Freeman

ARTICLE

Urban Renewal-- Opportunity for Land Piracy?

JANUARY 01, 1963 by JOHN C. SPARKS

Mr. Sparks is a business executive and past president of the Canton, Ohio, Chamber of Commerce. The October 1961 FREEMAN car­ried his earlier article, "The Urban Renewal Fallacy."

Many inspiring stories of Ameri­can heroism came out of our war to win freedom from England. Courage was the badge of the times. The thrilling account of the Boston "Indians’" famed Tea Party that cold December night in 1773 in defiance of the British government is but one of numer­ous accounts of the bravery of free men fighting against over­whelming odds. For any colonist to declare himself on the side of the American Revolutionists was truly to "cross the Rubicon," for ahead seemed certain defeat and subsequent death or imprisonment for daring to stand in defiance. Yet, enough men recognized that the authoritarian acts of the mother country were ruthlessly trampling the liberties they had come to enjoy and expect in their new land. They resisted any power that would attempt to remove the rights they believed were endowed upon them by God.

It is expected that a few men will always be alert to the danger of government oppression and will discern its characteristics no mat­ter how cleverly disguised. Un­fortunately, there also will be a few who, while comprehending the issue, will choose to seek im­proper power in the government or in special positions of influence involving privilege. In between are the majority, many of whom are unaware of any issue or whose other interests seem more impor­tant than the preservation of in­dividual liberty or who fear to differ from majority opinion.

Throughout the colonies—north or south, seacoast or inland moun­tains—men who loved liberty and hated oppression sprang up to fight for their principles. The minutemen of the Massachusetts countryside had personally felt the burden of British taxes, the out­rage of despotic rule in their colony, and the arrogance of British officials on the streets of Boston. These brave men—among them farmers, merchants, shop­keepers, workers in all trades and occupations—arose to defend their liberties when they were threatened at home, in Boston. They did not wait for other colonies or other lands to extend advice from some distant point. They acted themselves!

In the Carolinas a nondescript, half-starved band of freedom-loving men under the leadership of the "swamp fox," Francis Marion, made the war miserable for the British cavalry commander, Tarleton. They felt oppression and reacted to it! Similar heroic events occurred in Virginia, in Pennsylvania, and so on through­out the embryonic nation.

Reaction to Oppression

What does this review of the American Revolution have to do with government urban renewal? It simply points out a rather com­mon human reaction to oppres­sion: when freedom is denied, those losing their freedom and those near enough to the victims to feel the pain and to join in out­raged indignation, will be the ones most likely to revolt against the tormentors.’ Government inter­ference is more upsetting when encountered in one’s home com­munity than when examined theo­retically with regard to a situa­tion in another part of the coun­try or world.

If unlimited government is an un-American concept, then it should be especially provoking when big government power pushes around one’s neighbor or oneself. Excessive taxation should be particularly galling when new spending programs originate in one’s own city. Loose spending should be most painful when ex­perienced at firsthand in all of its wastefulness.

We should expect outcries throughout the land against urban renewal, especially from such com­munity thought leaders as those who so eloquently defended against the recent attempt to so­cialize the medical profession, or those who fight a continuing battle against the spread of government-owned electric power, or those whose public speeches purport to champion the individual’s right to earn, save, and spend his own in­come without interference from big government, or those who ac­tively support the right of indi­vidual choice against enforced membership in labor organiza­tions.

Any Objections?

We should expect angry resist­ance! But where is it? Why does not urban renewal cause righteous resistance in every city and com­munity in the nation into which its immoral tentacles have spread? Where is the opposition? Where are the advocates of private ownership? Where are the de­fenders of individual rights? Only an occasional dissenting voice is heard.

This is surprising because it is not difficult to discern that gov­ernment intervention has a near-perfect record in producing un­desirable results—sometimes hu­morous, sometimes tragic—but always enforcing the unnatural so that the consequences spell reverse progress. When an abundance of a farm product threatens to trig­ger a price decline, the nature of government intervention inevit­ably is a price support program, thereby encouraging farmers to produce more of the same. The original problem, abundance, is aggravated by increased abun­dance. Rent control during and fol­lowing World War II was a form of government intervention in­tended to assist more persons to rent property at reasonable prices. Instead, people occupied more space than they needed because it was comparatively cheap, and po­tential landlords did not make ad­ditional space available because it was unprofitable to do so at the rental prices allowed. Again, the result was quite contrary to the intention.

These reverse effects are not freaks; they can be anticipated nearly every time. While a few industrial and business leaders may not fully understand the fal­lacy of government interference in their economic decisions, most are well enough acquainted with its nature to oppose such govern­ment actions vehemently. Must one believe that a businessman, sophisticated enough to under­stand the nonsense in minimum wage laws and unemployment taxes, is so dull as to fail to com­prehend the open invitation to chicanery in the government urban renewal scheme?

A Weak Excuse

Perhaps the mixture of civic dreams and civic pride truly blinds the sometimes champion of free­dom to the immorality of the posi­tion he supports when he partici­pates directly—or indirectly through his silence—in bringing federal urban renewal money, con­trol, injustice, and oppression to his community. Those who are generous may allow this possible excuse for the illogical and im­moral action taken.

No generosity is warranted, however, toward one who recog­nizes the immoral premise but nevertheless parrots the worn-out cliché, "We’re paying for it, so we might as well get our share." It is as though a man believes him­self to be a fighter and flexes his muscles in public as he proclaims loudly how well he will do when he meets the enemy. Finally comes the day and place of the meeting, whereupon he joins the enemy. When government intervention threatens his own community, this vociferous would-be defender of freedom capitulates.

Unseen Consequences

Unfortunately, the people who sincerely want to strengthen their community are drawn almost in­evitably to programs that actually undermine and kill the community instead. Redesigns of allegedly fringe business districts are typi­cal. Small merchants, providing unique services or products, are uprooted. Many cannot survive fi­nancially during the interim, los­ing their customers while waiting in limbo. They even may be ex­cluded from the planned new busi­ness district because the planner doubts their usefulness in his neat uncluttered scheme. Genuine di­versity is thus lost; but business districts require diversity to live. Cities grow only as businesses thrive, not as they expire. Fur­thermore, in order to raise the local matching funds necessary to comply with the provisions of fed­eral grants, local taxes are in­creased. This compounds the er­ror, because increased taxation not only fails to attract new busi­ness and industry to the com­munity but tends to drive estab­lished business away.

Other Reasons Involved

Granted that some are blinded by their civic objectives. Granted that others know better, but ra­tionalize a desire to see their com­munity get its share. Do these two weaknesses effectively eliminate almost all potential leaders of re­sistance against urban renewal?

Recall that there are men in every community who speak out against a variety of government interferences—against socialized medicine, price and wage controls, government operation in fields pre-empted from private owner­ship, and other encroachment upon the rights of individuals. Can it be that government interference and oppression, involving funds

lic highways, public schools, and government buildings. In certain cases this right of eminent domain was also extended to private owners classed as public utilities, thus allowing power and gas com­panies to acquire the necessary rights of way to run their lines. Railroads as public carriers were also granted this power in limited circumstances. Consequently, the right of eminent domain was used sparingly and only under condi­tions well-known to everyone.

Slum Clearance

However, in 1954, the Supreme Court changed the law of the land so that the elimination of a slum was interpreted to be a public use, enabling government agencies to seize private property and resell to new private owners if, in the process, a slum is wiped out. Fur­thermore, the particular piece of property seized need not be "blighted" but may be taken sim­ply because it is part of a total project or program that eliminates a slum. This interpretation enables the professional government plan­ner to remake whole sections of cities; in fact, no property within a city is outside his potential power. If this were not sufficient power, more recent rulings by state courts have extended this in­terpretation to mean that any property that may become a slum forcibly taken from persons every­where, are proper and moral and right just in this one area—urban renewal?

Hardly. It does not check with logic. So, let’s see what other rea­sons might be so compelling and so convincing as to remove prac­tically all influential opposition.

Years ago Lord Acton observed that power corrupts and complete power corrupts completely. If power is present to a great degree in any government situation, then one can depend on it that corrup­tion follows.

"Public Use" Redefined

Laws, once designed to protect the individual against seizure of his property for other than strictly limited public use, now have been diluted to the point where public use is almost any­thing government planners decide it shall be. Constitutional checks and balances have evaporated, with the courts of the land affording virtually no protection for indi­viduals against domination by pre­dators in the legislative bodies of states and municipalities.

Until 1954, the Constitution of the United States prohibited gov­ernment seizure of private prop­erty except for public use, and then, of course, only with just compensation. For years public use was limited to such things as public highways, public schools, and government buildings. In certain cases this right of eminent domain was also extended to private owners classed as public utilities, thus allowing power and gas companies to acquire the necessary right way to run their lines. Railroads as public companies were also granted this power in limited circumstances. Consequently, the right of eminent was used sparingly and only under conditions well-known to everyone.

Slum Clearance

However, in 1954, the Supreme Court changed the law of the land so that the elimination of a slum was interpreted to be a public use, enabling government agencies to seize private property and resell to new private owners if, in the process, a slum is wiped out. Furthermore, the particular piece of property seized need not be “blighted” but may be taken simply because it is part of a total project or program that eliminates a slum. This interpretation enables the professional government planner to remake whole section of cities; in fact, no property within a city is outside his potential power, more recent rulings by state courts have extend this interpretation to mean that any property that may come to a slum in the future can now be seized.’ There is little doubt that great power has been conferred upon municipalities to seize property in accordance with their plans to eliminate slums or possible future slums. This is a blank check.

Yes, the power is there, en­dorsed by the courts of the land, opening the door wide to those who would plunder in the name of planning for the public good. Have local communities accepted the op­portunity to use this power?

Eugene Segal, writing in The Cleveland Plain Dealer, December 30, 1961, said, "…. the Board of Control…. is composed of mem­bers of [the mayor's] cabinet, in­cluding [the] Urban Renewal Di­rector whose opinion can be ex­pected to dominate in matters re­lating to urban renewal. So it is likely that while the planning commission and its fine arts advisory committee were obliged to go through the motions, it will be [the Urban Renewal Director] who in effect will make the final choice." The news item related to three competitive plans submitted for development of a certain piece of land in downtown Cleveland. The Fine Arts Advisory Commit­tee to the City Planning Commis­sion was reputedly in overwhelm­ing concurrence as to the superi­ority of a plan submitted by a Detroit builder. In selecting one of the other plans, the Board of Control explained that the plan of the selectee "was economically more feasible." It was further re­ported on January 18, 1962, that the attorney for the Detroit de­veloper indicated he would prob­ably bring suit because his client’s plan and bid were turned down by the city "although his plan was judged superior…. and he bid $100,000 more for the apartment site than other bidders."

Yes, great amounts of power have been placed in the hands of city politicians and professional planners. And power corrupts. Complete power corrupts com­pletely. Webster says that to cor­rupt is to change from a state of uprightness to a bad state, or to debase. Corrupt means to change from truth to untruth and from honesty to dishonesty.

Temptations to Dishonesty

What are the temptations to dishonesty by those involved in urban renewal? There is little doubt that the most important is the value of the property to be seized and resold to new owners. Private property anywhere has value and especially in the populous centers.  The value of certain private property can skyrocket if one seeking his own benefit has a hand in the compulsory rearrangement of all property in the area. A plan backed by power many cause a rearrangement of land use to that a new owner, favored by planners, gain advantages of location and use formerly developed and held by others. The “availability” of taxpayer funds in the federal treasury with which to accomplish the ill deed is a minor temptation in comparison to the attraction provided by such manipulation and transfer of downtown property values.

Imagine a beautiful grassy baseball field, fully equipped, set down in a neighborhood of American boys in the summertime. Would a baseball game ensue? It would All the ingredients are there. So are all the ingredients present in the urban renewal scheme—the temptations to tyranny and corruption. The power is indescribably great. For the squeamish, who would not act immorally when the act is illegal, moral prin­ciples have been negated through law. Huge property values stand defenseless against seizure. Fed­eral money and personnel cleverly encourage adoption of their pro­grams. The worn cliché, "get our share," becomes the password of the day, but not really to achieve civic advancement—this is not now the subject of our concern. The cliche is but a thin disguise for the fact that one has discarded his purported principles and has seized a once-in-a-lifetime oppor­tunity to plunder fellow citizens and to gain advantages by pushing around his neighbors, all done quite legally and in the name of civic duty.

These are the ingredients. Will there be a ball game? You can bet your boots!

Potential "Deals"

There are so many communities involved in federal urban renewal programs that it is next to im­possible to uncover all of the deals that doubtless are being chalked up. If somehow they could be tal­lied, the well-known scandals of the past involving power govern­ment and immoral opportunists would likely be dwarfed by those "ringing the cash register" today in the urban renewal "club" of privileged members. It is a kind

Temptations to Dishonesty

What are the temptations to dishonesty by those involved in urban renewal? There is little doubt that the most important is the value of the private property to be seized and resold to new owners. Private property any­where has value and especially in populous centers. The value of cer­tain private property can sky­rocket if one seeking his own bene­fit has a hand in the compulsory rearrangement of all property in that area. A plan backed by power may cause a rearrangement of land use so that a new owner, favored by the planners, gains ad­vantages of location and use for­merly developed and held by others. The "availability" of taxpayer funds in the federal treasury with which to accomplish the ill deed is a minor temptation in compari­son to the attraction provided by such manipulation and transfer of downtown property values.

Imagine a beautiful grassy baseball field, fully equipped, set down in a neighborhood of Ameri­can boys in the summertime. Would a baseball game ensue? It would. All the ingredients are there.

So are all the ingredients pres­ent in the urban renewal scheme—the temptations to tyranny and corruption. The power is indes­cribably great. For the squeamish, of local community do-it-yourself bit of tyranny and scandal.

While they may be difficult to uncover, it is not difficult to de­scribe various deals and examples of oppressive acts that can be ex­pected. The purpose of describing these is to alert the reader to take more than one look at the happen­ings in his own city.

The community newspaper in the past was the recognized cru­sader against oppressive acts, no matter who committed them—gangs, racketeers, businessmen—any one or more of whom may have illegally combined with im­moral government regimes. Con­cerning the urban renewal fallacy, where is the newspaper crusade? Could silence be golden, literally speaking?

The physical real estate of the newspaper publishing company in your city, quite by coincidence, may be in line for some secondary or even primary benefits as a re­sult of the planner’s rearrange­ment of the city. A look at the master plan in any municipality will likely reveal some interesting arrangement that takes special cognizance of the leading news­paper’s physical property. A pre­requisite to the planner’s success is the support of the newspaper, and its wishes are more than likely to be considered favorably. Fur­thermore, a newspaper’s largest income is from advertising. Down­town merchants are usually heavy advertisers. Urban renewal pro­grams are often centered around the objective to revive downtown.

Rising Values

Another likely area of legal im­morality allowing manipulation will be in the local interpretation of the meaning of a slum or a potential slum. This is not a de­finite concept, and one can expect the determination of what consti­tutes a blighted area will be quite flexible, to favor any objective in the minds of the members of the "club" operated by the munici­pality’s political head and his planner. Or more clearly stated, the chances are good that nonslum property and nonpotential slum property will be condemned and labeled substandard. As a matter of fact, property beginning to rise in value due to changing economic conditions may be a special plum ripe for picking.

For instance, the Erieview proj­ect in Cleveland, Ohio, covers an area that had seen the beginning of increased market values in re­cent years.’ Several large modern commercial buildings had been erected in the mid-fifties. Cleve­land’s new seaport and a new lake­front expressway have also con­tributed to these growing values, in fact, may have been the chief reasons lending attractiveness to the area for more than the origi­nal property owners. When prop­erties are sold to new private owners at one-fifth to one-fourth the price paid by the municipality, this is bound to attract anyone willing to take advantage of im­moral laws and supreme court de­cisions granting the privilege of legalized land piracy.

Bribing the Opposition

It seems reasonable to expect that substantial owners of large areas of condemned property will strenuously object, at least until included in the deal through some satisfactory compensation. Per­haps these former owners will be allowed to repurchase the leveled land from the city without the formality of an open bid. Or per­haps the plan will be altered to enhance other property of these former owners, such as a new arrangement of property use that will funnel shoppers advanta­geously to either the existing store or the new store of the former owners.

Look at gerrymandering of an urban renewal district as a clue to manipulation to favor some in positions of influence to the disad­vantage of others. Is a piece of property omitted from the area by an unusual deviation of the bound­ary lines? Or, is a piece of de­sirable real estate included un­naturally by a deviation in bound­aries? In either case the decision may have been reached by sur­reptitious under-the-table deals, sugar-coated with public-relation pledges avowing the decision to be best for the community.

Divulge Plans Piecemeal

Another advantage to manipula­tors is to divulge the plans piece­meal over a long period of time. This step-by-step revelation weak­ens those about-to-be-displaced property owners who would enlist the aid of their counterparts in other "planned" areas had the master plan been made public knowledge. Any chance to unite the opposition for defense against push-around tactics becomes slim as a consequence. Such secretive plans may be good tactics for the planner’s motives but morality or good business for the community may be another matter. In New Haven, Connecticut, "the hush-hush plans laid at City Hall called for relocating displaced busi­nesses, but the planners were vague on the crucial details of when and where. Many of the mer­chants were middle-aged; how could they begin again? In des­peration, they sued the city. An embattled jeweler, ordered to va­cate a new building, carried his plea all the way to the State Su­preme Court. In the end, the planners prevailed and the suits were lost or abandoned."4 One must ask why "railroading" tac­tics are used. The answer given undoubtedly will be that such meth­ods are needed to prevent an un­cooperative owner from blocking the city’s progress. The real an­swer may be more aptly stated as a strategy to catch probable oppo­sition off guard.

Rigging the Awards

Open invitations to bid to de­velop pieces of land leveled by urban renewal would seem to pro­tect against favoritism, but not with this power-laden scheme. It is frequently stipulated that bids must include detailed site develop­ment suggestions or blueprints for the "betterment of the com­munity." With this intangible measure, one can expect any kind of shenanigan:, Is the leveled land sold to the highest bidder? If it is not, then one may well won­der whether the successful bid­der’s blueprint for development was truly superior or, instead, may have been the means to con­vey a reward for "cooperation" or in payment for "influence."

Sometimes the price is fixed in advance and the "bidding" is then confined to the judgment of which plan is considered best. In one large city, a company sold a piece of property to the urban renewal agency for several million dollars. Later, at a fixed price of 22 per cent of the original price, the same company was the successful "bid­der" to buy back the property among nearly twenty firms sub­mitting architectural designs. A neat profit appears to have been made on the deal. Anticipating that the coincidence might be difficult to believe, "the urban re­newal agency declared the judges had no knowledge… who had en­tered the winning design."6

Since increasing emphasis in federal urban renewal is shifting toward renovation of the central core, it might be fruitful to ex­amine decisions regarding the con­trol by local government agencies of the use of land outside the re­newal area. Many urban problems are felt to stem from a migration of people and businesses and their activities from the city to the sub­urbs. It may be expected, there­fore, that cities will attempt to use measures that will penalize the "outsiders" by increasing charges for municipal services beyond the corporation limits, re­fusing to extend water and sewer lines to proposed new suburban shopping centers, and the like. The growing use of a city income tax that taxes nonresidents who only work in the city at the same rate as those who reside in the city is a related phenomenon. Within a city, but outside of downtown, the same kind of land-use restriction may be applied to would-be build­ers of private projects that may compete with the urban renewal downtown. This is not theory, but fact, as reported in The Cleveland Plain Dealer article of January 19, 1961, by Eugene Segal: "The Federal Housing Administration Office here has stopped the pro­posed construction of an eight mil­lion dollar downtown apartment building [outside Erieview] to dis­courage competition with dwel­lings that might be built in the Erieview urban renewal area."

Thus is power wielded; thus is corruption invited. Corruption is an unfailing companion of great arbitrary power. The ingredients are present. The ball game is being played. A new kind of tyranny is in the saddle of municipal govern­ment, aided and abetted by Wash­ington bureaucrats, and by local civic leaders and stalwart busi­nessmen whose consciences have been drowned out by the one-time chance to get "theirs."

In the Long Run

Justice may reign in the end regardless. The loot seized by land piracy may glitter less once gained, if the observation of Jane Jacobs is pertinent and accurate. In her excellent new book, The Death and Life of Great Ameri­can Cities (Random House, 1961) she reports urban renewal and city planning to date has brought dull, unexciting, and unprofitable results.

No advocate of freedom can in good conscience advocate legal theft and legal manipulation of the private property of others for his own gain. Justification of im­morality may be attempted by al­luding to the sheer weight of the numbers joining in the govern­ment urban renewal scheme. But moral principle is not changed by numbers favoring its banishment.

Where is today’s counterpart of the 1776 American who would not countenance the practice of tyranny in his community? Re­grettably, he is not in his accus­tomed role. Perhaps he can be found in Washington with hishand out, or behind the scenes in his home town entering into a legal conspiracy to rearrange the private property of others by coercive means—in the name of civic progress! Or he may be fear­ful to speak out against what he sees.

Let us hope that free men will not be blind much longer to the immorality of coercive urban plan­ning, and will curb the government power that makes it possible. Free­dom needs all its advocates.

Footnotes

1 An eminent political scientist ob­serves that no area in the world today has more appreciation of freedom from oppression than the geographic area ad­jacent and running parallel to the "iron curtain" boundaries lying next to Russia and her conquered nations,

2 Judge Van Voorhis in his dissenting opinion in Canata v. City of New York, indicated that governmental agencies were not satisfied with the power of law to eliminate slums, but had now pro­vided for the elimination of potential slums, meaning anything city planners think does not conform to their designs. The judge then pointed out that had public theorists had full sway in the early nineteenth century in America, the country would have invested its sub­stance in the construction of canals "as any intelligent theorist would have seen was the effective way to promote eco­nomic development in the United States. Railroads were just around the corner, but their advent was obvious to no­body."

3 The Cleveland Press, March 25, 1960, in a news item written by Bob Siegel: "Nationally known economist-investor Elliott Janeway today pre­dicted Cleveland is on the threshold of a new period of downtown growth…. because of its position on the Seaway, its diversified industry, and its big sup­ply of executive and labor talent…." Carrying out his prediction, Janeway’s firm constructed on the land referred to a new building for a large national office equipment company. It was occupied in 1960. One year later the City of Cleve­land acquired the building for $1,500,000 and will tear it down in 1964 to use that land according to the urban re­newal plan.

4 Richard J. Whalen. "Planners, Poli­ticians, and People." Human Events, June 9, 1962.

5 James L. Wick. Human Events, June 30, 1962: "Urban renewal agencies are exempt from that antiquated require­ment [that sales of government prop­erty be made to the highest bidder]. They may arbitrarily set the price at which urban renewal land shall be sold; offers of higher sums are disregarded as immaterial, irrelevant, and contemptu­ous of the dignity of political planning. The winning bidder is chosen by cri­teria which may be almost anything the planners conclude to be ‘in the na­tional interest.’"

6 Human Events, June 30, 1962.

 

***

Ideas on Liberty

Earning a Profit

Many businessmen are under the impression that business "has a right to make profits." Nothing could be farther from the truth. The only right which business has in a free enterprise economy is the right to run risks in the hope of earning a profit. As long as this freedom remains unabridged, society is giving business all it can ask.

Not only are profits earned by running risks, but many firms seldom achieve them. Ordinary accounting defines profits as rev­enues in excess of production and selling costs (with due regard to the wearing out of fixed equipment). In reality, however, profits are less than this: If the businessman could have let someone else use the capital and land (paying rent and interest) and hired out his managerial ability (for wages), these alterna­tive uses of his resources must also be deducted. In other words, true profits consist of the pure return on risk-taking, over and above what could have been earned if someone else took the risk.

From Washington Report, October 19, 1962 Chamber of Commerce of the United States

 

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