Yesterday, General Motors announced the planned closing of five plants in the US and Canada. One of the factories that will be shut down is in Hamtramck, Michigan. The plant was originally built as a result of the 1981 Poletown condemnations, in which the City of Detroit used eminent domain to forcibly displace some 4000 people:
Maybe the naysayers were right all along.
General Motors' decision to close its Hamtramck assembly plant recalls one of the most bitter development controversies in Michigan's history. Closing the plant will no doubt open old wounds — and raise anew questions of who benefits from such massive urban revitalization projects like the Hamtramck plant....
By the early 1980s, then-Mayor Coleman Young was seeking to create jobs for economically distressed Detroit. He agreed to support General Motors' plan to build its new assembly plant on the border of Detroit and Hamtramck.
But the more than 300-acre site was home to a Polish neighborhood known as Poletown. It featured about 4,000 residents, more than 1,000 houses, several Catholic churches and more than 100 businesses.
That neighborhood stood in the way of GM's plant. In a bold and hotly contested move, officials used government's eminent domain powers to seize and raze those properties on GM's behalf.
It made national news, got people like consumer advocate Ralph Nader involved, and the many protests included a nearly monthlong sit-in at the neighborhood's Immaculate Conception Church that police eventually broke up with arrests.
The opponents took their case to the Michigan Supreme Court, which, in 1981, decided to back the GM project. The court said that taking property from one private owner to give to another private owner in the name of economic development was an acceptable use of eminent domain.
The closure of the plant some 37 years after the Poletown condemnations were upheld in court doesn't by itself prove that the takings were unjustified. We cannot expect any factory to remain open forever - and indeed keeping unprofitable facilities open actually damages the economy in the long run. What does undermine the "economic development" rationale for the Poletown condemnations is that the use of eminent domain destroyed far more value than it created. As I described in a 2004 article about the Poletown case and its aftermath, the new factory never created anything close to the 6000 jobs promised by GM and city officials. On the other hand, an enormous amount of harm was caused by the displacement of 4000 people, and the destruction of numerous homes, businesses, churches, and schools. In addition, local, state, and federal governments spent some $250 million in public funds on the project (GM paid only $8 million to acquire the land). That money could have been better spent elsewhere. Poletown and other similar cases demonstrate that the use of eminent domain to forcibly displace people for private development projects is both unjust and likely to harm local economies more than it benefits them.
The Poletown takings attracted widespread opposition on both left and right. Conservatives and libertarians denounced the violation of private property rights. Left-wing critics attacked the seizure of property belonging (mostly) to working and lower-middle class people for the benefit of a powerful corporation. A small but gradually growing group of lawyers and legal scholars began to rethink the then-dominant view that almost any supposed public benefit qualifies as a "public use" sufficient to authorize the use of eminent domain under state and federal constitutions.
Protests against the Poletown takings failed to prevent authorities from going forward with the condemnations, or persuade the Michigan Supreme Court to strike them down. But the widespread opposition, combined with the poor results of the project, ultimately helped produce some beneficial change. In County of Wayne v. Hathcock (2004), the Michigan Supreme Court unanimously overruled Poletown and held that takings for private "economic development" violate the state constitution because they are not genuine "public uses." Several other state supreme courts have issued similar rulings since then.
In its controversial 2005 ruling in Kelo v. City of New London, the US Supreme Court upheld "economic development" takings under the Public Use Clause of the Fifth Amendment to the federal Constitution. But the ruling was a close 5-4 decision, and Justice Sandra Day O'Connor's much-quoted dissent drew extensively on the Michigan Supreme Court's reasoning in Hathcock.
The Kelo decision resulted in an even larger negative public reaction than Poletown. Some 45 states (including Michigan) adopted reform laws limiting the use of eminent domain, and several state courts rejected Kelo's interpretation of the federal constitution as a model for their application of their own state public use clauses. The widespread negative reaction featured the same sort of unusual cross-ideological coalitions first evident in the opposition to the Poletown takings. It was a rare situation where libertarians, the NAACP, Bill Clinton, Bernie Sanders and Rush Limbaugh were all on the same side.
There is a good chance that Kelo will ultimately be overruled, just like Poletown was. For reasons I explained in my book about Kelo and its aftermath, the ruling is badly flawed from the standpoint of both originalist and living constitution approaches to constitutional theory.
Much progress in curbing eminent domain abuse has been made since Poletown. But we still have a long way to go. Many state post-Kelo reform laws (though not those adopted in Michigan) actually impose few or no meaningful constraints on takings. And some jurisdictions continue to use eminent domain to seize property for dubious private development projects. The Foxconn case in Michigan's neighbor, Wisconsin, is a notable ongoing example. In addition, more needs to be done to constrain "blight" takings and pipeline condemnations. Still, I am guardedly optimistic that we can continue to gain ground on this issue.
The Poletown residents who bravely resisted the destruction of their neighbhorhood ultimately failed to save their homes. But they did help start a movement that has done much to prevent similar injustices elsewhere.
UPDATE: It is worth pointing out that the same federal government that helped pave the way for the Hamtranck factory by subsidizing the Poletown takings, also hastened its demise. President Trump's ill-advised steel tariffs greatly increased production costs at US auto factories, which in turn likely played a role in GM's decision to close down several US-based plants.
UPDATE #2: I should perhaps note that I wrote an amicus brief in County of Wayne v. Hathcock, on behalf of the Institute for Justice and the Mackinac Center for Public Policy.