An Eminent Domain Lesson From India: Treat People Well and You Won’t Have Problems

As we never tire of observing, much of the ongoing controversy over eminent domain could be eliminated (or at least greatly diminished) if it weren’t a government policy — whether spoken or unspoken — to acquire land for public projects on the cheap by undercompensating the people whose land is taken for public projects. That this is the case, is not subject to rational dispute. The U.S. Supreme Court has conceded that even though “just compensation” payable to property owners in eminent domain is supposed to meet the “fair market value” standard, actually, the courts ignore elements of value that would be considered by parties in voluntary market transactions and certainly would be insisted on by rational voluntary sellers.

Barrels of ink have been expended by legal commentators on articles that over the years have demonstrated over and over again that the law of eminent domain (apart from being confusing and contradictory) is inherently flawed because it explicitly holds that condemnees are not to be compensated for all their demonstrable economic losses inflicted on them when they are evicted from their homes and businesses through the use of eminent domain — never mind their intangible, personal lossess that are routinely compensated in other fields of law but are deemed by judges to be “non-compensable” in eminent domain. Not because they are speculative, mind you, their existence and extent are conceded, but because historically, American judges have sided with the government in an effort to keep the cost of public projects down. The California Supreme Court, for example, has made no bones about that and has conceded explicitly that its policy is to keep the cost of eminent acquisitions down.

Of course, that does not keep the cost of public projects down. It only shifts some of their total cost from the public that should be paying for the benefits it receives, to those few who find themselves in the path of government bulldozers.

Now, along comes a story from India demonstrating that even in that poor country, a more enlightened policy can work wonders. Here is a quote from a New York Times Story:

“JIKARPUR, India — When the state of Uttar Pradesh announced plans to confiscate farmland for a toll road to the Taj Mahal, a grimly predictable plotline ensued. Protesting farmers, angry over low compensation, blocked road work. Frustration boiled into fatal clashes with the police. Then opposition politicians arrived to pillory the state government and pose for photos with farmers.

“Next, though, came something less predictable. Rather than
the usual standoff, the state’s chief minister increased payments to farmers and
offered them annuities for the next three decades. The new policy also gave
farmers stakes in residential developments being built alongside the toll road,
known as the Yamuna Expressway, and promised jobs connected to the project.

“Today, the Yamuna Expressway is again under construction,
and if some farmers are still not satisfied, the project is now regarded as a
tentative sign of progress in India’s wrenching fights over land, one of the
most serious yet seemingly intractable challenges facing the country.” Jim Yardley, A Highway in India Peromises a New Ending to an Old Story, N.Y. Times, Feb. 23, 2011.

Moral: if the public project is indeed worthwhile, if it will generate the public benefits that its proponents advance, then it is also worth paying for. And “paying” should at the very least include payment for all actual, demonstrable, economic losses inflicted by the condemnation on people whose land is taken. That seems only the decent thing to do. And, as the Indian experience demonstrates, it may also improve the process.

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