Entrepreneurial Action, Public Policy, and Economic Outcomes
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Entrepreneurial Action, Public Policy, and Economic Outcomes

Edited by Robert F. Salvino Jr., Michael T. Tasto and Gregory M. Randolph

Examining the economics of entrepreneurship from the perspectives of productive versus unproductive entrepreneurial behavior and the role of institutions in economic outcomes, the authors in this book seek to advance the research on institutions by providing a simple framework to analyze the broader, long-term consequences of economic policies. They examine the relationship between economic freedom and economic outcomes and summarize empirical evidence and theory. The book also provides practical policy solutions that are based on the authors' cogent analyses.
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Chapter 7: Does the power to use eminent domain for economic development actually enhance economic development?

Geoffrey K. Turnbull, Robert F. Salvino and Michael T. Tasto

Extract

[H]ousing will almost never afford a community with the economic development benefits that a commercial application will. If economic development as a sole justification for public use is decided using a rational basis test with deference to local legislative bodies, then the door is left open for local governments to abuse their eminent domain powers and take developable land … National Association of Home Builders and National Association of Realtors. In the aftermath of the U.S. housing crisis, attempts by governments to create economic activity have heightened the debate concerning just and efficient use of government power. The Kelo decision in particular led to a backlash of state legislative action in which 37 states acted to update their eminent domain laws (Lopez et al., 2009). Groups historically supportive of economic development and pro-growth policies recognized the long-term threat to an important foundational principle of economic vitality, that of secure private property rights. The National Association of Home Builders and the National Association of Realtors together filed a brief of amici curiae in support of the homeowners attempting to defend their private property rights against the City of New London, CT (Pickel, 2004). Perhaps more than any other argument, the collective stance of the NAHB and the NAR highlights a clear distinction between the reliance on economic development activities per se and a generalized institutional framework supportive of long-run economic growth.

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