Econ- Urban Planning

From an Austrian Econ forum but worthy, yes worthy.

The most extreme examples of regional zoning were realised with terrible consequences in the former Soviet Union. And yet although the link between ecological depletion and cultural devastation is more visible in totalitarian regimes, the disembowelled neighbourhoods of many North American cities are in just as dramatic a state of decay. These tragic failures mark the dead-ends of all forms of collectivism. Traditional urbanism, the multifarity and proximity of uses, the great dimensional and functional variety of building plots are instruments without which societies based on individual responsibility, entrepreneurship and free competition cannot produce civilised cities and villages.
Léon Krier, Architecture : Choice or Fate

As one of the greatest construction booms in history unwinds it is necessary to observe that sprawl is still the dominant form of urban development in North America, and increasingly so the rest of the world as well. The Smart Growth and New Urbanism projects, although having had some success in the redevelopment of historic core cities, have failed at their primary objective: to stop sprawl. Whole metropolises have appeared during the boom that consist of nothing but sprawl, most notoriously Las Vegas and Phoenix. Despite the fact that New Urbanism principles have demonstrated both popular and commercial superiority to sprawl in those places they have been applied, there has been little interest, often hostility, from other municipal bodies about adopting them. The anti-sprawl movement has been fighting a desperate struggle against every political body it encounters, and its platform is resisted using arguments of a spectrum wide enough that some contradict each other, such as that it is “right-wing developer speak” and that it is “anti-business”.

The consensus within the anti-sprawl movement is that sprawl is a regulatory problem. It is sufficient, in order to end sprawl, to alter the regulations that perpetuate it and to replace them with regulations that favour traditional town building concepts. The strategy of the movement has been to enter the political struggle with treatises such as “Suburban Nation” to appeal to the general public as well as lobbying to political authorities, thus hopefully pressuring the planning authorities to adopt their point of view. The strategy has had limited success amongst established metropolitan cities and failed to succeed in established sprawl cities and rural regions. Sprawl continues to expand.

Behind the strategy of political lobbying there is the assumption that since sprawl was created through the political process it can be undone through the political process. It is only necessary to overcome the political ideologies that have backed sprawl and restore the traditional ideology. The possibility that sprawl is a product of the political process has not been considered. If it were true, there would be no way to abolish sprawl within the current system. Any achievements of the anti-sprawl movement would be gradually eroded and rolled back, while the expansion of sprawl into undeveloped regions would continue unhindered.

Economic Calculation

Modern cities are organized and operated as collectives. This process was put into motion during the 19th century in Europe, and was the original situation in the United States. This has caused urbanism to suffer the failures of collectivism as experienced in other economic sectors and in the general economies of the socialist states. The fatal flaw of collectivism is the problem of economic calculation, which is the rational valuation of assets and actions. This problem was championed by the economist Ludwig von Mises in his works Economic Calculation in the Socialist Commonwealth and Bureaucracy, and has been one of the foundations of “Austrian school” economic theory ever since. The problem is as follows: considering that value is marginal and subjective how is a socialist government supposed to determine what is the optimal path of production? If producing a certain amount of good A requires either 5 units of B and 4 units of C, or 4 units of B and 5 units of C, which path should be chosen? The free market economy relies on monetary prices to make cost comparisons, thus if the current market price for B is 10$ and for C 5$, the choice is between a process that costs 70$ and one that costs 65$. It is then trivial to decide what action to take. Prices inform someone of the economic cost of different actions. However in the socialist economy there is no market. Where prices in a free market economy are determined by the interaction of subjective valuation of two individuals in an exchange, in the socialist state prices are determined by decree of the authorities, regardless of scarcity. It is impossible to know if scarce resources are being put to their most valuable use, and therefore the idea of a socialist economy itself is a contradiction in terms. Scarce resources can no longer be economized when private property is abolished. The problem also occurs when we face a choice between different actions that have different costs but also different benefits. If action A costs 50$ and action B costs 80$, which should be done? If there is a market for the product of the action then we can evaluate the profit from either action. Suppose action A earns 60$ in revenues and action B earns 100$, then clearly action B is the most profitable and the economic choice is to do B despite the fact that this path costs more.

This problem plagues all cities today. Prices, commonly referred to as property taxes, are determined arbitrarily as the political process unfolds. Taxes are raised when the city’s budget goes into the red. Only exceptionally are they lowered. The consequences of a change in prices on the city’s competitive attractiveness, the city’s ability to attract investment and residents, are ignored. Contrary to the belief that a city is a “natural monopoly,” cities across the globe are in fierce competition not only between long-distance poles but also with their own suburban fringes. World-class cities like New York were nearly turned into ghost towns by flight of residents attempting to escape the high prices. As well there is never-ending debate as to how a city should be developed. Should there be a street grid or cul-de-sacs, more parking or more density? We are faced exactly with the problem Mises described, we cannot put a price on different urban development patterns because we have no market for them, and thus no valuation can be made. Urbanism is flying blind and is the object of permanent debate with no possible resolution.

Economic Decisions against Political Decisions

There are thus only two methods for making decisions as to a course of action. There is the economic process, which is to say to undertake the course of action that provides the greatest benefit at the lowest cost, or in other words the most profitable course of action, or the course of action that results in the greatest economy. There is then the political process, whereby a group of individuals discuss and debate a course of action until a vote is taken, or a decision-maker elected, to settle the issue. The participants in the political process are all capable of economic calculation from their own point of view, meaning they will take positions based on what they believe is most beneficial. However since they are shielded from the changes in the capital value of the institution they will not be able to calculate this value. Even the most talented mayor or the most lucid voters will not be able to know what is good for the city because the city as itself does not record whether it is increasing or decreasing in value.

The effect of individual action on the value of the collective property is sometimes called an externality. If, for example, a restaurant were to dump its trash onto the street, it would be said that the restaurant is externalizing its trash costs onto the street. If a popular discount retailer attracts heavy traffic and causes congestion, it would be said that this retailer is externalizing its traffic costs onto the street. To a private owner however the problem is easy to resolve. He may interdict the dumping of trash on his property and restrict the entrance of automobiles. What course of action he will take is a problem of economic calculation.

That the political process is often unable to deal with this kind of so-called externalities problem is evident. Traffic congestion on motorways has been a known problem since motorways first appeared in the 1950’s. On the surface it is an externality problem. Every driver uses up space taking away space from other drivers. The cost of every single individual use is externalized on everyone else, and congestion follows. The solution is of course very simple, limit access to the motorway to the maximum capacity. A private owner would impose this solution based on the most beneficial process, most likely through a system of tolls. But since the political process cannot calculate the benefits earned from such a system, there is not only gridlock on the motorway, but also gridlock in the decision process. Because they have already been taxed to pay for the road motorists consider extra tolls for access to be an injustice and the voters will punish the politician who imposes such a measure. In the meantime the number of people on the road increases, and the number of people who are opposed to paying tolls increases as well, making it even more difficult for a political officeholder to impose the proper solution without paying for it with his career. Thus the political process will result in outcomes that are anti-economic, that waste resources.

Democracies Don’t Compete, They Coexist

Because politicians will not seek the most profitable outcome when they choose their actions, the result will be that democracies will not behave in a competitive pattern and will not react to existing competitive challenges. This reason alone is in large part responsible for the never-ending expansion of sprawl. Although the spatial nature of sprawl explains why it consumes so much land, the anti-competitive nature of politics explains why sprawl expands even in cities where the population is shrinking. The central city, often ruled by some unapologetically corrupt mayor, stands by and watches as its residents flee to the suburbs or beyond. Property values plummet in the centre city, income falls along with it and the city’s budget goes into the red. The city responds not by increasing its competitive advantage, which would mean reducing prices and increasing quality, but by raising taxes to temporarily make up the shortfall in the budget. Of course this higher price only serves to drive even more people away, and the city is soon back in the red.
A competitive city would not only want to maintain prices at an attractive level, it would also seek to accommodate the highest possible density, the density that generates the most income from the street network. When the limits of this density are reached, then the city will expand horizontally by building equally dense new neighbourhoods. Because a competitive city is always seeking entrepreneurial opportunities to increase its profits the suburbs should rarely be in a position to attract away the core city’s residents.

Even though current cities do not behave competitively, they are still in a state of competition with one another. Different cities in a metropolitan region, with their arbitrarily determined level of quality and prices, coexist with one another. Residents and investors tend to move to the most attractive places. Some cities become slums and others become exclusive enclaves. There is no process at work where the successful cities overtake the failed cities, a process that in a free market economy is handled by the capital markets.

Participatory Democracy and Rational Ignorance

Even ignoring the problem of economic calculation, there remains impossibility for the democratic system to handle specialization. To require the general public to take a stance on what is the ideal urban policy is an exercise in futility. The voters are rationally ignorant, which means that they have calculated that the cost of informing themselves about urban planning issues would not yield any benefit in excess of the costs. Urban planning is a highly specialized discipline often requiring graduate-level studies. It is ridiculous to expect the general public to be able to take a correct position in the debates. The voters will not understand what the right urban planning policy will be and will not vote a mayor to office who promises to undertake such a policy. The mayor’s campaign credentials will be limited to superficial issues and promises.

What the voters do understand are the issues that affect them directly and that they can resist politically, issues that do not require them to undertake advanced studies in urbanism, for example the need to protect their “property value” by preventing the development of nearby sites into undesirable properties. There will therefore never be political pressure on the part of the public that seeks to protect the interest of the city as a whole, but public pressure will take the form of contests of special interests battling out over control of the city: residents versus developers versus the mayor’s office and planning commission. Beyond these conflicts the residents will take no interest in the urban planning issues of the city, and none should be expected of them, and most important of all, none should be demanded of them. That would be imposing an additional cost on residing in the city and would reduce the city’s competitive advantage even further.

The mayor who wishes to remain mayor will have no interest in developing an advanced urban pattern as such a pattern would create conflicts that threaten his office. Since there is no performance target for the mayor to achieve, he will remain in office so long as no controversy emerges involving him. The mayor will therefore favour an urban pattern that reduces conflicts to a minimum regardless of its impact on the city as a whole, and the result will be a trend towards urban decomposition. This pattern, the pattern that reduces political conflicts to a minimum, is sprawl. Sprawl is the accumulation of regulatory compromises that have been created through the political process at the expense of the vitality of the city. They are nearly impossible to remove because they were created to resolve a conflict, and removing them reopens the conflict, threatening political offices and powerful lobbies in the process.

In Suburban Nation, famous New Urbanists Andres Duany, Elizabeth Plater-Zyberk and Jeff Speck claimed that sprawl continued because of its seductive simplicity. What they missed is why so many cities and counties chose simplicity over a better place to live. They made this choice because of politics.

Bureaucracy

The political system requires that every citizen receive “equitable” treatment. This makes it impossible to resolve cases using “ad hoc” value judgements. Everything the city does must be codified into written regulation. In a system of private property each case can be negotiated between the parties depending of the value they wish to gain from it. Although there are benefits to standardizing procedures, there are points when such standardization is detrimental and avoided, instead relying on case negotiation to determine terms.

Because a bureaucracy must treat everyone equally and cannot conduct ad hoc negotiations it becomes ruled by a code, and this code by necessity cannot understand and transmit terms of quality. It can only understand quantity and quantifiable terms. While a strict definition of what consists “commercial use” or what is a necessary distance for a setback can be easily defined, one cannot define beautiful ornament in code. Any standard of aesthetic will be impossible to define. A project like the reconstruction of Brussels’ Grand Place where the architects were required to copy the style of a specific building would be unworkable in a system of codification. How is the bureaucrat expected to approve or deny a design without resorting to his own subjective valuations?

In a political urban planning system there will therefore always be a tendency to rely on quantifiable objectives instead of qualitative objectives, and the quality of urbanism will decline. In an economic urban planning system there will be codification to the extent where rational economic calculation determines it to be beneficial, while subjective negotiation will be used for all other purposes.

Regulation and Deregulation
A point of confusion brought about by politicization is the role of regulation in urban planning. The typical divide is for conservatives to be pro-deregulation and for social-democrats to be pro-regulation. Both positions are incorrect and ignore the nature of the city, which is not a government but is in fact a corporation with property. A government establishes regulations on how individuals must conduct themselves towards each other. A city’s regulations on the other hand define how individual citizens must conduct themselves towards the city. It is not an intermediary arbitrator between conflicts, but its own self-interest.

The concept of property implies limitations on its use. Property makes no sense if anyone can do anything one pleases with it. A situation such as this is often referred to as “the tragedy of the commons”. For any property there will therefore be regulations determined by its rightful owner as to how it may be used. These regulations may be very simple, such as requiring visitors to take off their shoes before entering one’s home, or forbidding smoking. The owner imposes them with a specific purpose in mind.

The core property of a city is the network of streets. There cannot be a city without these. It is essential to the success of the city that the streets be properly regulated. This includes imposing speed limits, defining the direction of traffic in specific lanes, and installing traffic lights and pedestrian crossing paths. If one were to “deregulate” these requirements there would be chaos on the property, the city would succumb to gridlock and a “tragedy of the commons” would ensue. There is thus very clearly a need for adequate regulation.

To what extent should the city’s regulatory power reach? This is what has fuelled the debate between the two political wings. Can a city enforce a smoking ban on all businesses in its network? Can it demand licensing for different commercial activities? Can it prevent private homes from being converted into rentals? For each regulation it must be asked, what does the city gain? Once more we run into a problem of economic calculation. What is the cost, what is the benefit of each regulation? It is certainly possible for, as example, an airline to require all passengers to wear white shoes and white shirts before coming on board an airplane. Does such a regulation make sense? For an airline attempting to attract consumers to its service, absolutely not. The regulation provides no perceptible benefit and makes it a hassle for consumers to enjoy the service. The airline would therefore never impose such a regulation. Cities, because they are owned collectively, cannot make this form of calculation on their regulations. Regulations are added and (seldom) removed without any rational evaluation of their consequence on the value of the city itself. The strongest political lobbying block gets its way no matter the cost. This can result in absurd regulations such as Mexico City’s attempt to cut down on traffic and pollution by allowing only odd or even-numbered license plates to drive on certain days of the week. The residents reacted by purchasing second cars, often older, more polluting models, with the license plate complementing their first car. Not only did this have a negative impact on the stated objective, it created an additional hassle to living in Mexico City and reduced the city’s competitiveness.

Commercialization and Privatization

There exists under the topic of privatization confusion between commercialization and privatization, where it is understood that the terms are interchangeable. The difference between them is critical. Privatization is the process of making an asset or property privately owned, brought under the control of an individual. Commercialization is the process of selling a good on the marketplace. It is therefore possible for an asset to be collectively owned and commercialized, and for another asset to be privately owned and not commercialized.

A coffee shop, for example, has one commercialized good, coffee, and many other non-commercialized bundled goods, such as providing tables and chairs, relaxing music and a social meeting place. The customers of the coffee shop do not buy a right to sit at the table and meet people. They pay for coffee and other goods are provided to them free of charge. Thus the non-commercialized goods are part of the business’ competitive advantage. They attract customers away from other coffee shops who don’t provide such goods. The coffee shop that provides bundled goods can charge a higher price for coffee than its competitors while remaining attractive, even though the production cost of the coffee itself is identical from one shop to the next. Providing bundled, non-commercialized goods increases the profit from the primary commercialized good.

A relevant example is the use of parking spaces. Street-side parking spaces in urban cores are commercialized using parking metres. The collectively owned city sells the right to park to drivers by time-blocks. Privately owned parking is often not commercialized and is provided to the customers of a retail building free of charge so as not to turn away visitors and lose sales for the shops. The retailers calculate the cost of providing free parking is less than the cost of potentially driving away paying customers.

Public parks have obvious positive effects on the value of properties near them, what is sometimes termed a positive externality, and thus generate increased income for the city. It is hard to conceive a simple park to be wholly commercialized and surrounded by gates, with an entrance fee charged. Other forms of commercialization can be used to generate income directly from the park instead, such as renting recreational equipment (bicycles, kayaks) to be used within the park. Thus an asset can be used both for commercial and non-commercial income generation.

It is also a mistake to think that goods ought to be unbundled and sold separately without evaluating if this good can be competitive as a stand-alone product. It would certainly be possible to start a coffee shop where customers have to bring their own coffee, while a cover charge is necessary to enter. Such a coffee shop would have unbundled the environment of the shop from the coffee sales activity, becoming something akin to a coffee club. However this club would likely not be able to succeed on the marketplace when its competitors provide both goods as one product. There is not enough demand for both goods separately, but enough when the goods are bundled. It is therefore economically efficient to combine them. In the political sphere there is often a lot of debate as to what should be provided on the market and what should be provided by the “public sector”, but these debates ignore whether or not the good being separated from the public sector can survive on its own. Should parks be provided on the market? They would be difficult to fund on their own, and there would likely be much fewer parks built. The city as a whole would then suffer and become less competitive than other cities that bundle parks with the street network. Forcibly separating these two goods then makes the city worse off.

Urbanism in practice combines both planning and development, and the insistence on leaving “the market” to guide development has resulted in an artificial separation between the two. Instead of planning urban spaces, developers are limited to creating “subdivisions” of land as indicated by the planning codes of the city or region where their development is located. The result is that potential valuable additions to the development, such as long-term investments in the streets, cannot be converted into a greater value for the developer. Developers then profit by reducing the quality of these investments to the barest minimum, to the extent that the bureaucratic planning codes require them to provide.

There is no methodical way to decide what should or shouldn’t be commercialized. It is another application of the calculation problem that only individuals maximizing their profit can make such a decision economically. Within a set of assets some will be commercialized and others will not, depending on what is the most valuable total outcome. To what extent and with what system an asset will be commercialized is also a problem of economic calculation. For example, is it preferable to charge fares or sell annual memberships? It is today widespread practice for expressways to be accessible to automobile users free of charge while mass transit systems such as subways and local buses charge fares. Perhaps it would be beneficial to the city to invert the relationship, to provide mass transit free of charge while charging for access to the expressways. It would certainly do a lot to tackle the problem of traffic congestion and pollution. Such a trade-off is however politically controversial and can only be made if there is rational economic calculation at the head of the city, which requires private ownership.

Quality Competition

Deducible from bundling and commercialization is the idea that goods can be made attractive not only by price competition, but also by changing the overall quality of the good in question. For example automobiles today are more expensive then they were during the era of the Ford Model T. Henry Ford sought to claim the automobile market by making his production process more efficient and selling cars that would be more affordable to more people. He undertook price competition. Since then however the price of automobiles has increased, and low-price automobiles have been driven out of the market. Automobile companies have invested in greater quality and more features for their products. It is perfectly normal for a new automobile to be equipped with air conditioning, multimedia stations and GPS locator systems. It is not even worth mentioning that the level of comfort of a new automobile is much greater than that of the Model T. This higher level of quality in the product allow the automobile companies to demand higher prices for their products, prices that consumers are more than eager to pay in exchange for the greater quality.

Cities and their planners have been completely oblivious to issues of quality in the product. How often does one hear political demands for subsidization of mass transportation? Taking the bus, it seems, is always too expensive for the man who drives a SUV with televisions for every seat. Because of the bureaucracy’s inability to codify quality, the product offered by the collectively owned city is the barest minimum quality possible. Everyone who has experienced mass transportation is familiar with the occasional reek of urine. Sanitation is a basic quality of any product, and yet the bureaucracy cannot even provide for this very basic need. Under these conditions any person that can afford the higher quality alternative will gladly pay for it.

No amount of subsidization will take people away from their cars. Even free the mass transportation system will remain unviable unless an effort to achieve the right quality in the product, which includes but is not limited to sanitation, convenience, comfort and reliability, is achieved. The only way to determine the right quality in the product is through economic calculation and thus with private property.

Urban Glory and Decomposition

An important result of Mises’ economic calculation theory was that the socialist planners could achieve a semi-rational economy as long as there existed a market somewhere on the planet. They could then have an estimate of the exchange value of goods to conduct their planning, although one that would not be location appropriate. Despite not having a market, the socialist planners could copy the market in place somewhere else. Only until the last markets were abolished would the socialist economy “go blind” and begin to retrogress into chaos and primitivism.

This has important historical implications for urban planning. Until the revolutions of the 19th century swept away monarchical rule in the European world, most cities were held as the private holdings of aristocratic rulers. They were roughly their own private property. Although they couldn’t achieve the level of sophistication that a free market could provide through exchange and specialization, the urban estates, being privately held, could benefit from rational economic calculation. The theory would predict that beneficial innovations in urban planning would take place there and then be copied in collectively owned cities.

This explains the rather poor urbanism of American cities compared to European cities. In America cities were political from their birth. They adopted rigid grid layouts and very basic elements of urbanism and building massing that were remnants of the European tradition.

New York was run for most of the 19th century, the critical period of its development, by the political gang-club Tammany Hall. It expanded in an extremely monotonous grid pattern and only acquired an urban park when conditions in the city had become so untenable that the political rulers could no longer justify avoiding the problem. The solution was to import the royal parks of Europe, such as Hyde Park, Regent’s Park and the Bois-de-Boulogne recently made public by Napoleon III, into New York’s gridiron plan. Central Park is thus an imitation of the aristocratic urban park. It was only conceivable by New York’s authorities because private estates had invented it elsewhere. The parallel development of Paris and New York in the 19th century makes for an interesting comparison. Paris, by virtue of Louis-Napoleon Bonaparte’s coup in 1852, became a pseudo-private estate under the directorship of prefect Haussmann. Haussmann received one directive from Bonaparte, to make Paris the greatest city in the world and spare no expense. New York under the rule of Tammany Hall expanded on its street grid as millions of people migrated to settle there. Despite the fact that it generated unprecedented wealth in the 19th century, New York never adopted any form of aesthetic street design. Haussmann’s work was focused on the street and the creation of new urban models to modernize Paris. The architectural legacy of the 19th century in New York consists of several grandiose and wonderful buildings that certainly must have been very expensive to construct, however there were no urban spaces created that could rival those of Paris. Of all the wealth New York could generate it never channelled any of it into its urban environment.

A great share of the so-called anti-urban preferences of Americans can be traced back to this failure to create an urban environment during the critical phase of America’s development. Because American cities never achieved an acceptable level of hospitability the general public is instinctively opposed to the idea of a city. They prefer the suburbs to the “grimy, gritty city”. They have no concept of a city that is clean, safe and visually delightful because it has never been the norm in American history. To turn tragedy into farce, there are groups of anticonformist urbanites that find grime and grit to be positive aspects of an urban environment!

With public opinion squarely, and justifiably, against the American city, the development of suburbia was favoured. In suburbia the city has to provide very little in terms of environment. As long as the different parts are physically connected to each other, the city works. That the streets themselves are ugly and inhospitable is not important. That was the way it was in the old industrial city. Suburbia reduces the city’s responsibilities to their strict minimum, thus limiting the damage that collectivism can cause on the residents’ lives. Suburbia was a solution to the problem of the American city, although not the optimal solution, which is the traditional European city.

But even the traditional European city had difficulty surviving through the 20th century. The abolition of the remaining traces of monarchy in the aftermath of World War I was the trigger point where the pseudo-market for cities was definitely abolished, and thus the point where urbanism went blind. This permitted the appearance and adoption of nonsensical planning schemes such as Le Corbusier’s Radiant City plan or the Garden City. Urban renewal programs and construction of “slab” tenements were heavily subsidized by state agencies despite the fact that their impact on the city, and the life of the residents, was ruinous. The reason these programs could go on past the initial failures was that there was no clear information gathered about their success, profit or loss, which could give an objective feedback to the participants. The demolitionists proceeded to reorder the physical nature of the city without realizing the consequences of their acts on the city itself.

The mass-production of automobiles was even more disastrous to cities that had lost their ability to adapt. Traffic choked the narrow urban centres of Europe and drove the demolitionists in America into a frenzied race to expand road capacity by taking over useful pedestrian environments. Had there been rational economic calculation still in place the city could have accommodated the car as elegantly as it had received the railways in the 19th century. Instead the response was paralysis in Europe and mass demolition in America. The outcome in both locations was to justify the exodus to the suburban fringes. Several generations later some successful efforts, such as London’s congestion zone, are being made to restore the balance, but the lateness of this measure does not bode well for another future event of this type. Not only will cities then have to deal with the remaining unresolved issues of the automobile, but a whole new class of issues requiring immediate attention. They may be completely overwhelmed once more.

Under New Ownership

Despite it being obvious by now that a market for cities is not only necessary, but also urgent, there remains the problem of determining what form this market will take and how it is to begin. Without extending the scope of this essay into political strategy and all its pitfalls the safest proposal is to simply take our current cities as they are and capitalize them with every asset currently under their ownership. To gain the support of the voters it would be convenient to convert every vote into an exchangeable capital share thus allowing everyone to share in the profits of the reform. Cities in deep budget deficits and heavy debt load will not achieve a high share value, but it is precisely this type of city that residents will be most anxious to reform.

To the extent it is possible there should be no imposed separation of the city’s activities before the reform. We have shown that it cannot be known outside of the market what combination of goods the city should provide to its residents. It would be contradictory to arbitrarily eliminate some of these activities prior to de-collectivization. Once in private ownership the city may abdicate some of its operations back to the state, such as the police service, or spin-off and outsource unrelated activities, such as motorways. It is even possible that the city will acquire and bundle new activities that increase its competitive advantage. If it were possible to know in advance how an enterprise should be structured, there wouldn’t be an economic calculation problem.

Conclusion

The battle against sprawl cannot be won in the political arena. It is politics that created sprawl and perpetuates it. It is politics that legitimizes it. There is no economic, social or ecological justification for sprawl. The New Urbanism movement must recognize that its greatest successes have been built on private domains, such as the towns of Seaside and Poundbury. It is no longer possible to ignore the institutional forces driving sprawl. For the urban planners employed in the municipalities and regional governments it is no longer permissible to tolerate the frustrations of politics as a necessary evil. It is not necessary. It can be fixed. Urbanism can be made a powerful, positive aspect of our lives once again.

There is a better way.

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