22 April 2006
Against Compulsory Purchase

A correspondent recently asked me what my views were on compulsory purchase. Although it was the topic of quite a few discussions on Transport Blog and I did reach a conclusion, I never quite got round to stating what it was. So, here goes: I am against it.

I am against it because:

  • it involves force which I am against
  • it encourages corruption and abuse
  • I believe its absence wouldn't be that great a loss

But how would you build roads or railways without it?

The fear has always been that without compulsory purchase then along the line of a proposed route there will be "hold-outs" ie landowners who will demand a much higher price than the prevailing market rate (not least because without their sale the road or railway cannot be built), and that therefore, for the most part, roads and railways would be too expensive to build. Now, for all I know this may be true - it's not a theory that has ever been tested to destruction - but there are grounds in both theory and practice for believing that this may not be the case.

So, the theory?

Well, more ideas than theory. One way might be, say, if you were trying to build a railway, to survey the route, ask the landowners along the route at what price they would be willing to sell and take out an option to buy. A more sophisticated way might be to survey a couple of routes and to take out options on both of them. That way "hold-outs" might be discouraged from holding the railway company to ransom.

And the practice?

  • Pipelines - my understanding is that these, typically, don't need compulsory purchase
  • Two of the earliest modern highways in the US were built without compulsory purchase (see p172)
  • The Stanhope and Tyne railway (apparently) was built without compulsory purchase

Why so few examples?

Well, one possibility is that it is very difficult (though clearly not impossible) to build a road or railway etc without compulsory purchase. But there are a couple of other possibilities:
  • Crowding out. If the possibility of state action exists people might be less inclined to look into other, potentially more expensive options.
  • There may be other things going on. At the dawn of the railway age all joint stock companies needed an Act of Parliament to establish themselves. In more modern times all road or railway schemes have required planning permission from the state (another thing I am against), so there is little point in buying the land without the permission and difficult to get the permission without knowing what land is involved.

What makes you think it causes corruption and abuse?

I've heard of a few examples and, no, I've got nothing to hand right now but I guess 5 minutes Googling the terms "eminent domain" and "Wal-Mart" should turn up a few examples.

Assuming that corruption and abuse do occur, why do you think they happen?

I think the abuse occurs because the state can't help itself. If it has a power it will abuse it
As far as corruption goes whenever the state is given a power which can make others rich, money is going to flow in the direction of the people with the power to influence decisions.
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Quote of the Day

David Farrer on airline compensation regulation:

Whenever I hear the word rights, I reach for my revolver

From Freedom and Whisky

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Squander Two doesn’t like his brother or public transport.  In fact, it is difficult to tell which he likes least.