Eminent Domain to the Rescue, or Not So Much?

By: Jennifer Lawson-Zepeda

There’s a new sheriff in town!  An underwater sheriff.  This sheriff is about to pull up the home owners who have underwater loans, and rescue them; or maybe not.

Eminent Domain

 

What is ’eminent domain,’ you may be asking?

According to most explanations, it is the right of a government or its agent, to expropriate private property for public use with payment of compensation.

Generally, this is used to claim properties the government feels may be in the way of a public use project.

For instance, a tract of homes that may lie right in the path of where a new freeway will be built.  The government will purchase these homes at highly reduced prices (under the eminent domain act) and claim the land for public use projects, like freeways.

Well how does that work to help homeowners?

In San Bernardino County, they’ve found a new use for expropriation.  And it has all the sights and sounds of that God-feared word that capitalists hate…socialism!

Well…that is, if you get right down to the basics of agrarian land reforms, it does.

Except…expropriation and eminent domain are supposed to be different; well…at least, when it comes to capitalism.

How?  Like this:

Expropriation is supposed to be the politically motivated and forceful confiscation and redistribution of private property outside of common.

Unlike eminent domain or laws regulating the foreign investment, expropriation takes place outside of common law and is generally used by revolutionary governments.

Or, that’s what most governments would WANT you to believe!

The term appears as “expropriation of expropriators (ruling classes)” in Marxist theory, and also as the slogan “Loot the looters!”  (Source:  http://en.wikipedia.org/wiki/Expropriation)

Land Reforms?

That’s how capitalists like to explain it, anyway.  And they accentuate this by demonstrating things like how horrible it was that revolutionaries like the FMLN in El Salvador, during the civil war there, expropriated land from the wealthy and gave it to cooperative farmers or peasants.

The overall agrarian reform program was to be implemented in three phases, only the first of which achieved any effective results. Phase I called for the expropriation of all landholdings over 500 hectares, with owners allowed to keep as “reserve” 100 to 150 hectares, depending on land quality, in order to continue farming.

The government, aided by the army, expropriated over 230 estates, comprising 15 percent of El Salvador’s farmland (or 10 percent, if reserve lands are excluded). This included 14 percent of total coffee land, 31 percent of cotton land, and 24 percent of sugarcane land; over 60 percent of the expropriated holdings, however, were pasture or fallow land, including forests and mountains not well suited to cultivation.  (Source:  Agrarian Reform – El Salvador)

Of course, they never mention that the wealthy actually expropriated the same land years before with the help of wealthy American businessmen.  They did this under names like United Fruit; by passing unfair laws allowing the wealthy elite (who married many American investors) options to buy the land at highly reduced rates.  Rates that the Salvadoran peasants didn’t have access to.

In 1959, two percent of the population owned sixty percent of the land, and fourteen families were said to own the country of El Salvador.  El Salvador’s elite were economically progressive but politically conservative — opposed to any threat to their power, opposed to reform that hurt them while benefiting others connected with farming.

Against dissent, secretive death squads appeared, consisting of people with military and law-enforcement backgrounds, and apparently bankrolled by rich conservatives. Political assassination was on the rise, and, as in Chile and Argentina, people were disappearing.

Intolerance for dissent was also expressed in July, 1975, when the army fired on demonstrators that had gathered in the capital, San Salvador. Violence was not enough to quell dissent, and the military government tried appeasing the unrest with minor land reforms — the forced rental or possible expropriation of lands not being used by big landowners — but the law was not enforced. Reform-minded priests — also called liberation priests — were busy organizing the rural poor, as were secular revolutionaries.  (Source: Civil War in El Salvador)

You see, with capitalism, it’s only bad expropriation when the revolutionaries do it.  When the wealthy elite take lands that they aren’t entitled to (usually after murdering the land owners) it isn’t expropriation; it’s legal entitlement.

However, in the U.S. things may be changing the word…expropriation.

San Bernardino Plan

 

In San Bernardino, the plan is to use the theories of expropriation and eminent domain together, to better the financial condition of the individual citizen and land owner:

A plan by San Bernardino County to seize mortgages and restructure them for underwater homeowners using eminent domain is perhaps the most aggressive example of how local governments are seeking new ways to combat foreclosure.

The cities of Ontario and Fontana are partnering with the county to create a Homeownership Protection Program that would use private funds to acquire underwater mortgages from investors. The county and the two cities have created a joint authority to explore and possibly enact the plan, and the first public meeting of that authority will be held next week.

David Wert, a spokesman for the county, said the program is worth exploring because it could offer a solution to one of the region’s most entrenched problems: the vast number of loans that are stuck underwater, with more money owed than the property is worth. If the program were to go countywide, it could benefit 20,000 to 30,000 homeowners, he said.  (Source:  Click here to find out more! San Bernardino County weighs eminent domain to fight foreclosures)

However, there is another side to this plan.  The side of the California Mortgage Bankers Assn. and the American Bankers Assn who are fighting against this plan.  The same people who stand to lose a great deal of money they have planned to make off of foreclosures, if this plan isn’t allowed.

 

This is one of three parts that Jennifer Lawson-Zepeda has written on the subject for more visit her blog @ http://lawsonzepeda.blogspot.com

 

 

 

 

 

 

 

 

 

11 Comments on “Eminent Domain to the Rescue, or Not So Much?”

  1. I’ve always hated the concept of “eminent domain” and have fortified my own lands to prevent the state (or any other force, for that matter…) from taking control of it without suffering severe losses – and if worst comes to worst, I’m prepared to initiate a “scortched earth” scenario in the event that I’m unable to repel the hostile force (essentially making the victory of the hostile power a pointless one…).

  2. It’s an interesting parlour-game; the use of eminent-domain to ‘rescue’ homeowners – but here’s how it’s probably going to play out:

    1. Banks, Wall Streeters and mortgage companies are going to gang up on city governments by way of lawsuits and buying elections.

    2. Cities, already strapped for revenues (ironically, because there are no homeowners paying property taxes), are going to have to cave in.

    3. The end.

    There’s some basic seventh-grade math here: 1% of the population owns 99% of the wealth; 8% makes over 90% of its income. He with the gold makes the rules.

    The banking-meltdown effectively transferred between 40% and 60% of the nation’s wealth to the upper classes from the middle class. The middle class are the primary consumers in American society. This is why (1) there will be no sustainable recovery, and (2) due to Citizens United, there will be no reforms to set things right.

    Real estate values in America is going to sink without a trace. We are about to become a nation of renters. Anyone who buys land or housing in America is a moron, unless that property sustains life by way of farming.

    The best deals in the world will be outside the U.S. until these disparities are resolved.

    Those disparities will not be resolved without (1) Congressional action, or (2) revolution.

    As Congress is the very entity which benefits from the aforementioned Citizens United ruling which effectively allows corporations to ‘buy’ Congresspeople, option #1 is not valid/won’t happen/out of the question.

    Enjoy the future, folks!

    -W

  3. I think that Jennifer’s perception is correct; change begins at the community level. While bankers might, and probably will, override this plan, it’s now out in the open as an option; an example of how we can effect change. If we want leaders than we should support the communities that take the lead. We may not have wealth on our side, but we do have the numbers. Resist defeatism. The government wants us to feel defeated. Unite with your neighbor, regardless of your neighbor’s color, ethnic background or religion. Stand firm, even in the face of monied opposition. We all know it’s just fiat money anyway and has nothing at all to do with true wealth, which lies in our natural and human resources.

  4. History has demonstrated that the greed of the elite changes opinions of the masses.

    If you look at places like El Salvador, where the conservative elite (who had controlled the politics and social services of that country for years) was replaced by a more popular party…one with socialistic values…the FMLN, you will see how change can happen. Look at Nicaragua, Bolivia, Venezuela, Brazil and you will see progressive change.

    Expropriation and agrarian land laws have been enacted in many of these places; taking coffee fincas from wealthy coffee growers who got them often through kissing American fruit growers asses in the 50’s and prostituting their daughters off to Americans there to acquire wealth; and giving it back to the people.

    Today, with the progressives in office, poor citizens of those countries are allowed access to health care through free clinics and socialized hospitals. There are low cost homes for sale to the poor. There are more benefits to help those country’s citizens than before the change in guard. Are the elite still in power? In things like banking, of course. And yes, they likely control the courts too. But it has given many access to services they didn’t have before.

    I’m with Karla. This throw-your-hands-up attitude is self defeating. And it is what the elite hope to convince you to do. This is why I have chosen not to vote in the traditional way this election. Not so that my vote elects one of the two who will win; but so that my vote registers to show a growth in the socialist party, to attract more to it in the future for other elections. And this is how it has been done in other countries until they were finally elected to enact REAL change.

    I believe this progressive land reform opportunity will be bought off by the bankers and real estate elite…THIS TIME in San Bernardino!

    But just as the wealthy are buying off local politicians, the 99% are saving homes one by one when it comes time for evictions by standing as groups and not allowing the bankers access to it. This in turn, allows homeowners the attention of lenders to renegotiate those loans. And it may change the view of many — like me — who refuse to borrow money at all and insist on paying cash instead.

    Even if that means I “qualify” into a lesser home; something within my means. How about THAT for an attitude adjustment? We begin buying only those things we can afford and tell these companies to shoot it out their shootypootsie if they don’t like it!

    And if we don’t buy all those outside of our budget, those companies lose money and become more responsive to our wishes. It’s odd how that old economic principle works. We simply don’t pay attention to our own buying power.

  5. @ Jen,

    First of all, I don’t see this conflict as one of “capitalism” vs. “socialism” – I see this as a conflict between a power monopoly vs. everybody else. The problem I have with the notion of “eminent domain” is that it’s a power that *will* be abused: with great power comes the certainty that its wielder will be a asshole – an entity that can deprive one person of property and give it to another person can (and eventually will) take it away again when it suits its purposes to do so!

    If you ask me, we’ve been carrying these concepts like “land titles” and “deeds” around for such a long time that most people have forgotten how to stake their claims naturally – a lion has no “deed” for his hunting grounds, nor do chimps have “titles” to the trees they forage in: all things held as property in nature belong to those who have the strength to lay claim to them – and that is something that we need to rediscover…

  6. Azazel,

    Power monopoly IS Capitalism! Therefore, the rest of us would be either clowns trying not to acknowledge capitalism’s failure; or socialists trying to fix it.

    I’m not discussing eminent domain in it’s usual use, here. I’m talking about a rather progressive use of it as a tool against the elite, for once. As we know, it is usually used as a weapon against the poor.

    I’ll be the first to admit that even Socialism has its downfalls. For one thing, it breeds mistrust in the form of collaborators, as has been done in Nicaragua. You have those who use the power to fill their own purses, like Ortega and his selected officials. And you have those who use the law to fill their purses, such as some of the wealthy American investors who live in protected beach resorts, places like San Juan del Sur. You have perverts who use the laws to divert their disgusting behavior of pedophilia to a place where they can pay off the collaboraters and elected officials. So, it is an imperfect model too.

    You compare us to animals. I feel humans are a bit more complex than that. We are much more greedy. An animal will mostly only take what it needs. That is not human nature. For instance, the child who starves in their youth may hoard food as an adult in response to their fear. The poor man may have a need for security through wealth. The unpopular young child may need the popular vote to become our nation’s leader. Animals are not afflicted with these weaknesses.

    But for survival, humans are. We overcompensate. We judge others. We inflict pain upon ourselves with our insecurities and moral assumptions.

    You can’t compare us to lions and chimps for that reason.

  7. @ Jen,

    1. Power monopolies take many forms and utilize many different political/economic ideologies – Capitalism being only *one* possible form that it can take.

    2. What I’m saying is that “eminent domain” is dangerous because it *requires* a power monopoly to enforce in the first place – which makes it a dangerous ability for any society to wield (or even have at it’s disposal at all!). Sure, there exists the potential to use it against certain factions of the ruling class: but this will only happen if there is rivalry within the ruling class and it will only happen to the extent of settling this rivalry – once that dispute is settled the winner of the conflict will not give up power ad will almost certainly wield its power against regular people again.

    In short, this idea will just leave the door open for other oppressors once the old oppressors are out of the way…

    3. This wasn’t meant to be a cirticism of socailism in particular (or an embelishment of capitalism either, for that matter…) – all I was trying to say is that I don’t see the economic system as being particularly relevant here (as any political/economic ideology can be exploited by a power monopoly to repress the common man).

    And for the record, my economic philisophy is Anarcho-Mutualisism.

    4. Actually, animals *are* greedy – just watch two predators fight over a kill that can easily feed the both of them! The difference between human greed and animal greed is that humans have developed advanced means of hoarding and distributing resources: pincipally, the use of currency – which is effectively an IOU for resources (so instead of killing each other over food [for example], we kill each other over tokens that are exchanged for goods and services – leading me to conclude that we aren’t as different from the wild animals as “civilization” [which is a construct built on many half-truths and blatant lies] has conditioned us to believe we are…).

  8. “History has demonstrated that the greed of the elite changes opinions of the masses.

    If you look at places like El Salvador….”

    Newsflash – The U.S. isn’t El Salvador.

    -W

  9. W.D.Noble. Newsflash…the U.S. isn’t Germany, either, but that doesn’t stop Nazi history from repeating itself here. Get real! If you don’t believe that, just look at our Immigration policies. They were written during the time of Hitler.

  10. “I’m talking about a rather progressive use of it as a tool against the elite, for once. As we know, it is usually used as a weapon against the poor.”

    Jennifer, on a societal level, perhaps it’s time the left consider the possibility of Fiscally Conservative Socialism. It tackles privatization and tax evasion while pursuing common ownership goals.

    Tax to nationalize? From a debt-averse and budgetary perspective, one could call this a fiscally “responsible” or “conservative” socialism of sorts.

    1) A special tax would be levied on some combination of windfall profits, operating profits, and financial assets themselves.

    2) Another combination of cash proceeds, non-retroactive tax credits, and retroactive tax credits (for discouraging tax avoidance) would be disbursed.

    3) The disbursements would be exercised in a compulsory purchase or eminent domain manner, to take the relevant ownership stakes into public ownership.

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