Lies the government told you

by Andrew P. Napolitano

  Over time, courts have morphed the public use requirement into something much broader, called public benefit. In fact, the public use requirement has all but been obliterated. While it had previously meant that the use was “in common and not for a particular individual,” cases whittled the requirement down to basically whenever the court thought the public could benefit from the taking.

  The drafters’ intention has been almost completely abandoned. As I wrote about in the beginning of this chapter, most recently, the Supreme Court of the United States, in a 5 to 4 opinion in the case of Kelo v. New London (2005),10 took the limiting term “public use” and expanded it to permit the City of New London, Connecticut, to take over a nine-acre residential neighborhood and give it to a private developer.11 The City created the New London Development Corporation to buy the land and find a developer that would build an “urban village” to attract shoppers and tourists to the City.12 The City used this proposed plan along with financial incentives to entice Pfizer, a giant pharmaceutical company, to build a headquarters in New London.13

  The idea that a city government, or any government for that matter, can justify a taking of one’s private property to give to another private entity for the local government’s economic benefit is one that utterly obscures the distinction between takings for private and public use, and one that visits instability on all property owners and omnipotence on any government that has jurisdiction over the real estate. It also suggests that the government can take private property if it believes that the land can be put to better use. Justice O’Connor’s dissent in Kelo rightfully took a frightened tone toward that possibility. She wrote, “. . . [The Public Use Clause] has no realistic import. For who among us can say she already makes the most productive or attractive possible use of her property? The specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”14 If only the “highest and best use” of a particular property is honored, the Kelo Court essentially fostered a type of slavery where a landowner is forced to labor over property against his will.

  Justice Thomas also dissented in Kelo, pointing to both the short and long-term consequences of the Court’s ruling. He discussed the immediate loss that property owners feel when they are displaced from their homes and uprooted from their communities. Furthermore, he stated that this is not something for which the government can realistically provide compensation because a “subjective value” is involved. Thomas then articulated some of the daunting long-term consequences involved when the government allows takings for economic development. Harkening Jefferson, he noted, “Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities”15 (emphases added). Justice Thomas’s dissent touches upon one of the most sorrowful themes underlying the Kelo case: by choosing to hand the land over to the developer, the Court rejected the homeowners’ personal values in favor of the government’s economic value; the choice of personal values is protected by the Natural Law.

  The choice of personal values (a book or a TV, a car or a bicycle, early to bed or up all night) is absolutely immune from government interference unless the exercise of that choice substantially and unfairly interferes with another’s natural rights. The use to which one puts one’s real estate (cottage or mansion, grass or Astroturf, indoor or outdoor plumbing) is a personal value. Moreover, the traditional bundle of rights encompassing, and even defining personal ownership of real estate are the right to use, the right to alienate, and the right to exclude; the last of these encompassing even the right to exclude the government.

  In Kelo, Uncle Sam is saying that the government can take away your land, simply because it doesn’t value the way you use it. Kelo also gives the government an easy target, by allowing the government to infringe unduly upon the rights of poor people. Many of these people worked very hard to buy these homes, to achieve their own version of the American Dream. Who is the government to take it away?

  (We) Give, and (They) Take

  Although the Kelo case signaled the most drastic expansion of government power under the Takings Clause, the government had been testing the water for decades. In the 1954 U.S. Supreme Court case Berman v. Parker, the federal government razed a local store so that a private company could build a redevelopment project. In that case, the Court paid little attention to the “public use” requirement, and instead decided that the Washington, D.C., area where the store was located was blighted, even though the store itself was not blighted. Kelo took a further leap because there was no accusation that the Connecticut neighborhood was blighted; the city merely felt that government-approved developers could improve the area economically.

  In Poletown Neighborhood Council v. City of Detroit (1981), the Supreme Court of Michigan permitted the government of the City of Detroit to wipe out a community in order to let General Motors build an assembly plant. (Wow, the government helping out GM? Who would’ve thought!? But more on this later . . . ) As a result of this massive taking, 3,468 people were ousted from their homes. In that case, the Court justified the taking based on the number of jobs that would be created by the plant (6,000) and the assurances that it would be for “public use.”16 The City of New London did not even bother to make this type of assurance. It just asked the Court to take its word for it, and five justices listened.

  You Can’t Make This Stuff Up!

  On November 9, 2009, to add insult to injury, Pfizer announced that it would leave New London in 2011, moving most of its New London employees to nearby Groton, Connecticut.17 Pfizer’s exit proves that the New London City Council, shockingly, is not as intelligent as it originally thought. The “urban village” was never built, and the land that the City took remains barren.18 According to Scott G. Bullock, senior attorney at the Institute for Justice, the New London debacle “really shows the folly of these plans that use massive corporate welfare and abuse eminent domain for private development. They oftentimes fail to live up to expectations.”19 Tell me about it.

  Thankfully, the Kelo saga wasn’t a total loss. Legislators in forty-three states, in response to New London’s abuse of power, passed statutes prohibiting similar exercises of the eminent domain power.20 Regardless, governments should not have to pass laws requiring themselves to operate within the Fifth Amendment. Americans are under the impression that obeying the Constitution is part of the government’s job.

  A Man’s Word Is His Bond

  The freedom to contract is another right derived from Natural Law. One law review article noted:

  Freedom of contract, together with the right to own property, were core elements in the American vision of personal liberty . . . The American constitutional scheme places contract liberty well above common law status; it is a guaranteed personal right. Liberty of contract is recognized not as power delegated by the sovereign, but as power originating in and guaranteed to the people.21

  In other words, it is a natural right. You agree to pay me X dollars for this book, and I agree upon receipt of the X dollars to deliver you the book. The right to enter into that agreement is a natural right; the right to have that agreement enforced is one of the aspects of human freedom that governments exist in order to protect. At one time in our history, these rights—to enter into a binding contract and to use the government to enforce the contract—were guaranteed. Sadly, now that is no longer the case.

  In a way, people who enter into contracts with each other make law for themselves because the government is constitutionally restrained from interfering unless there is a breach of the contract or the essence of the contract is unlawful. Yet, like our right to private property, our natural right to contract, as well as the rights defined in the Contracts Clause of the Constitution (Article I, Section 10, Clause 1), have repeatedly been v
iolated by the government.

  One of the greatest cases of government assaults on the right to contract was in Home Building & Loan Association v. Blaisdell (1934), where the U.S. Supreme Court upheld as constitutional a Minnesota law prohibiting banks from foreclosing upon mortgages that were in default. John and Rosella Blaisdell had borrowed money from Home Building & Loan to buy a house. The agreement, which was freely made between the Blaisdells and the bank, specified that if the Blaisdells defaulted on the loan, the bank could foreclose on the house, sell it, pay itself back the unpaid loan, and then turn over any remaining amount, what lawyers and economists call equity, to the Blaisdells. But the “government-knows-best” attitude in the State of Minnesota would have none of this freedom. It chose the value of people living for free over the value of enforcing freely entered contracts. It imposed a moratorium on home foreclosures, and the Blaisdells, preferring to live for free, took advantage of that.

  Yet, the U.S. Supreme Court held that it was constitutional if Minnesota stopped the banks from foreclosing on mortgages when the borrower defaulted. So, what was the Court’s justification for this blatant disregard of both our natural rights and the Contracts Clause? Was there a justification? In Blaisdell, the Supreme Court tore the Constitution’s Contracts Clause to shreds by allowing state interference with private contracts (those as to which the government is not a contracting party) whenever state legislatures found a “valid police purpose”22 that interfered with the remedy (foreclosure), not the contract (the promise to repay a loan). So, in truth, the State can butt into our personal right to contract, whenever it feels like it,23 so long as it doesn’t blatantly outlaw contracts, just their remedies. The Blaisdells still owed the bank the money they borrowed; the bank just couldn’t get the money back until the State of Minnesota said it could.

  Justice Sutherland wrote in his dissent:

  [W]hether the legislation under review is wise or unwise is a matter with which we have nothing to do. Whether it is likely to work well or work ill presents a question entirely irrelevant to the issue. The only legitimate inquiry we can make is whether it is constitutional. If it is not, its virtues, if it has any, cannot save it; if it is, its faults cannot be invoked to accomplish its destruction. If the provisions of the Constitution be not upheld when they pinch as well as when they comfort, they may as well be abandoned.24 (emphases added)

  Obviously Justice Sutherland understood not only the nature of the Contracts Clause, but the natural right to contract and the spirit of the entire Constitution. The Constitution is the supreme law of the land. The oath to enforce and uphold it is taken by everyone in the government. They are charged with enforcing its terms—upholding the liberty it guarantees—whether that liberty pinches or comforts. The Blaisdell result is not the way the Framers intended the Constitution to be used.

  The buck did not stop at Blaisdell. Today, in the wake of the Chrysler bailout, we see the current establishment’s utter carelessness when it comes to the contract rights of Chrysler’s bondholders. The bondholders are secured creditors, which means by law they hold a higher ranking than shareholders or unsecured creditors in a reorganization or bankruptcy. Outrageously, though, the government— which has inserted itself into this private bankruptcy by virtue of its massive loans to Chrysler—is completely ignoring this rule and is instead awarding majority ownership to the United Auto Workers, and only a small part of ownership to bondholders.

  When the bondholders tried to get a larger stake in Chrysler, President Obama publicly referred to them as “vultures,” and they eventually backed down.25 Since when are you a “vulture” just because you ask that the contract you agreed to be enforced? And since when does the President interject himself into the fray when a lender wants a loan repaid? When contracts don’t mean what they say; that’s when.

  While it may be reasonable for the court to step in when a person was deceived or actually forced into a contract, it is quite another circumstance when the Court enters into a perfectly fair agreement between the parties. This often paternalistic nature of the Court does more than take away our personal liberties; it also destroys the value of the contract itself. If the Court can actually dismiss the terms of a contract, allowing a party to breach, what is the point of making an agreement in the first place? If the use of contracts is put into question, a cloak of doubt is cast on our whole way of doing business in America.

  Aren’t You Entitled to the Fruits of Your Labor?

  You would think that if you grew something in your own backyard, for your own personal use, the government would not meddle. Guess again! In 1940, the federal government fined Roscoe Filburn, an Ohio farmer, for producing an excess amount of wheat on his farm. The government’s act of limiting the amount of wheat Filburn grew and then actually punishing him for it, seems like a gross restriction on individual liberty in itself. But the situation gets downright ridiculous when you consider that Filburn was not selling this wheat, not bartering with it, not leaving the State with it; poor Filburn was just growing the wheat for himself and his family to use. Now imagine how outraged you would be if the government regulated the parsley you grew in your backyard garden, or the summer tomatoes you planted. You get the picture. This ruling is simply a violation of the natural right to the fruits of one’s lawful labors.

  The Supreme Court used and abused the power of the Commerce Clause against Filburn in this case. The Commerce Clause gives the federal government the right to regulate commerce with foreign nations, among the states, and with the Native American tribes. While the Court’s interpretation of “among the states” has varied over the years, one of the main reasons for the clause was to prevent excessive competition between the states. The original meaning of the word regulate was “to keep regular.” Its sole purpose was to prevent states from creating state tariffs to be used to the detriment of other states.

  So, basically, the Commerce Clause was intended to empower Congress to keep interstate commerce regular, that is, devoid of tariffs imposed on the movement of goods over interstate borders by the states. Such tariffs had severely hampered commerce under the Articles of Confederation and were a major impetus for drafting the U.S. Constitution. Some of the broader interpretations of the Clause have included intrastate commerce that could have an effect on interstate commerce. Yet, who would have guessed that the government could regulate something that goes from your backyard to your kitchen table and is never actually bought or sold or moved more than a few feet?

  The government’s argument was that through the cumulative effect of Filburn’s use of his own wheat, and others’ potentially similar use of theirs, there might or could be an effect on interstate commerce, and that these activities were therefore subject to federal regulation. This means that if lots of people started to overproduce wheat in their backyards and consume it, it could affect the amount of bread or cereal that is being bought (or not bought) in stores. But, that is a big if. Also, the act of growing crops to provide for your own family has been going on much longer than the government itself. This harebrained reasoning employed by the government and accepted by the Supreme Court, paired with the destruction of the personal property rights conferred through Natural Law, make Wickard v. Filburn one of the more truly absurd and highly dangerous federal power trips.

  Commerce Clause: No Rationality Required

  Not only has the government regulated the remedies for defaulting on loans, not only has it regulated the amount of wheat grown in our backyards, it has also regulated the number of hours per day bakers can spend turning that wheat into bread. An 1897 New York State law pertaining to this, stated: “No employee shall be required or permitted to work in a biscuit, cake, or bread bakery or confectionary establishment” for more than ten hours per day. New York tried to rationalize the law by stating that the measure was meant to protect the health, safety, welfare, or morality of bakers in New York.26 Huh? Since when can the government tell people that they cannot voluntarily work more than ten hour
s per day? And why would bakers need to be protected from these long hours; is it particularly dangerous work?

  When the Supreme Court heard this case, it looked at whether there was a legitimate need for the State of New York to regulate workers’ hours because of the nature of baking. The Court said that given the nature of certain types of work, like mining or working with coal, it may be appropriate for the state to regulate, yet there was no genuine health issue present in baking. Consequently, the Supreme Court decided in Lochner v. New York, that New York had no right to make such a law. The opinion states:

  It is a question of which of two powers or rights shall prevail—the power of the State to legislate or the right of the individual to liberty of person and freedom to contract . . . The act must have a more direct relation, as a means to an end, and the end itself must be appropriate and legitimate, before an act can be held to be valid which interferes with the general right of an individual to be free in his person and in his power to contract in relation to his own labor.