Special Report

Big Government Business

Where is Karl Marx when we need him?

By 6.30.05

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Last week's Supreme Court ruling in Kelo v. New London should indeed be alarming to all homeowners and business owners, who have now learned that they'll own their property only as long as their local government thinks they should. But it should also serve to further demonstrate that the economic agenda of Big Business is the same as the agenda of the American Left: bigger government and central management of the economy.

The media like to portray big business as lobbying to be free of government intrusion, with regulators and lawmakers acting to curb these free-market cowboys. In truth, Big Business wants the government to be bigger. Much of big business's work on K Street is to give the government more control over the economy. This ruling on eminent domain is just another win for the unholy alliance of Big Business and Big Government.

Kelo was clearly a pro-Big Government ruling. The High Court confirmed that state and local governments have the power to take away someone's land and hand it to another party if the government truly believes that it will be for the best. The government, as long as it is acting in good will, gets to determine who owns what.

The decision is also pro-Big Government because of how it defines "public use." The city is justified in taking the land, Justice John Paul Stevens wrote, in part because what it hopes to do with the land will generate more tax revenue. In other words, governments may take private property when it can serve the purpose of increasing government.

Kelo is also an undeniably pro-Big Business decision. In the case of New London, the city was taking away family homes, and handing the land to developers. Taking land from individuals or small businesses and selling it to big businesses happens thousands of times all across the country, according to the Institute for Justice, which represented the families in the Kelo case.

The Court never argued that the private homes in New London were blighted, or that they caused any harm. They merely said it would serve the public good if the homes were in different hands.

Before the High Court, the city defended its actions by showing how developers, with that same land, could do so much more for the city as far as job creation and tax revenue than the private homes could. This was the same argument New York City made when it took William Minnich's woodworking shop from him in Harlem and handed it to a developer who would turn it into a Home Depot parking lot.

In the post-Kelo world, you are liable to lose your house if some developer can see a way to make more money or employ more people than you do. Only the big businesses are safe, and only until a bigger, more efficient business comes along.

Sandra Day O'Connor dissented, and showed she understands that expanding government power, as this decision does, is expanding Big Business's power:

Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more.

Costco, Home Depot, Pfizer, and other large firms with political allies and the promise of more revenue per square foot are enriched to the degree the government is empowered to say who owns what.

The same is true with government subsidies and regulations. Handing economic power to government will always benefit those with the best connections -- huge firms with high-priced, well-placed lobbyists. As a matter of simple economics, regulation adds to overhead, creating a barrier to entry and crowding out competition.

This is why Philip Morris supports FDA regulation of tobacco, and why the major airlines all opposed deregulation of that industry. This is why Enron lobbied for ratification of the Kyoto Protocol, and why General Motors pushed clean air laws in 1970s.

It surprises nobody to see the rich and powerful gang up on the little guy. Those who believe the conventional wisdom, however, may be surprised to see how the Big Government agenda -- the economic philosophy of the left -- serves the Big Business interests.

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About the Author

Timothy P. Carney is a columnist for the Washington Examiner and the author of The Big Ripoff: How Big Business and Big Government Steal Your Money (Wiley).