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Thread: Eminent domain

  1. #1
    Cyburbian vagaplanner's avatar
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    Eminent domain

    With the Kelo case and others around the country, this has been a big issue in the last few months. Quite honestly, I'm tired of hearing the issue being misrepresented in the media. Several talk radio shows that I've heard talk about how the government can "come and take your land." However, they leave out a very important phrase that includes the requirement for "just compensation". With the way it's represented in the media, you can just imagine the number of idiots in the world that actually think the "big, bad government" can take their land without the property owner being compensated.

    The level of compensation is always an issue. Of course, the property owners always whine that they were not given enough compensation for their land. However, the value of the land is not based on what it might be worth to the property owner, but what it's worth in the market. This means that it doesn't matter how many generations the land has been in the family, it doesn't matter that you may have rode dirt bikes or that maybe you got laid for the first time under the oak tree on that property. All that means "squat" in determining the market value.

    Like it or not, eminent domain is a necessary tool for the local governments. In fact, the necessity of its use is often due to a few property owners being unreasonable and self-centered, demanding exorbitant amounts of money for their property, thus hindering a major development or redevelopment project. In the recent Kelo case, it seemed pretty cut and dry to me where the local government was attempting a redevelopment project to benefit its depressed economy and reduce a high unemployment rate. This is a legitimate public purpose and some of property owners in the redevelopment area wouldn't "play ball". They deserved what they got.

    Greed usually drives the land values from the property owners points of view. It seems they think that just because its the government that needs their land they can overcharge for it. Sometimes members of the Governing Body shoot their mouths off and declare that "condemnation is not an option." All the land owners get $$$ signs in their eyes, because then the developer will either have to pay the asking price or the project dies. I worked in a city where this happened. Most people don't understand that with the unreasonable asking prices for the land, more of the TIF (public) dollars will go into making the property owners within the redevelopment project rich. Why should our tax dollars be used for that?

    Having said all this, I realize that the use of eminent domain should be considered very carefully and is not appropriate in all cases. In the city where I worked, which is by the way notorious for the abuse of eminent domain, a redevelopment project that was in the process when I left was not an appropriate case for the use of eminent domain, and I don't think they ever used it, even though it was considered. Therefore, it is unfortunate that ED is necessary in some cases to bring about change, but greedy landowners that significantly add to the costs of a redevelopment project, or in some cases, stop a good project altogether due to their own self-interests are just as bad.

    Whewwwwwwwwwww! Okay, I've heard enough from the narrow-sighted conservative media about this issue, because again, it's always the "big, bad government" crap. Now I want to hear from the Planning community, regardless of which side your on. I would especially like to hear from those that have actually been involved in an eminent domain project. If you've experienced and ED project, what was level of compensation given to the property owners (i.e. % above market value). Thanks!

  2. #2
    The definition of market value is the price that concludes a voluntary exchange between two people. If people complain that they aren't being fairly compensated for their property, then they aren't getting market value by definition.

    If I were to break into your car and drive away for a day, then come back and leave 10$ in the windshield so that you get "fair market value" for the "rental" of your car, wouldn't you be angry?

  3. #3
    Cyburbian
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    Be careful about the labels. The concern re: Kelo crosses many different groups.

    The problem many reasonable people have with Kelo is not about Eminent Domain per se, but the use of Eminent Domain for the express purpose of transferring property from one private individual to another. That really is what happened in Kelo.

    Its about the broad definition of "public purpose."

    I suggest we all read Justice O'Connor's opinion--the same Justice O'Connor that everyone thinks is so moderate and reasonable. Her dissent is exceptional.

    The concern is clear--Why can't government take your house and pay you the just compensation you mock and give your property to Wal Mart because they obviously would pay higher taxes, generate jobs etc...Conceivable under Kelo, this could happen

    That is the slippery slope that concerns many folks, conservative and liberal alike.

  4. #4

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    I agree with gkmo this time. Too often, Eminent Domain is used to facilitate grand projects (convention centers, badly conceived shopping malls, and...museums and high end housing, for example).

    I kinda dislike megaprojects anyway, where a redevelopment agency comes in and wipes out an entire two blocks, replacing them with awful, blank walled stucco "townhouses"

  5. #5
    Cyburbian Luca's avatar
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    Eminent domain is a suspension of property rights, like taxation. In monetary terms probably less onerous but in non-financial and transaction costs potentially quite onerous. OIne of the main reasons people buy rather than rent is that they prefer to be on their own property.

    What seems most objectionable in Kelo-like cases, is that the transfer of wealth is not redistirbutive and it is also very direct. If your city raises your taxes and, separately, it gives a big company a tax break to attract it to that location, there is an non-redistributive transfer of wealth, but it is not so clearly direct, which makes a difference politically and perhaps, to some extent, morally.

    I generally find the diffuse public good argument specious because that 'good' flows, as a by-product, through a giveway to a single entity / small-specific group. IF you reduce all corporate taxes (say) it's one thing; but to give one specific corporation a freebie seems liek close to corruption to me.

    Jaws: I think you can still define amrket value independent of someone's willignness to exchange. Notwithstanding that a 'forced' exchange is wrong as it does not take intoa ccount the owner's endowmet bias and, in rpactical terms, it's liekly to be abused by the more powerful party.
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    Cyburbian vagaplanner's avatar
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    Let's assume for a moment that Jaws' analogy about "borrowing" my car is legal. When he brought it back and offered $10 as compensation, I would most likely be upset about that and would probably expect more. But, the amount I would expect would be based on the fact that 1) I was angry; 2) I had lost the use of my car for a day, etc. Therefore, we would need an independent third party (appraiser) to determine the fair value of his use of my car. The fact that both of us are directly and personally involved in the situation renders us incapable of making a rational decision about the appropriate level of compensation. This is exactly what happens with a property owner facing eminent domain that will not accept compensation based on an independent appraisal. They allow their personal feelings to dictate their price for the land, not what it's actually worth.

    I agree with gkmo that the issue is transferring property from one private individual to another. However, this is where the government has to make a decision whether the transfer is appropriate based on factors such as blight, unemployment, the local economy. etc. What happened in Kelo, I think, was appropriate based on the depressed local economy, but would not be appropriate, for example, in an affluent suburban community.

  7. #7
    Cyburbian
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    They allow their personal feelings to dictate their price for the land, not what it's actually worth.
    Don't you have personal feelings about property you own? That's the point. I do not object to the eminent domain proceedings typically understood and expect the owner to demand as much as possible.



    However, this is where the government has to make a decision whether the transfer is appropriate based on factors such as blight, unemployment, the local economy. etc. What happened in Kelo, I think, was appropriate based on the depressed local economy, but would not be appropriate, for example, in an affluent suburban community.
    The result of this position might mean that only the poor or less affluent would have their land taken and given to others! That's not really consitutional, nor just or fair.

  8. #8
    Cyburbian Luca's avatar
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    Don’t entirely agree, Vaga.
    1. Not wanting to sell at the prevailing market price is not irrational. Different agents value the same thing differently. If they agree on a price that’s fine, if not you have to have a darn good justification to force them to sell. I would favour laws that constrain eminent domain to structural safety or the need to build basic infrastructure (among other things, the govt. is unlikely to want to build 12 aqueducts when one will do, so less scope for abuse).

    2. The problem with appraisals is that in practice people who del with one buyer (the govt.) all the time but with each seller maybe once are in danger of being co-opted (revolving door, etc.).

    A question: when one’s property is expropriated through eminent domain:
    > is the valuation based on recent averages of price/sq ft. for that type of property?
    > are any allowances made for specific amenities that raise that value?
    > does the expropriated owner receive compensation for transaction costs (moving, etc.)?
    > does the expropriated owner receive legal aid if he plans to contest the govt. request?
    > is it the case that typically it’s poorer property owners that get ‘domained’?
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  9. #9
    Cyburbian vagaplanner's avatar
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    Good points from Luca and gkmo!

    My experience has been that the property owners were paid relocation fees in addition to the land values. Another thing I want to make clear is that I don't expect anyone to settle for the appraised value. As noted in the last portion of my thread, I had asked what % over the market value has been paid for land in real ED cases. Therefore, I assume, and would certainly expect, developers to offer a reasonable amount over the appraised value of the property (and all improvements, if any). But, I don't have a clear definition of what is reasonable. In my mind, I would think 25-40% above appraised value.

    My statement about eminent domain not being appropriate in "affluent suburban communities" was certainly not to imply that only poor or less affluent people should have their property condemned, but let's face it, nobody will attempt to condemn a residential neighborhood in Greenwich Village. In the Kelo case, even though the city was not in good shape economically, I don't think all of the residents involved were necessarily poor.

  10. #10

    An analogy...

    Parchomovsky and Siegelman wrote Selling Mayberry: Communities and Individuals in Economics and Law in which they brought up an interesting point about 'just compensation'. The courts idea of FMV leaves out the idea of community and the personal attachments an individual might have.

    I quote "A related objection is that the value of the community, very much like idiosyncratic value, is unascertainable and should therefore remain noncompensable. This objection has some merit, but it cannot carry the day. That a loss may not be ascertained precisely does not entail a "no compensation" rule. In tort law, for example, the modern trend is to award compensation for emotional harms that accompany physical injuries, despite the fact that emotional harm is idiosyncratic and clearly unascertainable.The community losses accompanying property takings seem analogous to emotional harm in all relevant respect."

    Definitely something to consider.

  11. #11
    There is no such thing as a fair third party appraiser. The only person that can establish the correct value of your property is you, the proprietor. Valuation is subjective.

    Imagine a couple who have lived their entire lives in the same house, raised their children and even their grandchildren in this house. They would not sell such a house other than for an immense sum of money, but no third-party appraiser could place a number on the value this couple attaches to the house. The only thing an appraiser can do is estimate the value a potential buyer would attach to the house, using comparative purchases of houses in the area. But this price is only an estimate, and is certainly very unfair because the data used to make this estimate was collected from people who did make voluntary exchange.

    In a free market, the price is established by balancing the subjective valuation of two parties, buyer and seller. If the gain in value is not positive on both sides of the exchange (one actor gets less value from the property they receive than from what they give up), then the exchange will not take place. Eminent Domain overrules the proprietor's freedom to choose. Eminent Domain is theft. There's no other way to qualify it.

  12. #12
    Cyburbian Luca's avatar
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    Jawsy, is there ANY situation where you would consider expropriation to be justifiable?
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  13. #13
    Everybody has their price. Whatever that is, that's the market price. If you're going to expropriate people, you might as well save cash and give them nothing in return. They are getting screwed either way.

    How can we pretend to be civilized when we reserve to some the privilege of stealing for profit? Why do only elected official get this privilege, why not you and I?

  14. #14
    Cyburbian michaelskis's avatar
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    This is a very interesting discussion. As crazy as it sounds, each state has different regulations when it comes to emanate domain. For example, in Michigan, there are some people questioning many of the properties that have been acquired for private redevelopment because the state constitution says “Public Use” instead of “Public Benefit”.

    However I think that if a community can explain and show how the acquisition of properties will be an overall benefit to the community, and the fair market value has been establish by a third party, (in Michigan a Judge sets the price) then it is completely justifiable. The difficult part would be to show how it will improve the health, safety, or welfare of the community.
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    Forums Administrator & Gallery Moderator NHPlanner's avatar
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    The Kelo case has caused a panic here in the legislature, where there are a myriad of bills filed for the current legislative session, even though our state supreme court ruled back in the 80's that eminent domain cannot be used for economic development. (see:http://www.cyburbia.org/forums/showp...00&postcount=7)

    See attachment for Current Bills in the NH Legislature.
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  16. #16
    Unfrozen Caveman Planner mendelman's avatar
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    My understanding of urban development history is that the concept of eminent domain with just compensation originated with the redevelopment of Paris by Haussmann/Napoleon III in the 1860's Until that time, Paris was cramped unsanitary large European city. Through financing and eminent domain Paris was reconfigured to accommodate modern housing, wider streets, more spacious parks, etc.

    Though many Parisians were certainly disrupted by the efforts, the reultant product benefited everyone, and made Paris the beacon of urban living it is today.

    Read up on the subject:
    http://en.wikipedia.org/wiki/Baron_Haussmann

    Eminent domain is a good tool, but has certainly been grossly misused and perverted. Google 'Poletown' as an example of the perversion.
    I'm sorry. Is my bias showing?

    The ends can justify the means.

  17. #17
    Much of this handwringing would go away if states would adopt the federal Uniform Relocation Act requirements into their eminent domain legislation. URA essentially requires the authority taking the property to "make whole" the property owner, covering costs for moving, providing replacement housing similar to the housing taken and other costs associated with the process. Better definitions of blight would be helpful as well.

    No doubt state legislatures around the country will screw it up.
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  18. #18
    Cyburbian
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    gedunker, mskis'

    i think none of it would go away. the supremes decision allow the government to take your property and give it to someone else because they might pay higher taxes.

    this should fill all of us with chills.

    again, read Oconnor's dissent.

  19. #19
    Cyburbian michaelskis's avatar
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    Quote Originally posted by gkmo62u
    gedunker, mskis'

    i think none of it would go away. the supremes decision allow the government to take your property and give it to someone else because they might pay higher taxes.

    this should fill all of us with chills.

    again, read Oconnor's dissent.
    If emanate domain was declared illegal, what would you do to ensure that property be used in a manner to benefit the general benefit of the public? What about in areas where the property is just within code, but still acting as a blight for the rest of the community? Or for areas where the land use is grossly non-conforming compared to the surrounding land uses and you have an absentee land lord who is just holding out for what they feel is the correct price for the property even though it is several times what the property could be sold for to anyone else?

    I think that if you have a better solution, please, share with us.
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  20. #20
    Cyburbian jordanb's avatar
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    Quote Originally posted by mendelman
    My understanding of urban development history is that the concept of eminent domain with just compensation originated with the redevelopment of Paris by Haussmann/Napoleon III in the 1860's

    Considering that the Takings Clause entered the US constitution in 1789, I'm guessing that the notion of just compensation probably predates Haussmann quite a bit.


    Until that time, Paris was cramped unsanitary large European city.
    Just like Venice or Rome or Amsterdam or any number of other medieval European cities that are now considered to be wonderful urban environments.

    Paris would be quite a bit different today if not for Haussmann, that's for sure, and it would certainly be less iconic, but would it be worse? Worse enough to justify the urban upheaval in his own time? So much that we can use it to justify obliterating neighborhoods in our own cities with the argument that it will make them great for future generations? I'm sorry, Bulldozer Bureaucrats have been pointing at Haussmann as a justification for their own atrocities for far too long.


    Though many Parisians were certainly disrupted by the efforts, the reultant product benefited everyone, and made Paris the beacon of urban living it is today.
    "Disrupted" is putting it quite mildly, don't you think? Yes, the urban "disruption" probably paled in comparison to the social "disruption" of the revolution and Napoleon's wars. Plus Haussmann's bulldozing of "slums" to replace them with chic boulevards, increasing property values and attracting wealthy people, was just not the type of social justice issue anyone was talking about back then -- with the possible exception of Fredrick Engles, who was no where Paris. But lets not pretend that many people were "disrupted" very gravely by Haussmann. He could never have done what he did if he hadn't been working for an autocratic dictatorship.

    Eminent domain is a good tool, but has certainly been grossly misused and perverted. Google 'Poletown' as an example of the perversion.
    How is Kelo not any worse than Poletown?
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  21. #21
    Cyburbian Luca's avatar
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    Quote Originally posted by jaws
    Everybody has their price. Whatever that is, that's the market price. If you're going to expropriate people, you might as well save cash and give them nothing in return. They are getting screwed either way.

    How can we pretend to be civilized when we reserve to some the privilege of stealing for profit? Why do only elected official get this privilege, why not you and I?
    Why can a swat team guy get to walk down the street with a machine gun and I don't? Why can a judge 'decide' that I am in contempt of court and throw my ass in the stir but if I do that people get all huffy about 'kidnapping'? The moment you have ANY laws you admit that some people may have to be coerced for some reason by the community or its (imperfect, indirect) representative, the state.

    I guess in the case of expropriation, I would draw the line at uses that are clearly public, clearly of broad benefit (a water treatment plant, for instance) and clearly not inversely redistributive. I gather the Kelo case was that they got kicked out so someone could develop the land privately?
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  22. #22
    Cyburbian
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    Good discussion. I see both sides of the argument. I certainly think that determinig the worth fo the property is an issue. If the govt. suddenly came and took my property, even if it was for something like widening a road, I would want more than the amount I could sell it for. I want to be relocated in the same neighborhood, insured that my kids could go to the same school, that I would have the same reasonably expectation of quality of life. I don't know how you put a price tag on that. I don't like using ED to transfer ownership between private owners. I think maybe after the public improvements have been established it may be a little esier to swallow, but to me there has to be a more direct link to enhancing the public good. Maybe increased tax revenue is a by product of the action, but not the initial reason to do it (although, the more I think about this the cloudier the concept gets to me)

  23. #23
    Quote Originally posted by michaelskis
    I think that if you have a better solution, please, share with us.
    Buy it. If an absentee landlord feels his property is worth more than what you are offering him in exchange, then that's what it's worth. Give him the real value of his property.
    Quote Originally posted by Luca
    I guess in the case of expropriation, I would draw the line at uses that are clearly public, clearly of broad benefit (a water treatment plant, for instance) and clearly not inversely redistributive. I gather the Kelo case was that they got kicked out so someone could develop the land privately?
    Well that's the whole problem. There is no "clearly". Everything the state does affects some people positively and others negatively. As such there is no use of eminent domain that is clearly public.

    And you didn't justify why some people have the exclusive right to eminent domain and not others. All you did was point out that it's a common occurence. Why am I not qualified to use eminent domain, while the mayor of McSuburbia is?

    Quote Originally posted by mendelman
    My understanding of urban development history is that the concept of eminent domain with just compensation originated with the redevelopment of Paris by Haussmann/Napoleon III in the 1860's Until that time, Paris was cramped unsanitary large European city. Through financing and eminent domain Paris was reconfigured to accommodate modern housing, wider streets, more spacious parks, etc.

    Though many Parisians were certainly disrupted by the efforts, the reultant product benefited everyone, and made Paris the beacon of urban living it is today.
    Haussmann probably saved a lot of money by using Eminent Domain, but that doesn't mean it wouldn't have been possible to do the renovation without resorting to it. It would have been expensive, yes, but that's how you know whether something is worth doing or not. Balance the returns with the costs.

    As luck would have it, lewrockwell.com has just published an article pointing out how Eminent Domain is actually used to enforce racism:
    Uppity in Central Park
    [...]
    There is currently unfolding, in the city of Riviera Beach, Florida, an effort to use the powers of eminent domain to take as many as 2,000 homes in order to allow for the private development of a billion-dollar yachting, high-income housing, and commercial facility. The rationale for this project is, of course, the same that has underlain previous efforts throughout America, namely, to “revitalize” or “renew” a community. The assumption – that ought to have been laid to rest by the failures of politically directed economies – is that government coercion and planning ought to be substituted for marketplace influences that are more responsive to latent economic preferences within a community.

    Most of the affected residents of Riviera Beach are black, which brings to mind an interesting historical event of which I just recently became aware. Two weeks ago, Tom DiLorenzo, my daughter Bretigne, and I attended a very interesting exhibit at the New York Historical Society in New York City. Titled “Slavery in New York,” the exhibition helps to deflate the statist fantasy that the American Civil War was energized by northern hostility to the practice of slavery. As the exhibit book states:

    For nearly three hundred years, slavery was an intimate part of the lives of all New Yorkers, black and white, insinuating itself into every nook and cranny of New York’s history. For portions of the seventeenth and eighteenth centuries, New York City housed the largest urban slave population in mainland North America, with more slaves than any other city on the continent.

    Over 25% of the New York City work force – and upwards of 50% of that in areas outside the city – consisted of slaves. Toward the mid-eighteenth century, some 40% of New York City households had at least one slave. While the State of New York passed antislavery legislation in 1827, the practice was not made illegal in New Jersey until 1865, with the passage of the Thirteenth Amendment.

    While at this exhibit – which continues to March 26th – I learned of the experiences of some former slaves who had managed to become free in antebellum New York City. A number of them formed a community in an area extending from present-day 81st to 89th Streets, between 7th and 8th Avenues, known as “Seneca Village.” Churches and a school were established in this village which, in time, also welcomed Irish and German immigrants.

    The exhibit book informs us that, by the early 1850s, many whites in New York City became concerned with how well Seneca Village was doing. “That the Village occupied land that was increasingly valuable as the settlement of Manhattan marched north was not lost on them.” The Democratic Mayor of New York City, Fernando Wood, employed the powers of eminent domain, in 1855, to remove these black property owners and create a city park.
    [...]

  24. #24
    Cyburbian vagaplanner's avatar
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    Quote Originally posted by jaws
    Buy it. If an absentee landlord feels his property is worth more than what you are offering him in exchange, then that's what it's worth. Give him the real value of his property.

    Well that's the whole problem. There is no "clearly". Everything the state does affects some people positively and others negatively. As such there is no use of eminent domain that is clearly public.

    And you didn't justify why some people have the exclusive right to eminent domain and not others. All you did was point out that it's a common occurence. Why am I not qualified to use eminent domain, while the mayor of McSuburbia is?


    Haussmann probably saved a lot of money by using Eminent Domain, but that doesn't mean it wouldn't have been possible to do the renovation without resorting to it. It would have been expensive, yes, but that's how you know whether something is worth doing or not. Balance the returns with the costs.

    As luck would have it, lewrockwell.com has just published an article pointing out how Eminent Domain is actually used to enforce racism:

    So, I guess by your logic that the value of a property is determined only by its proprietor, I should be able to go to a bank or a mortgage company and get a second mortgage on my property for $300,000 because that's what I say it's worth, but realistically knowing that no sane, rational person would pay even close to that. Thankfully, the bank/mortgage company would save me from myself.

  25. #25
    Quote Originally posted by vagaplanner
    So, I guess by your logic that the value of a property is determined only by its proprietor, I should be able to go to a bank or a mortgage company and get a second mortgage on my property for $300,000 because that's what I say it's worth, but realistically knowing that no sane, rational person would pay even close to that. Thankfully, the bank/mortgage company would save me from myself.
    No that's completely backwards. Your property may be worth 300,000$ to you but you are not buying it, you are selling (borrowing against) it. The bank values its money more than it values your property. In an exchange the price is set to balance the subjective valuations of the two parties. If you wanted 300,000$ for your house you would have to find someone else but you that values your house for 300,000$. However if someone values your house 200,000$ he would never be able to buy it from you because the value he offers you is less than the value you attach to your house, therefore you would realize a loss on the sale.

    Exchange is a value-creation process. Two actors give up a good they subjectively value less in order to receive a good they subjectively value more. Eminent domain is a value-destruction process because it does not exchange someone's property for something that they value more.

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