Friday, July 22, 2005

Eminent Domain Has Become Imminent Domain

The theory of the Communists may be summed up in this simple sentence: Abolition of private property.
Karl Marx and Frederick Engels, The Communist Manifesto, 1848
In the annals of property condemnation by the government’s exercise of eminent domain, there are winners and losers. And in rare cases, the status quo held.

The winners, of course, are easy to spot. You see their land every time you exit the interstate. While ten houses on one street might have been cleared away for a new highway, the untouched adjoinder properties soared in value when the exit ramps opened to traffic.

As for the status quo being unchanged, I invite you to travel US 50 in Harrison County. Just east of Salem stands the Bristol United Methodist Church, a rather substantial brick structure that originally sat alongside old US 50 until it was condemned for construction of Appalachian Corridor D, the present four-lane superhighway.

The Bristol congregation was not ready to see their church demolished, so they used their condemnation check to hire Goff Brothers Co. of Pullman, WV to move the church up on the hillside. If you had witnessed the church being lugged uphill to its present site, you would believe in miracles. Not a brick was lost nor a window cracked in the ascent.

The big losers in eminent domain condemnations tend to be the landowners whose property is partially taken. The William Kester farm in Harrison County is the best example of the ruinous effects of a partial taking that I know of.

Nearly every acre of Mr. Kester’s bottomland was condemned to build the Saltwell interchange of Interstate 79. That left him owning only hillside land on each side of the interchange. And as if done in a fit of spite, the new highway snipped five feet off of one corner of the Kester’s house, leaving it uninhabitable. But rather than tear his house down, Mr. Kester sawed off the small wedge that the state could not do without, and then he nailed siding boards across the diagonal to close the opening.

The Kester house overlooks Exit 125 from the southwest and remains as a monument to the cruelty that the government’s power of eminent domain can inflict on a proud farmer.

The well-connected and certain politicians have enjoyed their own version of eminent domain. These scurrilous cheats either had the new highway built to their land or knew years in advance where the highway was headed and bought the right land before the public was allowed to see the plans.

In the 1960’s, LOOK magazine featured an expose about a South Carolina Congressman who owned a large tract of rural land. By coincidence, if we are to believe the congressman’s story, the new interstate just happened to access his land with an interchange.

Do the well-connected still take advantage of inside information? Perhaps. The mayor of Erie, PA faces trial for a land deal related to a race track and redevelopment project in that city.

In 1954, the Supreme Court expanded the power of eminent domain when it ruled that blighted urban land could be seized for redevelopment. It was just a matter of time before the court reached its 5-4 decision in Kelo vs. City of New London which allows the taking of private property for "public benefit." We will have to wait for a future decision (or decisions) for the court to set the limits of "public benefit."

At present, the federal court system consistently restricts land use by humans whenever the Endangered Species Act comes into play. Even our national borders cannot be walled off because that would interfere with the migration of some of the animals and birds on the endangered list. Along with the Kelo decision, it is now fair to say that you, as a property owner, have almost no standing in the courts. The pygmy cactus owl or the colossus shopping mall can take your land on a whim.

Central planners decide which animals are classified as endangered species. Central planners decide the curricula that your children study in the public schools. Central planners decide the size of your local airport. Central planners even decide which military bases are to be closed. And with the high court’s blessing, central planners are defining the words "public benefit" as they have already done for New London, CT.

Central planners also decide where the highway exits are built. But as Nobel economist F. A. Hayek pointed out in The Road to Serfdom, it is the route that central planners invariably choose, and not the actual pavement, that gives the book its name.

Friday, July 1, 2005

A Left Turn On The King Coal Highway

In early June, California Gov. Arnold Schwarzenegger spoke at the United Nations World Environment Day conference in San Francisco and announced he had issued an Executive Order requiring the virtual elimination of greenhouse gases (GHG) in California by 2050.  As California is the world’s 7th largest economy, the most populous American state, and the national trendsetter in all behaviors social, coal-producing states like West Virginia need to take his decree seriously.  If California follows through on his GHG reduction plan, then we will have, on a de facto basis, ratified the Kyoto Treaty.

Oh Arnold!  Must we all pay an imaginary piper because your in-laws have made you feel guilty for burning tons of napalm on your way to becoming a Hollywood millionaire?

Also flying across the radar screen is the resurgence of nuclear power.  The Green religion considers GHG the equivalent of 666 in Revelations.  And to exorcise GHG, the Greens have become blind, deaf, and dumb monks whenever the topic of nuclear power is debated.  Talk about an unholy alliance against coal!

The facts of burning coal are simple but no scientist is prescient enough to draw conclusions about atmospheric warming from them.  When you burn coal, you get lots of carbon dioxide.  The trees can reprocess part of the CO2, but only seasonally.  The oceans can absorb CO2, but at a fixed rate.  Coal gasification strips CO2 ahead of the smokestack, but the CO2 gas must be liquefied and pumped underground at great pressure.  CO2 that cannot be reprocessed or stored goes into the atmosphere and, so the theory goes, causes the greenhouse effect.

Regardless of your position or thoughts on GHG and global warming, we are not far from the era when pollution credits are auctioned to competing industries.  The government will determine hypothetical annual limits for GHG’s, and fossil-fuel-burning industries will have to pay large sums for the rights to discharge GHG’s.

Pollution credits are not scientific.  Instead, they represent the political solution for a problem that has far too many variables for humankind to solve.  Count the votes in Congress of the coal-producing states and compare that total to the votes of the non-coal states.  West Virginia loses any contest in which "Congress felt it had to take action on global warming!"

In one respect, pollution credits will, for the first time, place an economic cost on air pollution.  Prior to this approach, only the cost of abatement equipment has factored into the equation.  It’s one thing to determine the price of a car’s catalytic converter but quite another to anticipate the auction bids of American Electric Power and Allegheny Power for credits to generate one million megawatt-hours of electricity.  We won’t know the cost of GHG credits until we see it priced at the meter.  On the bright side, the air pollution taxes that we’ll eventually pay should restore solvency to Social Security.

A few days after Gov. Schwarzenegger made his mid-century predictions, officials at the National Coal Show in Pittsburgh gave their assessment of 2050.  The coal industry predicts an increase in coal usage overall as well as a small increase in market share for coal-fired electric generation.  Either each party is mostly wrong in its forecast or one of them is totally wrong.  These two predicted outcomes, zero emissions and business as usual, cannot mesh as stated.

Next to electric power generation, coal’s other big market is steelmaking.  The industry has far too much capacity in basic steelmaking because there is so much scrap steel being recycled.  There is so much scrap steel lying around now that some experts predict that an equilibrium point is near and only a small amount of new steel will be needed annually in the future.  Recycling uses far less energy and produces less GHG than does making steel from scratch.

Coal demand has its boom and bust cycles.  If the nation takes a hard left turn off the King Coal Highway, as recently evidenced by California’s pace car, then we must ask ourselves: Is the current coal boom the last one ever?  Is it the next to last?

We would do well to consider California’s actions when predicting coal’s future and its impact on West Virginia’s economy.  It is more likely that the Left Coast of America decides our energy future than will our optimistic friends who attended this year’s National Coal Show.