This week's edition of The Becker-Posner Blog focuses on just what you hoped: The issues raised by the Supreme Court of the United State's expansive definition of public use in Kelo et al versus City of New London et al. Becker starts:
The eminent domain clause of the Fifth Amendment of the U.S. Constitution states that "Nor shall private property be taken for public use, without just compensation". This clause allows private property to be taken for public use, but requires "fair" compensation. The clause raises three major questions: what is "public use", what is "fair compensation", and is the principle of eminent domain desirable in a modern economy? I briefly discuss all three questions.
On the circumstances in which it is appropriate to invoke the public use justification for the taking of private property, Becker applies the standard definition of economic efficiency:
It is difficult to establish a simple dividing line between what is and what is not a public use...
The best judge of this is the market test of whether the new owners could fully compensate the old owners and still benefit, yet the right to eminent domain means that a public project can avoid having to pass this test.
What is fair compensation? Becker says the utility value to the individual, not the market:
To me, the only reasonable interpretation of "fair compensation" is the worth of property to the present owners. This often is greater than the highest bids for the property in the marketplace.
In the end, Becker appears to feel that the best route is to avoid trying to jump these hurdles all together:
Without the right to eminent domain, governments would have to buy property in the same manner that private companies often accumulate many parcels to create shopping centers, factory campuses, and building complexes, like Rockefeller Center. There are difficulties involved in combining separate parcels into a single more extensive property, but whey should that be made too easy, as through a condemnation proceeding?...
I am not claiming that a system without eminent domain would work perfectly- it would not. But modern governments have more than enough power through the power to tax and regulate.
Posner, for his part, acknowledges Becker's points, but seems generally sympathetic to the courts decision:
It is possible that what really motivated the Court was a simple unwillingness to become involved (or to involve the lower courts) in the details of urban redevelopment plans; a flat rule against takings in which the land ends up in the hands of private companies would, as I have explained, be unsound. Another practical defense of the decision is that the more limitations are placed on the private development of condemned land, the more active the government itself will become in development, and that would be inefficient.
For more spirited debate on the Kelo decision, check out this discussion string at SCOTUSblog.