'Tis the Season

With stores beginning to decorate for Christmas, I have been reminded that the holiday season is just around the corner... Though most college students will not start their Christmas gift shopping for a while, a discussion of Christmas gift giving is actually relevant to what we are talking about in IPE.

When I was an intern at American Enterprise Institute, Kevin Hassett, an economist and current advisor for the Romney campaign, shared with us (the interns) an article that he had written about the economic conundrum of Christmas gift giving. The Christmas season is increasingly profitable for retailers as Christmas gifts are becoming more and more extravagent over the years. However, because shoppers usually do not know exactly what the recipient wants, an estimated dead-weight loss of $79 billion dollars plagues the collective group of gift-givers each holiday season. Money would be the most efficient gift to give because then the recipient could simply buy what he/she really desires, eliminating the dead-weight loss. So why does the economically-inefficient practice of Christmas gift-giving continue to be popular? (Or the practice of passing out Halloween candy for that matter...)

Hassett eventually concludes that although economists are sometimes baffled by this apparent inefficiency, the spirit of the season is more than enough of a reason to continue to give gifts. He admits that an individual may not realize what he/she truly would like because his/her experience is limited. Therefore, gift giving provides a way for people to share their own experiences with others (i.e. give someone something that he/she never would have thought about purchasing). Hassett further states, "I believe that the holiday spending binge reflects our attempt to provide each other with the benefits of our collective experience."

How is Hassett's argument relevant to IPE? Well, as we've addressed briefly in class, the IMF and World Bank often give "gifts" of aid to countries that are struggling to stay afloat. However, many times the aid has statements of conditionality attached to it. This is the IMF's way of trying to reform the country's government or economy in hopes that a future economic crisis might be avoided. Nevertheless, though the IMF has threatened to reduce aid if the statements of conditionality are not met, often the aid is not decreased. (In some cases, it has actually increased over the years, despite non-compliance.) Sometimes the government is so corrupt that the aid eventually ends up in the dictator's personal bank account, though the IMF has taken steps to avoid this in recent years. Though the governments that are receiving aid must promise to try to fulfill the statements of conditionality, often these promises are not kept, and the same statements of conditionality are attached to the aid again the next year. Some regimes do work toward implementing reform, though even benevolent regimes only focus on the measures that don't threaten to weaken their power.  In some cases, partial reform has been estimated to cause even more problems than no reform at all. Also if the IMF has incomplete information about the politics and regime of the country, (as we talked about on Thursday), then maybe a country is better off not even trying to implement its generic measures.

So during this holiday season, while shoppers are completely justified in giving whatever gifts they choose to give, the IMF, World Bank, and aid-giving countries should consider the "gifts" they are giving. While I don't think that blindly throwing aid at a country with a struggling economy is prudent (especially if the regime in power is corrupt), I do think that statements of conditionality should be reconsidered on a country-by-country basis. Furthermore, these statements should definitely not be toothless; aid should be decreased if a country fails to implement the recommended economic policies.

Tightening Fiscal Policy in Sub-Saharan Africa: Prudent or Detrimental?

A recent article in The Star (Nairobi) entitled "Kenya: IMF Raises Concern Over High Public Debt" explains that the IMF believes that high public debt will lead to a decrease in short-term economic growth. While the IMF believes the interest rates are at a managable level right now, it worries about the current account deficit and the high public debt. However, the Central Bank of Kenya is not worried. The Kenyan economy has performed relatively well during the global economic crisis, and the economy is predicted to continue to grow by 5% per year, though the Eurozone crisis could decrease the rate of growth by 1% per year. The Central Bank believes that Kenyan institutions will continue to reform and remain competitive in the global economy in order to combat the potentially detrimental effect of the Eurozone crisis. Because the price of commodities has been declining, Kenya's export growth has taken place in the service sector, rather than in the agricultural or manufacturing sector.

Is the Fund meddling where it shouldn't be? Is its usual manatra of fiscal austerity detrimental to long-term growth? Is the Fund missing losing sight of the big picture and simply focusing on short-term goals? After all, as the article says, much of the "borrowed capital goes into large infrastructure projects, most of which require imported machinery and material," which affects the current account negatively. But should a developing country really refrain from investing in infrastructure in order to maintain a positive current account balance?

This IMF report talks about the complex relationship between fiscal policy and short- and long-term economic growth. Ultimately, it recommends that high public debt be lowered through a tightening of fiscal policy over a substantial period of time. It warns that other policies (monetary, financial, and structural) may need to be changed to support economic growth when fiscal policy is tightened so that the overall economy does not tank.

The Rise of Sub-Saharan Africa and the Downfall of South Africa

Today an article from the Economist addressed the fact that capital and labor has begun to steadily flow into Sub-Saharan Africa because economic stability, and therefore, investor comfidence in the area has increased. Multinational corporations are specifically targeting this region because it "desperately needs two things: more capital and skilled workers," which are exactly the two things that are abundant in the West. Furthermore, in terms of labor, Africa provides younger business people the opportunity to "work at a senior level with relatively little experience." The article cites four reasons that the Sub-Saharan Africa economy is gaining strength:

1. Healthy population growth--longer life expentancies and fewer children per family.
2. Urbanization--major cities are luring investors. I believe the growth of African cities has greatly contributed to economic development; the book I am reading for the precis, African Economies and the Politics of Permanent Crisis, states that "the growth of cities has been critically important to the historical development of both capitalism and the modern states." The book further claims that Africa now boasts some of the world's largest cities.
3. Technology--When I was in Ghana this summer, I was surprised by the prevalence of cell phones. Though they were far from a smart phone, they definitely did the job of connecting people over great distances. In fact, yesterday I listened to Lois Quam, the Executive Director of the Global Health Initiative, speak. She said that a surprisingly large number (I believe she said around half) of business transactions in Africa are done via texting.
4. Better/Less Corrupt Governance--Again, the book I am reading for class definitely addresses this point. In fact, one of the author's central arguments concerns the substantial affect that the ideologies and practices of political leaders/regimes have on the economy both in the short- and long-term.

All of these factors combine to make Sub-Saharan Africa a more viable place for capital and labor flow. If these economies continue to have stable growth, it is a great opportunity for investors because the continent as a whole is extremely large with relatively "non-existant infrastructure." See the Economist's map below to see just how large the African continent is relative to other countries.

 

Due to the investor confidence generated by the four factors I have already mentioned, foreign direct investment in the area has increased by 50% since 2005. Many analysts are optimistic about the continent as a whole; a World Bank economist remarked, "If current trends continue, most of Africa will be middle-income by 2025." Similarily, the IMF says the "continent's GDP will grow by 5% this year." However, it is important to note that the IMF and World Bank are far from skeptics or pessimists when it comes to Africa. In fact, according to my reading in African Economies... it appears that institutions such as the World Bank and IMF tend to be overly optimistic about African development in order to avoid criticism that the aid (much of it attached to toothless statements of conditionality concerning economic and political reform) that they have pushed into the continent over the past 5 decades (since African independence) has failed to spur the right kind of change and economic growth.

 

Furthermore, it is important that we not simply generalize about the entire African continent when there are clearly some outliers from the portrait of economic growth that was painted above. For instance, the Economist published another article recently about the downfall of South Africa. Though South Africa still has the most developed and largest economy of all the countries in Africa, it is quickly fading, and Nigeria is rapidly emerging. This is largely due to South Africa's horrible educational system; high unemployment related to a lack necessary job skills, which causes many job openings to remain unfilled; and corrupt governance.

 

South Africa's issues are directly addressed in yet another Economist article. South African politics needs to undergo significant change in the near future. The African National Congress--the legendary party of Nelson Mandella--was at one time a populist party committed to racial equality and anti-apartheid measures. Though there has been much progress in the civil-rights sphere since black-majority rule began, the African National Congress is now forgetting that it is accountable to the people. The political elite are getting richer and richer off of corrupt rent-seeking practices, creating a great divide between the rich and poor. A governmental position is so clearly the cause for material gain that men physically fight (and die) in an attempt to gain a position. Yet a large majority of the people continue to support the ANC, most likely because of its reputation from its past accomplishments. The Democratic Alliance is the next strongest political party, but it only garnered 17% support in the last election. The people view this party largely as the "white" party, so they are hesitant to support it, in fear of a return to racial segregation.

 

I will write more later (especially in my precis) on the economic implications of political regimes. For now, we should keep our eyes on South Africa and the Sub-Saharan countries to see if the one falls while the other rises, as the Economist predicts.

The Next Bubble

As we now begin to analyze the factors that create country-wide and global recessions, I think it's important to consider not just the past, but also the present and future. In America, 2008 was the year that the infamous "housing bubble" burst, and lending institutions began to realize the steep consequences for lending money without due consideration of the assets/credibility of the borrower. Analysis of historical trends and bubbles in America and other countries sheds some light on the anatomy of an economic crisis, but in our analysis, we should not overlook the steps that we, as a nation and as a global actor, need to take to avoid a bubble in another industry.

Prof. Dickovick briefly mentioned that many economists believe that student loans may form the next bubble. An article on MSN Money explains that the average college graduate has over $23,000 in debt upon graduation, and 2 out of 3 college graduates are in debt. This is due to the fact that college professors' salaries are increasing along with increased non-teaching staff employment, causing tuition to rise eight percent per year! Is this sustainable? Or is the cost of tuition way too high? It's definitely a hot topic.

Kahn Academy offers an (arguably) college-caliber education for free online. Maybe Americans are simply more willing to pay substantial prices for face-to-face education. (Remember the discussion that we had about personal, face-to-face services being safe from globalization...) PayScale  ranked American universities by the ratio of cost of attendance to estimated average lifetime earnings. Not surprisingly, engineering, research, and ivy league institutions comprise the top spots, because cost of attendance is largely overshadowed by future earnings. (Luckily, W&L is 48th out of 805.) So some schools can justify a high cost of attendance, while others (i.e. Judson University, Seton Hill University) cannot. Most graduates from top-ranked universities (i.e. Harvey Mudd, Caltech) will be able to pay off their student loans, while some graduates from the lower-ranked universities may struggle to pay them off--leading to a bubble. Just as in the housing bubble crisis, not everyone will default on their loans. Some people will pay back their student loans. But will there be enough people who can't pay back their student loans to create a crisis?

The MSN Money article also talks about a potential for a bubble to arise in the gold market, U.S.
Treasury market, health care sector, real estate market, and athlete incomes. For instance, the real estate market is more heavily regulated now, with the implementation of the Dodd-Frank Reform Act. There is also a potential for higher interest rates. Unemployment is still high, which affects disposable income, and in turn directly effects the commercial real estate market. Similarly, the sports industry is greatly dependent on individuals having a sufficient amount of disposible income. Many athletes have signed multi-million dollar contracts for many years in the future, but athlete incomes could be considered greatly overvalued if people do not spend as much money on entertainment activities.

If we can recognize these tendencies early, hopefully we can take steps to avert a crisis. However, just as the MSN article points out, governmental attempts to avert a bubble in one industry may lead to a bubble in another.

Romney at VMI

Here's what Romney had to say about globalization/free trade during his speech at VMI today:


I will make further reforms to our foreign assistance to create incentives for good governance, free enterprise, and greater trade, in the Middle East and beyond. I will organize all assistance efforts in the greater Middle East under one official with responsibility and accountability to prioritize efforts and produce results. I will rally our friends and allies to match our generosity with theirs. And I will make it clear to the recipients of our aid that, in return for our material support, they must meet the responsibilities of every decent modern government—to respect the rights of all of their citizens, including women and minorities… to ensure space for civil society, a free media, political parties, and an independent judiciary… and to abide by their international commitments to protect our diplomats and our property.

I will champion free trade and restore it as a critical element of our strategy, both in the Middle East and across the world. The President has not signed one new free trade agreement in the past four years. (See below.)  I will reverse that failure. I will work with nations around the world that are committed to the principles of free enterprise, expanding existing relationships and establishing new ones...

There is a longing for American leadership in the Middle East—and it is not unique to that region. It is broadly felt by America’s friends and allies in other parts of the world as well— in Europe, where Putin’s Russia casts a long shadow over young democracies, and where our oldest allies have been told we are “pivoting” away from them … in Asia and across the Pacific, where China’s recent assertiveness is sending chills through the region … and here in our own hemisphere, where our neighbors in Latin America want to resist the failed ideology of Hugo Chavez and the Castro brothers and deepen ties with the United States on trade, energy, and security. But in all of these places, just as in the Middle East, the question is asked: “Where does America stand?”

I know many Americans are asking a different question: “Why us?” I know many Americans are asking whether our country today—with our ailing economy, and our massive debt, and after 11 years at war—is still capable of leading.

I believe that if America does not lead, others will—others who do not share our interests and our values—and the world will grow darker, for our friends and for us. America’s security and the cause of freedom cannot afford four more years like the last four years. I am running for President because I believe the leader of the free world has a duty, to our citizens, and to our friends everywhere, to use America’s great influence—wisely, with solemnity and without false pride, but also firmly and actively—to shape events in ways that secure our interests, further our values, prevent conflict, and make the world better—not perfect, but better.

Our friends and allies across the globe do not want less American leadership. They want more—more of our moral support, more of our security cooperation, more of our trade, and more of our assistance in building free societies and thriving economies. So many people across the world still look to America as the best hope of humankind. So many people still have faith in America. We must show them that we still have faith in ourselves—that we have the will and the wisdom to revive our stagnant economy, to roll back our unsustainable debt, to reform our government, to reverse the catastrophic cuts now threatening our national defense, to renew the sources of our great power, and to lead the course of human events.

Sir Winston Churchill once said of George Marshall: “He … always fought victoriously against defeatism, discouragement, and disillusion.” That is the role our friends want America to play again. And it is the role we must play.

The 21st century can and must be an American century. It began with terror, war, and economic calamity. It is our duty to steer it onto the path of freedom, peace, and prosperity.

The torch America carries is one of decency and hope. It is not America’s torch alone. But it is America’s duty – and honor – to hold it high enough that all the world can see its light.


I checked out the highlighted claim above because I thought that it seemed like an exaggeration/distortion of the facts. In fact, in 2011 Obama signed free trade agreements with South Korea, Panama, and Columbia.

Nevertheless, I support Romney's general stance that we should continue to increase free trade. I also agree that we should increase/improve American leadership in the world, so that we don't end up in another Great Depression.

Of course, the Obama "truth team" anticipated Gov. Romney's speech at VMI and came out with ads attacking Romney's foreign policy/interactions with foreign governments:

http://www.youtube.com/user/BarackObamadotcom?feature=watch Failing the Commander-in-Chief Test
http://www.youtube.com/user/BarackObamadotcom?feature=watch Policy

Globalization as Portrayed during Election Cycle

Though tonight's debate will be focused on domestic policy, I am hoping there will be some talk about job creation, which could lead to some remarks on globalization. I thought last weeks' class discussion about the similarities and differences in the candidate's ads (particularly dealing with China) was interesting, and I found some more Obama and Romney ads on the subject. Look at the dates--note that this attack has been coming from both sides for months (and even over a year) now!

Obama ads:

http://www.youtube.com/watch?NR=1&v=o0tZK_qHHCc&feature=endscreen, July 7, "The Problem"
http://www.youtube.com/watch?v=Ud3mMj0AZZk, July 17, singing "Firms"
http://www.youtube.com/watch?v=kweMVAHE6vA September 26, "To Us"
http://www.youtube.com/watch?v=kweMVAHE6vA, October 1, "Since When?"

 Romney ads:

http://www.youtube.com/watch?v=58pq658byzI&feature=relmfu, September 13, "Failing American Workers"
http://www.youtube.com/watch?v=v9Q4Wu9x1Uw&feature=relmfu, July, 2011!, "Take China to the Mat"

Pay special attention to this last Romney ad from over a year ago. This gives a coorporation's perspective on international intellectual property protection (or lack thereof).

Kelo v. City of New London

Though we mentioned Kelo v. City of New London in our last class discussion, I wanted to draw some more attention to this landmark Supreme Court Case. Knowing the current state of property rights in our own country is important to the discussion we will have in class on Thursday. As Wolf remarks, "We know there are some things states must do -- protect property rights. This is a 'must have' if there is to be a sophisticated market economy" (67). After studying the Kelo v. City of New London case in a Constitutional Law class last year, I would argue that the Supreme Court's ruling in this case severly dismantles the private property protection that the founders originally established in the Constitution. The following is a paper that I wrote for my Con Law class about this case.

The Destruction of Private Property Rights:

Public Use v. Public Purpose

 

The conflict between the private interest in protecting property rights and the public interest in the general welfare of society is not new or unique to America. In many societies, the interest in the general welfare is so compelling that it has encroached on property rights in the form of socialism or communism. However, because America’s founding fathers believed that private property rights were fundamental to a capitalistic society, they virulently defended them against anything—including personal liberty—that could impinge. The framers of the Constitution, many of whom were philosophically opposed to slavery because of their belief in personal liberty, did not prohibit the institution of slavery in the Constitution because they sought to protect the “property” of slaveholders.[1] The founder’s reverence for private property is communicated in the strict provisions of the Fifth Amendment, stipulating that “private property [shall not] be taken for public use, without just compensation.” By expanding the Fifth Amendment’s Takings Clause to constitutionally justify governmental taking of private property for a public purpose in Kelo v. City of New London, the Supreme Court ultimately eviscerates the public use requirement of the clause; because of its inherent breach of an explicit amendment to the Constitution, the Court should overturn its decision.

The case of Kelo v. City of New London arose when the city’s economic development plan called for the procuring of private land—including that of Susette Kelo and eight other petitioners—for use by new businesses that potentially would revitalize the economy. The catalyst to this development plan was the announcement by the pharmaceutical company Pfizer Inc. that it was planning to build a global research facility in the city. The city, looking to capitalize on economic growth, thought potential new businesses would benefit the public more than the private structures that currently occupied the land.

In upholding the legitimacy and constitutionality of the city’s taking of private property for the use of new businesses, the Court relied on the test of public purpose—that is, any governmental taking of private property has to be shown to serve a public purpose. Whereas the public use requirement of the Fifth Amendment strictly limits governmental takings of private property to situations in which the land will be used by the general public, the public purpose requirement is not so much of a limit; it is an unwarranted grant of power.[2] In his dissenting opinion, Justice Thomas wrote that because government eviscerated the public use requirement “citizens are safe from the government in their homes, [but] the homes themselves are not [safe]” (577).[3] Justice O’Connor elaborated on the consequences resulting from an increased governmental takings power in her concurrence: “Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded” (574). This danger caused Thomas to call for a limitation on governmental takings to property that “it actually uses or gives the public a legal right to use” (577). Under this strict standard of purely public usage, the government could not take land from Susette Kelo to give to private businesses, regardless of the potential for economic growth.

The belief that government should not take land from a private entity to give to another private entity originates in common law. Thomas’ dissent quotes Blackstone—one of the foremost experts on English common law—on the fundamental belief in the sanctity of private property. Because the law reflects this belief, it will not tolerate governmental usurpations, even if they are a means to the end of ensuring the general welfare of the community. Therefore, any governmental taking of property must imitate the typical private transaction in that government should only take land for its own use. The government is not a real estate broker—it is not justified in “taking property from A and giving it to B” (577). Hence, the framers of the Constitution instituted the public use requirement to prevent governmental takings contrary to the common law tradition.

While the majority contested that property can be taken for the general welfare of society, the wording of the Fifth Amendment suggests otherwise. As Thomas pointed out, “the Constitution’s text … suggests that the Takings Clause authorizes the taking of property only if the public has a right to employ it, not if the public realizes any conceivable benefit from the taking” (576). He claimed that while the framers used the phrase “general welfare” in other sections of the Constitution, they purposely limited governmental taking to property which will be directly used by the public.[4] If they wanted the eminent domain power to be greater, they would have employed wording that would have broadened the power.

The majority asserts that the Public Use Clause should not be interpreted so strictly; it should be construed as a loose requirement that the taken land will serve a public purpose. According to the majority, the “Court long ago rejected any literal requirement that condemned property be put into use for the general public” (572). This claim is a result of the Court’s reliance on precedent—Berman v. Parker and Hawaii Housing Authority v. Midkiff. While O’Connor argues that these cases were decided correctly, but do not apply to the current case, Thomas contends that these cases should be overturned because they contradict the Constitution. His contention is based on the belief that “Berman and Midkiff erred by equating the eminent domain power with the police power of States” (577). In other words, the Takings Clause, with its public use and just compensation requirements, should not be confused or combined with the state’s police power, which allows a state to take land without compensation if the land is harmful to the health, morals, safety, and general welfare of the community. Because he believed those cases were decided wrongly, he claimed that the current ruling should not be based on them even if their precedent did apply to this case; basing decisions on unconstitutional precedent is not a valid exercise of jurisprudence.[5] Two rulings contrary to the Constitution, even if in agreement with one another, do not make either constitutional. In Thomas’ dissent, he argues, “When faced with a clash of constitutional principle and a line of unreasoned cases wholly divorced from the text, history, and structure of our founding document, we should not hesitate to resolve the tension in favor of the Constitution’s original meaning” (578).  O’Connor disagreed with Thomas’ view that Berman and Midkiff were decided wrongly. However, she did not believe those cases had any bearing on the current case because their circumstances were different.

            Berman v. Parker and Hawaii Housing Authority v. Midkiff expanded the government’s takings power. In both cases, the “extraordinary, precondemnation use of the targeted property inflicted affirmative harm on society,” whereas the property in Kelo did not (575). Also, each taking in Berman and Midkiff “directly achieved a public benefit,” whereas the taking in Kelo, achieved, if anything, an indirect public benefit (575). In Berman, the court upheld the constitutionality of a revitalization project for a blighted area of Washington, D.C. The project affected the area as a whole, not just random individuals. The majority contended that although the houses of the plaintiffs in the Kelo case were not blighted, the legislature’s determination that “the area was sufficiently distressed to justify a program of economic rejuvenation is entitled to our deference” (572). This logic gives too much power to the legislature to make judgments it is not fit to make. Legislators are not qualified as judges of home value and upkeep and are liable to err, which is evidenced in the fact that it allowed the taking of Susette Kelo’s property even though she had made “extensive improvements to her house” (571). If the legislature relied on facts to conclude that the properties involved in the Berman case were blighted, its determination should be respected. However, in the Kelo case, the legislature clearly did not rely on any such evidence, and therefore, an external judicial check is needed to reign in governmental powers.

In Hawaii Housing Authority v. Midkiff, the court upheld the legislature’s taking of property for the opposite reason of Berman—the properties were not blighted, but instead a few elites owned a majority of the land. The court determined it should defer to the legislature’s determination that in effect eliminated an oligopoly that was a “social and economic evil” (572). Just as the plaintiff’s land was not blighted, it was also not part of an oligopoly. By owning her land, the plaintiff was not negatively impacting society or the economy. While the majority implicitly claimed that the plaintiff was hurting the economy by occupying space that more lucrative businesses could have owned, this reasoning, while logical, is not constitutional. In Kelo, the state had no justification to take the property by its police power because the property did not interfere with the health, safety, morals, or general welfare of society. Government also did not have any justification for seizing it with its takings power, because the land was not going to be directly used for the public. As long as the private property does not directly harm society, government cannot take it and give it to another private entity—even if the entity is a business.[6] Because Midkiff and Berman concerned private property that was harmful to society, their precedents do not have any bearing on Kelo.

Another precedent that the majority employed in their decision in Kelo was that of deferring to legislative determinations of public use. O’Connor and Thomas found fault with this precedent. While O’Connor believed that deference to the legislature in determining whether the land serves a public use is valid, she contended that “an external, judicial check on how the public use requirement is interpreted, however limited, is necessary if this constraint on government power is to retain any meaning” (574). She then cited three categories of takings which the Court previously held to be constitutional: the least controversial—a transfer of private property to public ownership, more controversial—a transfer of private property to private parties who make the property available for public use, and most controversial—a transfer of private property to a private entity who may use the land privately in order to meet “certain exigencies” (575). Note that O’Connor did not believe economic development takings were constitutionally justified by any of the aforementioned categories. O’Connor believed that because the government could abuse the third category of takings, the Court must actively review—and sometimes overturn—legislative decisions in order to protect the sanctity of private property.

While O’Connor’s view on deference to the legislature was moderate, Thomas’ view was extreme. He attacked deference to the legislature, declaring that “there is no justification … for affording almost insurmountable deference to legislative conclusions that a use serves a “public use” (577). He claimed that because the public use determination is at its heart a legal question, the Court should review legislative acts just as it would review acts dealing with other provisions of the Bill of Rights—such as search and seizure. He brought this argument to life, claiming that because studies have shown that minorities are most often the victims of urban renewal plans, the Court, in accordance with the famous footnote in United States v. Carolene Products Co., has an even greater responsibility to review these plans.[7] Both O’Connor and Thomas criticized the majority’s insistence that the legislature’s judgment on situations dealing with the Public Use Clause is paramount. The Court needs to fulfill its responsibility to protect private property.

Not only did the Court shirk its responsibility by deferring to the legislature, it further deviated from its purpose by putting the burden on the each state to protect private property by reminding each state that it has the power to place “further restrictions on its exercise of the takings power” (574). O’Connor condemned the majority’s suggestion, calling it “an abdication of our responsibility,” because though the government is federal, the enforcement of private property rights against (primarily) state intrusions is the job of the federal government (576). Power is addicting and ever-expanding;[8] the Court must not rely on state governments to limit their own power.

In order to protect private property rights, the framers created strict requirements for governmental taking—the most important of which is the Public Use Clause. This strict requirement is a reflection of their reverence for private property. Thomas Jefferson, a Lockean scholar, thought property should be defined as that which is developed by a man’s “own industry or that of his fathers,” and should only be limited when he owns an excess of property resulting in “uncultivated land.”[9] Susette Kelo adhered to Jefferson’s conception of property. She did not have more land than she could feasibly improve—in fact, she made several improvements to her land. She was causing no direct harm to society; nevertheless, government took her land and gave it to another private entity. The majority decision in Kelo emasculates the main limit on the takings power of the federal government, and therefore conceivably puts all private property in jeopardy. Because of this decision, no longer are people protected from being deprived of their right to property, as the framers first established. This decision is an unconstitutional precedent that constitutes a slippery slope for possible future governmental encroachments on private property.

            

---

[1] Richard Beeman, Plain, Honest Men: The Making of the American Constitution (New York: Random House, 2009), 311-312.

[2] Justice Thomas’ dissent recognizes the increase of governmental power inherent in the public purpose precedent: “Once one permits takings for public purposes in addition to public uses, no coherent principle limits what could constitute a valid public use” (Rossom and Tarr, American Constitutional Law, Volume I, 577).

[3] In-text parenthetical citations are taken from Rossom and Tarr, American Constitutional Law, Volume I.

[4] Examples of sections of the Constitution that use the phrase “general welfare” are the Preamble and Article 1, Section 8.

[5] In his concurrence to Hein v. Freedom from Religion Foundation, Justice Antonin Scalia attacks the use of judicial minimalism, or stare decisis, when he declares, “Minimalism is an admirable judicial trait, but not when it comes at the cost of meaningless and disingenuous distinctions that hold the sure promise of engendering further meaningless and disingenuous distinctions in the future. The rule of law is ill served by forcing lawyers and judges to make arguments that deaden the soul of the law, which is logic and reason.”

[6] Justice Thomas would take issue with this argument. He would say that the government cannot seize private property with its police power at all. In his view, the Takings Clause is the only means by which government can take private property, and therefore it must satisfy both the requirements—public use and just compensation. According to Thomas, the fact that a certain piece of private property harms the health, safety, morals, or general welfare of society has no bearing on whether government can take it.

[7] The United States v. Carolene Products Co. footnote stated, “There may be narrower scope for operation of the presumption of constitutionality when legislation appears on its face to be within a specific prohibition of the Constitution.” The Court further decided that it should pay special attention to statutes “directed at particular religious … or national … or racial minorities” (571).

[8] Bernard Bailyn, The Ideological Origins of the American Revolution (Cambridge: Harvard University Press, 1992), 56-59.

[9] The first phrase is taken from Jefferson’s Second Inaugural Address in 1805. The second phrase is taken from Jefferson’s letter to James Madison on October 28, 1785. See Barbara Arniel, John Locke and America (Oxford: Clarendon Press, 1996). The chapter entitled “Locke, Jefferson and the Amerindian” is especially relevant to a discussion of Locke’s influence on Jefferson’s conception of property.