America’s Weak Property Rights Are Harming Those Most in Need

Poor people are more likely to see their homes and belongings seized by the state for dubious reasons.

An illustration of the Constitution and design plans.
Katie Martin / The Atlantic

Alexander Hamilton said at the Constitutional Convention of 1787 that “one great obj[ect] of Gov[ernment] is the personal protection and security of property.” James Madison, similarly, wrote that “government is instituted to protect property of every sort.” Madison tried to ensure that the new Constitution would honor that principle, in part by authoring the takings clause of the Fifth Amendment, which restricts the government’s power to take private property.

Today, however, property rights receive only weak constitutional protection. In recent decades, the courts have too often allowed governments to violate property rights with little or no judicial scrutiny.

This should concern anyone who cares about protecting the rights of minorities and the poor. These groups are the primary victims when property rights are violated. They have seen the state condemn their homes for dubious private “development” projects. They have seen law enforcement seize their assets even when they have never been charged with any crime, much less convicted. And they have been shut out of housing and job opportunities by onerous zoning laws that block housing construction. These groups have the most to gain from stronger protection for property rights, which would enforce tighter constraints on government’s power to take property and block development.

Constitutional protection for property rights began weakening in the early 20th century. That shift was largely driven by Progressives’ perception that property rights mainly benefit the wealthy, and that they were an obstacle to benevolent, expert social planning. The experience of the last 80 years suggests that the very opposite is true. Social planners are usually far from wise and benevolent, and the people who suffer most when property rights are undermined are usually poor people, minorities, and anyone else with little political power. Recent years have seen some progress on strengthening protection for property rights. But much more is needed.

Let’s begin with what’s in the Constitution itself. The Fifth Amendment mandates that the government can only take private property for “public use.” This is a crucial constraint on the government’s power of eminent domain, which enables the state to force owners to turn over their property to the state, even if they refuse to sell voluntarily. During the late 18th and 19th centuries, courts usually interpreted “public use” as either government ownership or private ownership in which the private holder is legally required to serve the entire public. The former covers situations in which land is taken for purposes of building public infrastructure such as roads or military bases. Public utilities are examples of the latter. Even when under private ownership, they are legally forbidden to turn away members of the public willing to pay for their services; ordinary private businesses, by contrast, are largely free to accept or reject customers as they please. This “narrow” view of public use was in accordance with the original meaning of the takings clause, and also of the Fourteenth Amendment, which first made the Bill of Rights applicable to state and local governments, in addition to the federal government.

But in the 20th century, courts began to shift toward what was previously the minority view, which held that a public use exists whenever the public could potentially benefit from the taking. This culminated in the Supreme Court’s 1954 ruling in Berman v. Parker, which upheld an “urban renewal” condemnation transferring private property to private developers, as part of a project that displaced some 5,000 poor African Americans in Washington, D.C. The land was used to build more expensive housing, occupied mainly by whites. As the legal scholar Wendell Pritchett points out, it was both ironic and tragic that a ruling that “enabled institutional and political elites to relocate minority populations and entrench racial segregation … was decided just six months after Brown v. Board of Education” by a Court that included nearly all the same justices. While most of the justices were not racial bigots, their lax attitudes toward property rights blinded them to the harm their ruling caused to the very people they sought to protect against oppressive government policies in other contexts.

In the decades since Berman, “blight” and “economic development” takings sponsored by federal, state, and local governments have forcibly displaced hundreds of thousands of people, most of them poor minorities—a pattern that led James Baldwin to denounce urban renewal as “Negro removal.” While such takings are not nearly as common today as they were in the 1950s and ’60s, they still occur in many areas, and still disproportionately affect racial and ethnic minorities.

There is no comprehensive data available on the invocation of eminent domain in recent years. But a 2009 study of 184 areas designated for the use of eminent domain for “economic development” found that they had much higher minority populations than either the surrounding area or the country as a whole. Available evidence suggests that such takings are far from rare: A survey conducted by the pro–eminent domain League of Minnesota Cities found some 400 takings for private economic development per year in Minnesota during the early 2000s.

The harm caused by urban renewal and other similar condemnations gradually increased skepticism about the judiciary’s permissive attitude toward the use of eminent domain to transfer property to private interests. In the 1980s and ’90s, a number of state supreme courts began to apply tighter restrictions on such takings under their state constitutions. Property-rights activists sought to persuade the Supreme Court to reconsider its own deferential posture.

The Court didn’t answer their call. In 2005, it largely passed up an important opportunity to strengthen property rights. In Kelo v. City of New London, a closely divided 5–4 decision refused to put tight constraints on eminent domain. The majority ruled that the public-use requirement can be satisfied by a plan to transfer condemned homes to a new private owner, for purposes of promoting “economic development,” even if the government could not prove that the promised development would actually occur. The Court said it would defer to a government’s “considered” judgment on whether the public benefit that supposedly justified the use of eminent domain would actually materialize.

No other provision in the Bill of Rights is treated with such enormous deference to the very government officials it is supposed to protect people from. As Justice Clarence Thomas pointed out in a dissenting opinion, courts are willing to scrutinize government decisions “when the issue is only whether government may search a home,” and yet unwilling to question “the infinitely more intrusive step of tearing down … homes.”

As it turned out, the New London development plan was badly conceived, and nothing was ever built on the condemned property. The land is now regularly used only by a colony of feral cats. This is an extreme example of a broader pattern in which the use of eminent domain to eliminate “blight” and promote “economic development” actually routinely destroys more economic value than it creates.

In addition to licensing the condemnation of property for the benefit of private interests, current practice also regularly shortchanges property owners on the “just compensation” required by the Fifth Amendment’s takings clause. The Supreme Court has long held that owners of condemned property are entitled to “fair market value”—the amount the property would fetch if sold on the open market. But studies show that owners often don’t get that amount, especially if they are poor and lack legal sophistication.

The Trump administration’s plan to use eminent domain to seize property for its border wall is just the latest manifestation of this problem. The controversy over the wall has attracted attention to the Department of Homeland Security’s long history of shortchanging property owners on compensation, and to the danger that it will now be repeated on a larger scale. Sadly, such DHS abuses are just one example of a larger phenomenon of similar behavior by condemning authorities.

Another problem for property rights is that current jurisprudence imposes an extremely restrictive definition of what qualifies as a taking requiring compensation in the first place. This regularly results in severe uncompensated harm for property owners and others. The problem arises in a wide range of contexts, when the government imposes regulatory burdens on property, and even when it severely damages or destroys it.

Supreme Court precedent holds that there is generally a taking if the government establishes a permanent physical occupation of property or if it imposes regulations that destroy all of the property’s economic value. But if the occupation is “only” temporary or the loss of economic value is, say, “only” 95 percent, then the Court’s 1978 Penn Central decision establishes a complicated three-factor test for determining whether a taking has occurred. That test can be difficult to apply, but in most cases the government prevails and property owners get nothing.

Courts also sometimes rule that there is no taking and deny compensation in cases where the government has deliberately destroyed property. A recent federal appellate decision ruled that innocent owners of a house completely destroyed by police seeking to apprehend a suspected shoplifter are not entitled to compensation, because law-enforcement operations using the “police power” are exempt from the constraints of the takings clause. Needless to say, the courts generally do not give police activities similar exemptions from other constitutional rights. Here, too, judicial abdication tends to disproportionately victimize poor people and minorities, as they are more often targets of law-enforcement activities than are relatively affluent whites.

Perhaps the most harmful consequence of judicial failure to enforce constitutional property rights has been the spread of exclusionary zoning. In many major metropolitan areas, zoning restrictions have made it very difficult or impossible to build new housing in response to growing demand. This has priced millions of people out of the housing market in these areas, cutting off countless poor, minority, and lower-middle-class workers from both housing and job opportunities. Economists and housing experts across the political spectrum agree that restrictive zoning is one of the biggest obstacles to opportunity and economic mobility in America.

A series of Supreme Court decisions beginning in the 1920s largely eliminated constitutional constraints on zoning.The Court found that zoning rules almost never qualify as takings, and that there are few other constitutional constraints in this field. Courts even permit zoning rules whose primary purpose seems to be to exclude the poor and lower middle class from areas inhabited by more affluent people. If not for these decisions, onerous restrictions that block all or nearly all construction of new housing would qualify as takings, because they undermine a major standard element of property ownership: the right to build on one’s own land.

There is room for reasonable disagreement about exactly where to draw the line on takings. But severe restrictions on ownership rights that are not justified by health or safety concerns are ripe for reconsideration. Such tightening of the takings doctrine is justified on both originalist grounds, which emphasize the need to protect traditional property rights against erosion, and living-constitutionalist concerns about the need to protect vulnerable groups against abuses of government power.

Some fear that strengthening protection for property owners will lead officials to forego beneficial regulations, particularly in the environmental field. But requiring compensation does not prevent the government from adopting new regulations. It just, in some cases, requires it to compensate owners for the losses they have suffered.

That requirement should not block regulation in cases where the social benefit is worth the cost. Government can recoup that cost in economic growth, higher tax revenue, and sometimes in other ways. But requiring compensation can help deter regulations that—like many forms of zoning—destroy more economic value than they create. If the cost of such regulations comes out of the government budget, officials may be more careful about imposing them.

Yet another area in which failure to protect constitutional property rights has had harmful consequences is what is known as asset forfeiture. These laws enable law-enforcement officials to seize property they claim may have been used in the commission of a crime, even if the owner has never been convicted of anything, or even charged. In some cases, the police can keep the proceeds from the seized property for their departments’ own use. In many states, owners have little opportunity to contest forfeiture, thereby enabling authorities to hold on to seized property for long periods of time, without so much as a hearing. Law-enforcement agencies regularly keep seized cars, cash, and other property for many months before the owner has any opportunity to recover it.

Asset-forfeiture abuse routinely victimizes innocent people and particularly harms the poor. In some years, police plunder more property through asset forfeiture than is stolen by conventional thieves. Asset forfeiture has attracted widespread opposition on both right and left. Many states have enacted laws curbing it, and a few have even abolished civil forfeiture altogether. Unfortunately, the Trump administration has reinstituted a federal policy that helps state and local law-enforcement agencies circumvent state limitations on forfeiture and keep a hefty share of the profits for themselves.

The Supreme Court has, sadly, condoned this state of affairs as well. A 1996 Court decision allows authorities to seize property through asset forfeiture with little constraint, despite the blatant clash with the Fifth and Fourteenth Amendments’ requirement that the government can only abrogate property rights with due process of law. In recent years, both the conservative Justice Clarence Thomas and the liberal Justice Sonia Sotomayor have raised questions about the Court’s highly permissive approach on these issues. Hopefully, the Court will reconsider its precedents in this field.

This all amounts to a very dismal state of affairs, but there has been some notable progress in strengthening property rights in recent years. In February of last year, the Supreme Court ruled that asset forfeitures are constrained by the excessive-fines clause of the Eighth Amendment, though this ruling is only likely to invalidate some of the most extreme abuses. In June 2019, the Court reversed a 1985 precedent that made it almost impossible to file takings cases against state or local governments in federal court. By contrast, federal courts routinely hear cases involving possible violations of other constitutional rights.

In 2015, the Court issued an 81 decision ruling that the takings clause requires the government to pay compensation for the seizure of personal property, just as with land. Most recently, a trial-court decision ruled that the takings clause requires the federal government to compensate property owners whose land was deliberately flooded by the U.S. Army Corps of Engineers during Hurricane Harvey in 2017.

The Kelo decision attracted widespread opposition across the political spectrum and stimulated a major political and judicial backlash. This led 45 states to enact reform laws and several state supreme courts to rule that Kelo’s interpretation of the federal Constitution should not be used as a guide to the interpretation of their state constitutional public-use clauses. Though many of the new laws provide little real protection for property owners, there has still been significant improvement in some states. More recently, there has also been a movement to curb dubious takings for pipelines. Recent progress has been made in reforming exclusionary zoning, and more might well occur in the near future.

Overall, the state of constitutional property rights is considerably better now than at its nadir several decades ago. But there is still great need for additional progress.

This will require a combination of political action and litigation intended to change legal doctrine. Strong protection is only likely to be assured if it has support on more than one side of the political spectrum. And that begins with understanding that strong protections for property rights will help the neediest among us.