John's Blog

"Free" markets, the commons, libertarianism, and New Urbanism

Over at TDIclub.com, TM and Mike were having a discussion on oil and free markets that spilled over into a discussion of urban poverty. Eventually, TM blasted what he called social engineering, dismissed it as socialism and waived the free market flag. Here is my reply, reformatted.

First, economically valid choices for the individual do not always result in the best choice for the community. This is the fallacy of "let the market decide." Imagine a public green where you and me and Mike and everyone else is free to graze cows. If we're rational, we'll each seek to maximize our individual gain, asking, consciously or not, "What is the utility to me of adding one more cow to my herd?" Because you or I receive all the proceeds from the sale of the additional cow, the positive utility is almost +1. Because the effects of overgrazing are shared by all of us, the negative utility for you or me is only a fraction of -1. Adding these together, I would get a value a little less than 1 and would thus decide the only sensible course is to add another cow to my herd. But this conclusion is also reached by you and Mike and everyone else that shares the commons. What is good for you or me individually results in the destruction of a public good - in this case, the green. Sometimes we as a society need to step in (via regulation) to protect the public good. You may call this socialism - I call it civic responsibility.

In fact, I *like* the way market economies work; appeals to virtue or government fiat simply don't work. Instead, using market forces to enforce regulation is a good thing because it preserves *choice* - individuals can still choose to do as they wish while shifting the utility function toward that of the public interest. With a carbon tax, you can drive your V12 Aston Martin Vanquish if you really want while I might reconsider driving to work and may take mass transit instead. A gas tax is much MORE fair than CAFE or a horsepower tax, since it directly addresses consumption. If I want to drive a 400+hp viper but choose to live 5 miles from work, why should I pay a penalty compared to my neighbor that commutes 60 miles roundtrip in a 270hp Acura?

Second, you act as if we haven't already been inadvertently social engineering society for the last 50 years via our policy choices. These policies include zoning, lot size minimums, and highway funding. After the second world war, GI-mortgages heavily favored new greenfield development over renewal. Meanwhile, urban renewal based on massive top down bureaucratic redevelopment -- the dreaded "super-block" -- was an utter failure. But this failure of well-meaning social engineers doesn't mean we shouldn't take a good hard look at how our past and current policy choices influence how we live.

In other words, you can dislike "progressive social engineers" all you want, but pretending the market will solve all is naive given that our policies choices inherently influence how we live. For example, although critiques of New Urbanism are frequently cloaked in libertarian language, there is actually a very strong libertarian case supporting New Urbanism. Here's what
Capt Obvious at UrbanPlanet has written on the topic. With the most ambitious rebuilding project in 3 generations underway in New Orleans, I think this an important issue.

Most so-called libertarian critiques of the New Urbanism are hypocritical, and lack basic philosophical foundation. They go something like this: "Sprawl is the free market, let people build what they want. No more government planners telling us what to build." While that line of reasoning makes sense within the context of various socialist regulations often imposed in the name of "smart growth," it is largely incoherent when levied against New Urbanism.

In reality, this argument crumbles under the weight of even minor scrutiny. First and foremost, sprawl is not a result of the free market. In no way, shape, or form would the free market produce our current sprawl-style building patterns. Low density zoning, maximum lot coverages, minimum parking requirements, on-site parking requirements, draconian height restrictions, roadway easements and setback requirements, countless unnecessary regulations mandated by traffic engineers, and the list goes on and on. All these things are government intrusions (dare I say socialistic intrusions) which directly promote sprawl, and quite obviously force many developers to build designs in a way which they otherwise wouldn't.

Furthermore, NU design codes hardly represent the work of an oppressive government bureaucracy. The NU originated through the Congress for the New Urbanism, a private organization comprised of numerous developers and architects who were sick of government agencies preventing them from building what they wanted. The New Urbanism was actually a way for them to free up, or liberalize, the zoning codes. In fact, it is sprawl-style zoning codes which were fashioned by countless municipal bureaucrats, NIMBY's, and traffic engineers with the specific and unabashed intent to limit and constrain others' property rights

For all intents and purposes, the most basic component of New Urbanism - the new urbanist zoning overlay - is about the most free-market, developer-driven, urbanism out there. If a developer wants to build sprawl, they follow the basic zoning and build sprawl. If a developer wants to build under urban design guidelines laid out in the overlay, they get the benefit of increased density (and ostensibly increased profit). This overlay zoning code is philosophically and morally equivalent in purpose to any other zoning code, including the original sprawl code. Let me repeat for emphasis. A new urbanist zoning overlay is no more of a government intrusion than the original zoning code that mandated sprawl-style development in the first place. In theory, if developers are given the option of choosing between NU and sprawl (i.e. an overlay, as opposed to a replacement code) libertarians should be logically forced to accept NU, unless they are willing to affirmatively reject sprawl zoning as well.

This brings us to a basic revelation about many such critics. They aren't willing to repudiate sprawl, despite the overwhelming evidence that it is just as government imposed (if not more so) than the New Urbanism. I suspect that such people are not truly libertarians. They are merely reactive NIMBY's (or perhaps even BANANA's - Build Absolutely Nothing Anywhere Near Anything) who, due to a mild right-wing leaning, feel comfortable waving the "free market" flag in support of their anti-density preferences. Hard facts about restrictive sprawl zoning, massive government road subsidies, and the general anti-free market reality of sprawl would do little to assuage such people. As long as they get their wide highways, free parking, and cheap suburban land (a side effect of the money the government pumps into highways) they are happy. "Who cares if it's inefficient? Other taxpayers are picking up the dime.

To the real "pure" libertarians who stand opposed to New Urbanism, I offer these three explanations.

- Many libertarians simply are ignorant of how the government effectively mandates sprawl. Every now and again you read a libertarian article (Thomas Sowell comes to mind) complaining about government highway spending. However, most libertarian writers are economists or political scientists. They neither know nor care much about the details of zoning laws, government expenditures, and other land use restrictions that spawned sprawl. I once had a brief conversation about sprawl with a brilliant guy from the CATO institute, Dr Tom Palmer. While he expressed a general dissatisfaction with sprawl, he concluded that it was all okay, because the government paid for highway construction exclusively with the gas tax. Therefore, he reasoned, only drivers were forced to subsidize highways, and subsidize it in proportion to use. Of course, this argument is factually false, on its face. Government agencies also pay for road construction with federal discretionary funds, state and local sales taxes, and outright municipal bonds, backed by other tax revenue. Now, it's not that Dr. Palmer's logic is lacking, far from it. He just neither knew nor cared much about landuse policy. Consequently, his premises were inaccurate.

- Others remain extreme ideological purists. These people might actually embrace my argument, and vehemently oppose sprawl. However, they would still view NU as an equivalent infringement on property rights simply because it remains a form of regulation. In other words, even though they might admit that sprawl runs contrary to the free market, the NU still wouldn't be "free market enough" for such ideological purists. It's analogous to the all pretentious Canadian socialists who complain about NU not being "real" or "gritty" enough to be included in their progressive conception of urbanism.

-Still others merely oppose the New Urbanism, precisely because of the types of people who tend to support various "urban" causes. The aforementioned "pretentious Canadian socialists" and other of their ilk, run rampant throughout pro-urban movements. They voice their loud and largely ill-considered preferences for such left-wing nonsense as increased taxation, rent control, living wages, extremely cumbersome design review processes, more public housing, and so forth. Such activists proclaim their causes in the name of urbanism. Consequently, many right-wing people develop a blanket opposition to anything "urban," thanks to the peripheral issues of many extreme progressives.

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