Recently I’ve noticed an interesting tension in libertarian theory. As I’ve mentioned before, I just completed work on a new paper on eminent domain abuse in Missouri that will be published by the Show-Me Institute next month. The basic conclusion of my paper is that eminent domain should only be allowed for public use—that the government should have the power to take someone’s property (with compensation) to build a road or a courthouse, but not to build a Wal-Mart or a shopping mall. One of the interesting wrinkles to this issue is what to do about public utilities: railroads, power lines, oil and gas pipelines, phone and cable services, etc. Like roads, these facilities are subject to serious holdout problems. And since the mid-19th century, the courts have held that takings for the construction of such infrastructure is a public use, provided that the railroad (or later other service) acted as a common carrier. As I understand it, for precisely this reason railroads were subject to certain common carrier requirements under the common law before the creation of the ICC.
That’s the tack we libertarians tend to take today. For example, here in Missouri I played a small role in drafting this proposed amendment to the Missouri constitution, which reads, in part, “property may be taken for transportation or utility facilities or transmission systems used by a railroad, regulated utility or rural electric cooperative.” When Adam wrote his magnum opus on the installation of FiOS in his neighborhood, he mentioned that Verizon came along and ripped up his yard not once but twice. He didn’t say for sure, but it sounds like they did it without getting his permission first. These comments suggest that the law gives Verizon permission to tear up peoples yards and even install new cabinet cases on their property without their permission. And I got the impression (Adam correct me if I’m wrong) that he wasn’t overly troubled by this invasion of his property rights.
But that brings me to my question: what does the “regulated” in “regulated public utility” mean? If in the ideal libertarian world telecom firms wouldn’t be subject to any regulations at all, how would we distinguish between those that are allowed to rip up Adam’s yard and those that are not? Should anyone who declares himself a public utility have the power to rip up anyone else’s yard? Or should no one be allowed to rip up Adam’s yard without permission?
Conversely, if some regulations are justified by the public use limitations, which regulations are they, and how do we distinguish good regulations from bad ones?