Epstein on zoning and Kelo

by Russ Roberts on September 17, 2007

in Podcast, Property Rights

The latest EconTalk is Richard Epstein talking about zoning and Kelo. He argues that zoning can be a "taking" that deserves compensation. He also has some interesting points on how zoning leads developers to pay more attention to politicians. Not the healthiest set of incentives.

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{ 8 comments }

John Pertz September 17, 2007 at 2:30 pm

I cant wait to hear this broadcast. Government's involvement in development is one of my favorite interests. There is so much that needs to be discussed in terms of how truly "capitalist" the U.S, in light of government's large presence in the development arena. We often hear the rhetorical defense of government supervision of growth, however, little intellectual effort is spent analyzing the true outcomes of such processes.

Person September 17, 2007 at 2:30 pm

Not to start a flamewar, but…

If the government builds something that makes you property's value go up significantly, is that a "giving" that justifies higher property taxes? Higher than the current property tax rate would cause?

Russ Roberts September 17, 2007 at 2:50 pm

Person,

I think that's a good question. Could you post it as a comment over at the podcast page and maybe we can get a good discussion going.

Go here:
http://www.econtalk.org/archives/2007/09/epstein_on_prop.html#comments

Sam Grove September 18, 2007 at 12:57 am

If the government builds something that makes you property's value go up significantly, is that a "giving" that justifies higher property taxes? Higher than the current property tax rate would cause?

This isn't how it works in the 'private' sector. There is no prohibition on benefiting others, only on causeing them harm.

If a grocery store is built near you and causes your property value to increase, you owe the owners nothing, as it is presumed that they built it for their own reasons for their own benefit. The increase in your property value is not due to the addition of the store, but due to the perception of potential buyers of your property.

Of course, if your property value goes up, that often means your property taxes increase, the reason for the increase of value is irrelevent.

Ammonium September 18, 2007 at 1:26 am

I grew up in an area where everybody was on a wells. As development picked up the municipal water systems in nearby towns spread out. Some areas became annexed to these towns while others made arrangements to just have water lines. Property values went up but so did the property tax.

All of these areas agreed to these annexations by a democratic process (usually a single landowner owned a lot of land that would be developed into a subdivision, so the democratic process was pretty simple.) As in most democracies, there were those who were opposed.

This seems like a precedence for raising property tax in exchange for something that will raise property values. The problem, of course, is that not everybody is in favor of the changes, and it could be abused by governments. For example, my local transit authority has decided to annex a bunch of wealthy subdivisions (transit districts can apparently do this in my state without approval from the citizens) and plans to start running (empty) buses to those subdivisions. The transit authority would no doubt argue that this raises property values, when it clearly won't. It's just a way to raise more revenue.

vidyohs September 18, 2007 at 9:06 am

I think Sam G. nailed it and left no room for further discussion or adition. Anything more will be like slathering gravy on a saucy orange roasted duck. It's not going to improve it.

Thanks Sam.

shawn September 19, 2007 at 1:07 am

…as someone who deals with zoning on an everyday basis, I'm SO excited to listen to this one. Unfortunately, Randal O'Toole's snippets that have been available as CATO daily podcasts on zoning have been…well…they're 5 minute podcasts, so there's not much discussion available there. Awesome…I'm glad you guys put this together. What a great welcome-back-from-vacation treat this will be tomorrow.

Incidentally…I listened to the last (tyler on 'inner economist') while walking the streets of Juneau, Alaska, having disembarked from my cruise (and using my cell phone as a wireless bluetooth modem to download the podcast to my computer while in the seattle airport). Thought it was funny that y'all discussed strange/interesting places/ways that people listen to the podcast. :)

Now, my visual mind will picture juneau likely every time I hear tyler's voice, or if i listen to that podcast again. :) Probably specific stores or intersections at particular points.

Sam Grove September 20, 2007 at 8:37 pm

We can go even further with my example of the grocery store above; The people who built the grocery store expect that the construction costs, maintainence, etc, will eventually be paid for by the people who live around it through the purchases they make. It would be absurd to expect them to pay upfront costs for what they will eventually pay for anyhow.

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