Socialism in America, South American-style

Socialism in America,
South American-style

By John Silveira

February 23, 2007

Venezuela’s President, Hugo Chavez, is leading his country into socialism. Why should Americans care? If that’s what the Venezuelans want, it’s their choice, and their problem.

But one of the steps he’s about to take, as he takes his country down this road, is to nationalize the country’s largest phone company, currently owned by Compania Anonima Nacional Telefonos de Venezuela (CANTV). Nationalization, for those unfamiliar with it, is actually eminent domain—the seizure of private assets for some perceived public good.

About this the United States government does care. You see, the largest minority stockholder in CANTV is Verizon Communications, out of New York, which is largely owned, either directly or indirectly, by American citizens, both rich and ordinary.

So, America’s ambassador to Venezuela, William R. Brownfield, has lodged a protest with the Venezuelan government. The basis of the protest is that if the Venezuelan government is going to nationalize the the phone company and appropriate the assets, he must do so “in a transparent, legal manner,” and both in a timely fashion and at fair market value. He said, “These are the only obligations that a government has when it decides to nationalize an industry.”

Chavez’s reaction was to tell Brownfield that, by making comments like that, he is meddling in Venezuela’s affairs. Chavez warned the American ambassador he would be asked to leave the country (a nice way of saying he’ll get kicked out) if he persists in this. He also flatly stated that the stockholders will not be compensated with the market value for their company. (By the way, this is also what Castro did when he nationalized foreign holdings in Cuba.)

You may ask what business Washington has in—using Chavez’s words—”meddling” there?

According to the Founding Fathers, one of the functions the United States government is that it is supposed to protect our freedoms and our rights, including property rights. So, it would seem wholly appropriate that the United States, through its ambassador, would take the side if its citizens whose private property is being…well, stolen.

In case you’ve missed it, there’s an irony here: when a foreign government nationalizes American corporate assets, Washington whines that they want full compensation for the owners at fair market prices. But when an American municipality, county, or state, or the federal government itself decides to take property from their fellow Americans, using eminent domain, our politicians find justification for doing so at bargain basement prices, just as Hugo Chavez does, and Washington doesn’t bat an eye.

There are endless examples in this country, in which our government, including the Supreme Court, is either silent or actively involved as the abuser. Here are just a few:

  • Columbia University, a private school, wants to have the state force numerous residents and local businesses near the school to move so it can expand its campus by some 18 acres.
  • Businesses in Las Vegas have been “condemned’ and the property sold at bargain basement prices to accommodate rich developers (who are also large campaign contributors) who make fortunes with their casinos. By the way, sometimes, these properties have been “condemned” just to put in parking garages for these very same casinos.
  • Though Wal-Mart claims its success is simply beating its competition in the marketplace, it is one of the corporations most apt to have local government not only bully people off their property, but to encourage those same politicians to force the local taxpayers to subsidize it, as well. According to, this is happening nationwide.
  • In several states, entire neighborhoods have been “blighted,” without furnishing any evidence of blight, then “condemned,” and the homes and businesses bulldozed to put in, of all things, golf courses.

One of the pet explanations for why they do this is because they claim the new businesses will generate more jobs and taxes. However, this isn’t always true (though it’s almost always claimed). But the reasoning they’re using is tantamount to the words of the English philosopher, Jeremy Bentham (1748-1832), whose social philosophy was, “The greatest happiness of the greatest number.” (And who measures that “happiness,” anyway? I can guarantee you one thing: It’s going to be a bunch of special interests and their lawyers, not the people living and doing business there.) However, even if it were true, one of the many reasons we have the Constitution we have is to prevent a tyranny by the majority.”

Those above were just a few cases. There are thousand and thousands of others, nationwide, where government, at all levels, has had no problem abusing eminent domain. It’s bad enough if they’re taking your property to construct a freeway or harbor, but it’s worse to discover it’s being seized simply to make some wealthy individual or corporation richer at your expense. And it gets worse, yet, when you discover your rights are ignored because those who covet your land are allied with the very government officers charged with protecting them. This, despite the fact that the the Fifth Amendment to our Constitution reaffirms:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

On top of this, the constitutions of every state maintain the same provisions: no seizure without just compensation and for public use—not private use.

Eminent domain is supposed to be for public projects, not to subsidize developers, corporations, or just someone who’s rich and wants to move into your house. (Yes, even that’s happened.)

This type of eminent domain interpretation goes back to 1954 when, in Berman v. Parker (348 U.S. 26), the United States Supreme Court ignored the clear language of the Fifth Amendment and allowed Washington, D.C., to condemn and seize a department store and turn the land it was on over to a private developer.

Using this questionable decision, politicians have since warped it further to mean that seizing any real estate from the poor and legally weak, to give to the rich and influential, is some kind of public good. And, if you disagree? So what. They don’t care—even if you can show the supposed public good doesn’t exist.

By the same measure, anyone who doesn’t think Chavez will have reasons why this nationalization is “good” for the people had better rethink their position. I can assure you, just as our own courts have discovered “legal” reasons to screw our own citizens in eminent domain cases, in spite of the very Constitution they are sworn to uphold and the state constitutions of each of the 50 states they are also sworn to uphold, so too will the Venezuelan courts find legal reasons to screw the stockholders of CANTV. And if you disagree with him? So what?

Now, you can’t hate Chavez. He’s beginning to sound as American as apple pie.

A friend of mine has a rosier outlook on this problem. He pointed out to me that in this country, “On the eminent domain problem, there has been some progress against that in California. Under the California Constitution, property and business owners are entitled to have just compensation determined by a jury. But, 1) You might have to run up huge legal bills fighting the state, though most eminent domain attorneys will work on contingency; a percentage of the increase in the settlement…”

Lawsuits? The lawyers must love this thing of, “We’ll settle everything with more lawsuits.” Yeah, sure.

Of course, there are yet more ironies. One is that not only must the landowners fighting against eminent domain pay their own legal fees, the politicians they must fight against use the landowners taxes to cover the costs of persecuting them in court. So the landowners are faced with a double whammy because they must legally finance part of the fight against themselves.

What that tells me is that lawyers themselves will forever be an obstacle to a return to more reasonable eminent domain laws—the eminent domain laws we had before 1954. What we need are the Constitution of the United States and the constitutions in virtually every state in the Union to be enforced. Then, and only then, will the problems and the lawsuits disappear.

But an even greater irony is the way politicians and lawyers are dealing with the problem. They are trying to come up with more mumbo jumbo about the definition of terms such as blight and public use to determine what the politicians, bureaucrats, and developers can take away from you. What is conspicuously left out, and the only thing you care about when they come to take you house, your land, or your business are property rights. They certainly don’t want to stir up that bogeyman because they know what you’re going to do if they have to tell you they have decided your property rights don’t exist.

Let me conclude with two statements:

1) In a free society, citizens should not have to periodically battle their fellow citizens to retain their property rights. Yet that’s what they have had to do for the last half-century to fight this new kind of eminent domain.

2) Anyone or any corporation that doesn’t believe its assets should be nationalized at submarket value had better rethink it’s position when they try to get our own government agencies to seize the private property of their fellow citizens the same way.

Yeah, like that’s going to happen.

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