle from the government to come and take our stuff away, at least whenever in his view our privilege of property ownership obstructs the march of progress. When are they going to come up with some new modern excuses for tyranny? This one was old when Cicero was consul and was no more true then than it is now. Doubt? Re-read the history of Cataline’s attempted coup d’etat. What does “general cancellation of debt” sound like to you? heh. Tired old arguments for tired old excuses for those who want to be Der Fuhrer but who lack the ruthlessness to seize power on their own. The height of their ambition is a GS-14 job in, maybe, the IRS Audit division, signing blistering letters to recalcitrant tax payers and seizure letters against the truly unregenerate. Pathetic.

    1. I have more respect for a common mugger on the street, than I do Chad.
      At least the mugger does his own dirty work. Chad would have the government do it for him.

  47. This is becoming waaaay too complicated, guys. I’ll put it simply, for Chad’s sake.

    My house is mine – bought and paid for with my very own blood, sweat and tears. If I love my house and don’t want to sell it, that’s my decision. The billions you may or may not make if you owned my property don’t mean shit too me. I have worked to pay for what is mine, therefore I have earned to right to do with it what I will.

    I may choose to sell it. I may not. I am responsible for making my dreams come true. I am not responsible for the dreams of others. No matter what anyone else thinks, I hold the deed. Period.

  48. Ike|10.10.09 @ 7:46PM|#
    Your reading skills appear to require remedial instruction. The word, “Inescapable” as used in my comment refers back to the previous sentence wherein I point out that the market for the remaining sub-parcels of land will inevitably increase in price as the number remaining decreases. Hardly a radical notion, as it is merely an application of the ancient economic “law” of supply and demand. Given an inelastic demand and a fixed supply, as the units of supply decrease, the value to a buyer of the remaining units increases. Inescapably increases.

    Well, then you are simply wrong, Ike. If you are talking about generic pieces of property, the land that Ratner is consuming is a trivial fraction of the total available in the broader area, and would have a neglible impact on price.

    Prices go up because people try to extract monopoly profits out of their specific pieces of land, which are not in competition with those just a few blocks up the road.

    You clearly understand the distinction, and it should be obvious that the magnitudes are vastly different.

    1. I begin to suspect you of deliberately misunderstanding my comments, Chad.

      One last time: the 22-acre parcel which Mr. Ratner wanted/wants to assemble via purchase includes more than one tract of land, which tracts of land are owned by other people. This is proven, beyond any doubt, by the fact – not opinion, fact – that Mr. Ratner secured from the state an act of eminent domain, taking from one or more property owners the tract or tracts of land which they were unwilling to sell to Mr. Ratner at a price he was willing to pay for those tracts. Thus, clearly, there was at least one property owner out of some number of property owners – exact numbers are unknown to me – who refused to sell at Mr. Ratner’s offered price. Facts established from the published news items about the case and facts inferred from those published facts. Doubt me? Observe that if there was only one parcel which made up the 22 acres Mr. Ratner required, there wouldn’t be any discussion going on about “hold-out owners who are claiming monopolist rentals”.

      From here, let us descend to a hypothetical: everything we have said as to the facts in the real case are in our hypothetical, except for: (1) the number of tracts – or “sub-parcels” – and (2) the number of owners who were unwilling to sell to Mr. Ratner at his price. Let us assume for my hypothetical that there were 10 sub-parcels and 10 total owners and one of them was unwilling to sell at Mr. Ratner’s offered price. Now observe with me the process, please.

      As each sub-parcel owner sells to Mr. Ratner, at Ratner’s offered price, the remaining parcels become more important than the preceeding ones to Mr. Ratner’s plan. Why is that? Because he has one, then two, then three, four, five and so on and only the final remaining unwilling seller. Nine sub-parcel owners sold at a price Mr. Ratners offers them. The tenth does not. As each owner sells, the number of sub-parcels which fulfill Mr. Ratner’s requirements for his project decreases by one. Mr. Ratner’s desire for the parcels does not diminish as he obtains each; if anything, one would expect his desire to increase as he approaches completion of this state of his proposed project. In economic terms, the demand for the remaining sub-parcels is either unchanged or mildly rising, while the supply of remaining sub-parcels is dropping in direct proportion to the number of owners who have already sold to Ratner. This is classic economics; not “progressive”, not “conservative”, but rather “descriptive” economics which tells us that if the supply of a desired object decreases and the demand for it remains constant the price does what? The price increases. This is known in descriptive economics as “the law of supply and demand”. It is known to apply to markets large and small; world-wide to neighborhood-wide, over durations ranging from minutes to decades or even perhaps centuries. Notice that no other fact, either real or hypothesized, is required in its application to our discussion, only that the supply of the desired thing is decreasing while demand stays the same as previously.

      While it is true that land generally is generic, it is not fungible; that is to say, unlike money where any $1 bill is interchangable entirely and completely with any other, one parcel of land is different from another. When we are speaking of a 22-acre parcel for a particular development in an urban center, then those owners of the sub-parcels are indeed owners of a near-unique item, but only from the perspective of Mr. Ratner, in his need for that particular 22-acre parcel of land for his project. Notice, please, that if the need is for “any 22-acre parcel” then eminent domain may not be used by Mr. Ratner. The authorities would simply tell him to find another land owner who will sell to him at his price. It is the nature of Mr. Ratner’s project which determines the necessity of that particular 22 acres.

      Your objection to my argument based on magnitude is inapplicable. Magnitude qua magnitude has no application and is without meaning in this context. The size of the individual sub-parcels is not important to our discussion.

  49. This is becoming waaaay too complicated, guys. I’ll put it simply, for Chad’s sake.

    My house is mine – bought and paid for with my very own blood, sweat and tears.

    But the person you bought from, or the person he bought it from, or the person he bought it from either just claimed it by fiat, or was granted it by the government for either free or a trivial price.

    1. Even if – “if” I say – there are only three prior owners in the chain of title, the source of title in the last known title-holder is irrelevant to present claims or titles of ownership. This basic property law principle is both universal, outside of nations which do not recognize private property rights, and necessary. If we are to indulge in such a reducio ad absurdem, all persons in the Western Hemisphere having any trace of European ancestry or African ancestry must necessarily abandon any and all claim to ownership of anything and forthwith decamp to Europe, there to pursue equally destructive litigation against present claimants to land titles there. In short: a preposterous assertion.

      And, in point of both law and fact, specious. When law and similar matters are honestly examined in detail and over just the relatively short period of time for which any intelligible records are available, one fact emerges: the ultimate court of appeals for many claims of ownership, sovereignty, right and all of that is the battlefield. The claims of prior landholders, no matter how meritorious or noble they may appear to us at this temporal remove, have been settled on the battlefield. The prior owners lost and those from whom we presently claim title won the war or wars. Their claims are therefor invalid; ours are instead sustained. Any other view or opinion is destructive of the fragile peace the world enjoys today, not to mention the similarly fragile peace individuals in every nation on earth enjoy. Imagine if every irredentist claim were deemed legitimate in a world where the last 7,000 years of human history is a history of invasion, conquest, dominion and submission, winners and losers in wars … utterly foolish.

      I begin to suspect that Chad is either without any knowledge of human history and the rational conduct of human life or is a troll for whatever reasons motivate such people.

  50. “either just claimed it by fiat, or was granted it by the government for either free or a trivial price.”

    This translates to “property is theft”. You’re a dick. Shut the fuck up.

  51. The problem is much worse than Eminent Domain.

    Security of the person, place,and thing requires recognition of those as private property, not public property for private gain. When Constitutional law is beset by assaults upon the essence of those terms and allowed to be controverted and converted, there exists no longer any right to private property in the form of security of the person, of the right to one’s own labor, or the right to acquire real or personal property that can be removed by seizure, assigned by third parties under the color of law, or destroyed because of the size and status of the predator.

    If the concept of private property dies, doesn’t the Constitution die along with it?

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  54. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…the Bible’s books were written by people with very different mindsets

  55. “The government” does not have any “right” to anyone’s property “for the common good.” In fact, the Constitution expressly forbids the government from taking private property UNLESS it provides compensation to the property owners and the property will be put to “public use.” E.g., highways, bridges, etc. Not some connected fuck of a real estate speculator’s wet dream.

    What is libertarian about the notion of government taking private property “for the common good”?

  56. Abuse of power is a prevalent problem all over the world. I just hope our leaders will humble themselves and realize that without the people, they wouldn’t be in position.

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