The recent Supreme Court decision upholding the prerogative of local governments to steal private property for the purpose of giving it to third-party private interests, so long as those interests can generate more tax revenue or otherwise contribute more to a liberally defined notion of 'public use' than can the original owners, has drawn ire from people across the political spectrum. Most libertarians have condemned the ruling as an affront to property rights  and American liberty . N. Stephan Kinsella, on the other hand, has presented a compelling argument  that under a truly federal system, the central state would lack the power to overturn local and state laws, even ones inimical to liberty and private property.
I think these two positions can be reconciled.
I agree with Kinsella that libertarians should want as many ways as possible to limit state power, not least of all centralized state power, and that the federal government should generally not be empowered to overturn the bad laws of other jurisdictions, whether foreign or domestic.
I also agree with Kinsella and all other libertarians that eminent domain is an evil. I do not believe states have any sort of 'right' to seize private property, no matter how democratic their decision-making process, no matter how eloquent their Constitutions, no matter how impressive their plans for its 'public use.' Temporarily putting aside the question of the U.S. Supreme Court, we can all agree that the Connecticut Court blew it in this case, and that the state agents expropriating private property are committing a criminal act, regardless of what any judge anywhere might say.
When a government steals private property to give it to big business, what we have is nothing short of economic fascism ' that is, a corporate-state collusion conspiring to trump individual rights and liberties for their mutual benefit: profits for the corporate interests, expanded tax revenue, and augmented central planning powers for the state.
The argument between centralists and decentralists is whether a central government should stop the state governments from violating liberty. To be a consistent libertarian centralist, one would have to think the central state should overturn every single state law that violates liberty, which would be more than 99% of them. Certainly there are many things that local governments do that are as bad as or even worse than eminent domain. Can we trust an empire with bases in 150 countries to protect our fundamental rights against our local rulers, or even to determine which rights are fundamental enough to protect in this way? Should the feds overturn every state law? Can anyone really argue this is what the federal government should be empowered to do? It sounds dangerous, given how robust and active such a federal government would have to be. Kinsella is right to be concerned about expansions of government power, even in the name of protecting liberty, for we all know that the subterfuge that they protect liberty has always been the way governments have established themselves, fastened themselves onto society, and expanded their powers.
Given all this, I would say I agree with all of Kinsella's main points, but I still disagree strongly with the Supreme Court's decision. Why? Because the Supreme Court should have just shut up. The Supremes did not do what Kinsella argues they really should have done ' which is to refuse to hear the case.
The High Court did hear the case, did stick its nose where it did not belong, and did rule in favor of a bad state law.
Eminent domain is a crime. Even if the central state should not have the power to override this crime, neither should it give the criminals its official sanction. Let us ponder an analogy. Anarchists don't believe that, in an ideal world, the state should ban common crimes, because, ideally, the state should not exist. Now, given that we have local governments, would anyone, even an anarchist, advocate that a local government sanction murder, theft, or battery? Would we want local government courts to rule in favor of arson? Of course not. And neither should we want the federal court system to specifically rule in favor of aggressive local policy. For the feds to side with our local rulers in stealing our liberty is akin to local governments siding with common criminals to burglarize our homes.
The Supreme Court should never specifically legitimize a bad local law, nor should it ever uphold one as being Constitutional. If it's indeed a local issue, the Court should just say so and shut up. There are very few enumerated Constitutional powers delegated to the federal government, and upholding bad state laws is not one of them.
Furthermore, it is possible that the Supreme Court's decision, more than simply upholding a bad state law, will pave the way for future abuses on the federal level. With its loose interpretation of 'public use,' as the phrase appears in the federal Constitution, to include private developments that bring in increased tax revenue, we have little reason to expect the Court to reverse itself if federal eminent domain ever comes up for judicial review. Rarely will the Supreme Court uphold the plenary police powers of the several states while taking a principled Tenth Amendment stand against federal usurpations. We need only look at the recent Raich decision , which no libertarian could defend, for a stark example of the Court's willingness to rubberstamp egregious federal action.
The Kelo decision was not made on the federalist grounds that the Fifth Amendment does not bind the states, but rather on the assumption that, while it does bind the states, the 'public use' clause should not preclude eminent domain for corporate development that serves the government's purposes. Since the decision was not made on federalist grounds, it is safe to doubt the decision's virtue as a genuine example of judicial laissez faire, and even to consider it tyrannical activism that has effectively widened the already troubling loophole in the Fifth Amendment, not just for states that debatably should not be subject to its provisions, but, quite potentially, for federal encroachments on private property as well.
Seeing what has happened, we would have been better off, surely, if the Supreme Court had not ruled on this at all. Most centralist and decentralist libertarians should agree on that. (And anarchists, who think there shouldn't even be a Supreme Court, should also agree.) If the Supremes had butted out, fewer jurisdictions would now have the gumption to steal as much land as they want thanks to the High Court's green light, and the debate on eminent domain would have continued on the local level, where it better belongs. As it stands, the Court has now effectively encouraged all states with their own constitutional protections against takings inherited from the federal Constitution to similarly interpret the 'right' of the government to forcefully take private property in this outrageously broad fashion.
The Supreme Court should have just shut up. Libertarians should neither rely on it as our salvation from local tyranny, nor should we praise it when it explicitly condones grassroots oppression.
* Thanks to B.K. Marcus  for the title to this piece, and his helpful suggestions.