Why Robbing Peter Won’t Help Poor Paul.

Yale Law Journal ^ | September 16, 2007 | Ilya Somin

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Why Robbing Peter Won’t Help Poor Paul: Low-Income Neighborhoods and Uncompensated Regulatory Takings

Does requiring government to pay compensation for regulatory takings harm poor communities? My answer to this underanalyzed question is “probably not.” Because of the relative political weakness of the poor, unfettered government regulatory authority is likely to be used to their detriment more often than to benefit them. History shows that unconstrained government power to abrogate property rights as caused great harm to the poor.

Arizona and Oregon have recently enacted referendum initiatives requiring government to compensate landowners for reductions in the value of their property caused by regulation. Other states are considering similar measures. The impact of these measures on the poor has not yet been adequately analyzed. Hannah Jacobs’ fine article is an important contribution to the debate. However, I question her conclusion that such laws are likely to harm the poor. The heart of our disagreement is captured by Jacobs’s assumption that “[t]he very essence of government action is an attempt to serve the public good.” In my view, the essence of government action is an attempt to serve the interests of politically powerful groups who can help politicians and bureaucrats stay in power. Unfortunately, the poor are rarely in a position to wield such influence. Jacobs’ otherwise laudable proposals to employ land-use regulation for the benefit of poor communities fail to take into account the high probability that such regulatory authority is likely to be dominated by nonpoor interest groups.

The Supreme Court’s decision in Kelo v. City of New London, which held that government has the right to condemn private property for purposes of “economic development,” has rekindled the debate over the impact of eminent domain on the poor. Some forty states, as well as the federal government, have enacted new legislation intended to curb economic development takings in the wake of Kelo. Most of the discussion has focused on the extent to which the poor might benefit from a ban on the sorts of condemnations that Kelo permitted. As the post-Kelo debate over eminent domain continues, we must also consider the impact of efforts to constrain regulatory takings.

I. The Political Weakness of the Poor

Like other government policies, land-use regulations are determined by the political process. Rational politicians who wish to be reelected must cater to those interest groups that can best ensure their political survival. Politicians who ignore the wishes of powerful interest groups are unlikely to stay in office for long. Unfortunately, the political power of the poor is extremely low compared to that of other groups political leaders cater to.

The history of government land-use regulation is no exception this general rule. Economic development, urban renewal, and “blight” condemnations have often disproportionately targeted low-income neighborhoods. Since World War II, some three to four million low-income Americans have been displaced by such condemnations. In the 1960s, urban renewal takings were sometimes referred to as “negro removal,” because so many of them targeted poor African Americans. Such takings continue to victimize poor communities to this day. Perhaps even more relevant to Jacobs’ analysis is the fact that zoning and other regulatory policies short of condemnation have routinely been used to benefit powerful interest groups at the expense of the poor. For example, “exclusionary zoning”—which includes land-use regulations such as bans on the construction of multifamily homes—systematically prevents the construction of low-income housing in order to benefit middle-class homeowners.

The political weakness of the poor has many causes. They are less likely to vote, less likely to engage in other forms of political activity, and of course less likely to make financial contributions to political campaigns. In addition, the poor also have lower levels of political knowledge than more affluent citizens. Low political knowledge makes it more difficult for poor voters to determine what policies government officials are pursuing and whether or not they serve the voters’ interests. Moreover, due in part to their low average levels of education, the poor are less likely than the more affluent to be able to make effective use of the information they do possess, and more likely to be misled by faulty reasoning or deception. For these reasons, the poor rarely exercise substantial influence over the political process, especially in cases where their perceived interests conflict with those of the wealthy or the middle class. Efforts to better the lot of the poor through political action must take account of this reality.

II. Implications for Regulatory Takings in Poor Communities

The political weakness of the poor has important implications for Jacobs’s proposals for ensuring the participation of low-income communities in land-use planning. She advocates the establishment of “neighborhood input groups” and ombudsmen, and the creation of special community project funds. However, given the relative powerlessness of the poor, there is strong reason to expect that such organizations will quickly be “captured” by middle-class and wealthy interests. Some of Jacobs’s proposals might actually worsen the lot of the poor. For example, her suggestion that states impose filing fees on property owners seeking compensation for takings is likely to disproportionately burden poor owners.

Jacobs fears that collective action problems may prevent poor communities from addressing land-use issues without resorting to coercive regulation. She may be right, though recent research shows that private organizations have a wide range of tools for overcoming such difficulties. However, efforts to maintain democratic control over government policy involve even more severe collective-action problems. Individual voters have little incentive to become informed about policy, or to engage in effective lobbying activity. Allowing local governments unfettered power to regulate land uses may create more collective action problems than it solves.

Jacobs also worries that forcing government to compensate landowners harmed by regulatory takings would inhibit land-use policies that might benefit the poor. Such concerns would have more weight if local governments were actually likely to enact such policies in the first place. Both theory and evidence suggest, however, that regulations benefiting the wealthy at the expense of the poor are far more common than the reverse. If Jacobs is right to conclude that regulatory takings initiatives will significantly impede local land-use regulation, that result is more likely to benefit the poor than to harm them.

Conclusion

There is reason for skepticism about the possibility that local land-use regulation can provide great benefits for poor communities. By contrast, there is stronger evidence that it often harms them. Economist Hernando de Soto has shown that the lack of secure property rights is one of the main factors inhibiting economic growth in poor urban areas in the Third World. To a lesser extent, the same may be true of the urban poor in our own country, who have suffered greatly from blight condemnations and other similar policies. Far from hurting the poor, measures protecting property rights might actually benefit them.

Ilya Somin is an Assistant Professor of Law at George Mason University School of Law and author of an amicus curiae brief on behalf of Jane Jacobs in Kelo v. City of New London.

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