Eminent domain powers and the size of government

This is not good news. This paper, Do Broader Eminent Domain Powers Increase Government Size? in the Review of Law and Economics, looks at the effects of widening eminent domain powers on the size of state and local governments in the US. It looks in particular at the 2005 U.S. Supreme Court decision Kelo v New London which allows the use of eminent domain to transfer property from one private party to another when it serves a broadly defined public purpose such as economic development. The empirical results show that states which explicitly empower their local governments to use eminent domain for private economic development have larger state and local public sectors than those that do not.

The abstract reads,

The 2005 U.S. Supreme Court decision Kelo v New London allows using eminent domain to transfer property from one private party to another when it serves a broadly defined public purpose such as economic development. This paper examines the effect of this doctrine on the size of state and local governments. In the leviathan model, constitutional constraints are needed to control government expansion. The Kelo decision removes one such constitutional constraint on how state and local governments gain command over privately owned resources. The empirical results show that the breadth of eminent domain power affects the size of the public sector; states that explicitly empower their local governments to use eminent domain for private economic development have larger state and local public sectors than those that do not.