Rothbard the Urbanist Part 3: Prevention of Blockades

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In the last post, we discussed the first paragraphs of chapter 11 of Murray Rothbard’s For A New Liberty. (available free from Mises.org as pdf, web page, and audio book) Those paragraphs discussed the private ownership of all land, including streets and roads. Rothbard clearly and concisely argues that private ownership of streets would result in safer public spaces.

Discussions I have had with people often lead to the topic of forestalling, in which a sinister land owner decides to completely surround a neighbor’s property, preventing him from using it. This valid concern can be eased through a principled analysis of such a situation:

At this point in the discussion, someone is bound to raise the question: If streets are owned by street companies, and granting that they generally would aim to please their customers with maximum efficiency, what if some kooky or tyrannical street owner should suddenly decide to block access to his street to an adjoining homeowner? How could the latter get in or out? Could he be blocked permanently, or be charged an enormous amount to be allowed entrance or exit? The answer to this question is the same as to a similar problem about land-ownership: Suppose that everyone owning homes surrounding someone’s property would suddenly not allow him to go in or out? The answer is that [p. 204] everyone, in purchasing homes or street service in a libertarian society, would make sure that the purchase or lease contract provides full access for whatever term of years is specified. With this sort of “easement” provided in advance by contract, no such sudden blockade would be allowed, since it would be an invasion of the property right of the landowner.

A likely solution to this issue of forestalling, would be the emergence of “access insurance”. This would be similar to title insurance, which is a system that emerged as a result of the United States system of document recording “in which no governmental official makes any determination of who owns the title or whether the instruments transferring it are valid.” The US system seems anarchic, but the Title Insurance system emerged through the marketplace.

Such a system of “access insurance” would likely emerge to become as universal as the title insurance system, and likely be required by lenders. A buyer of a property would purchase insurance to ensure that access to the property would not be denied by any parties. If some neighbor decides to invade the property rights of the insured by blockading him in, the “access insurance” company would have to compensate the policy holder for the full value of the property (or other amount insured). Thus, the heavily capitalized insurance company has every incentive to use its vast resources to prevent such an event from occurring to defend the property from blockades.

A few updates

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I added a few features to improve the reader experience:

1.
I started using twitter (in addition to linking on delicious) to share links to related articles. You can follow the Market Urbanism twitter feed here. I think I’ll eventually phase out the delicious feed, and use twitter exclusively.

2.
I migrated the comments to DISQUS. The comments should remain threaded as they did before, but will have added functionality for commenters such as:

* Track and manage comments and replies
* Verified commenter reputations across sites
* More control over your own comments on websites
* Never lose your comments, even if the website goes away
* Build a global profile, or comment blog, to collect and show off what you’re saying
* Easier to comment on websites using Disqus
* Reply to comments through email or mobile
* Edit and republish comments with one click

Please let me know if you encounter any problems with the new commenting system.

3.
Based on some of the discussions on recent posts, which I found very valuable, I decided it would be good to add a FAQ page. This is under development, but I think it will serve as a valuable resource. Let me know if you have any questions for the FAQ or suggestions.

O’Toole Under More Fire

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At Streetsblog, Ryan Avent presented a scorching attack on the most notorious free-market impostor – Randal O’Toole: Taking Liberties With the Facts for his consistent hypocrisy:

The Cato Institute’s Randal O’Toole gets under the skin of many of those interested in building a more rational and green metropolitan geography, but in many ways he’s an ideal opponent. It would be difficult to concoct more transparently foolish arguments than his. The man is an engine of self-parody.

The requisite identification of “libertarian” contradictions:

This is one thing I’ve never understood about the libertarian love affair with highways; they seem utterly blind to the fact that it has required and continues to require massive government action to build and maintain the road network. The interstate highway system is perhaps the single largest government intervention in the economy in the 20th century. Reading O’Toole you’d think it was a wonder of the free market.

And with ease, Ryan points out the data needed to take O’Toole to task on his persistent assertion the “roads pay for themselves”:

The source of his blindness on the issue seems to be due to his belief that roads pay for themselves, and that congestion exists only because governments shift gas tax revenue to pay for transit and other smart growth projects. Nothing could be farther from the truth.

In the first place, gas tax revenue comes nowhere near paying for roads. Federal gasoline tax revenues cover barely half of the annual budget of the Federal Highway Administration. Add in diesel tax revenues and you’re still short. And that’s just the federal budget picture.

In response, Randal replies to critics in the comments of his latest post of his “Antiplanner” blog:

The Antiplanner sees the American dream as freedom of lifestyle choices and opportunities to realize those choices unfettered by government subsidies or restrictions.

As for the claim in D4P’s link that the Antiplanner ignores highway subsidies, I’ve addressed that many times in this blog. Yes, there are highway subsidies, but they are tiny compared to transit subsidies. I oppose all subsidies. Will D4P agree with me that we should get rid of all subsidies and then let people make their own choices?

Great!  So, this is the standard by which the “anti”planner wishes to be judged?  Very well – From now on, this shall be the standard I shall point out his hypocrisies.

The rhetoric of his first statement is noble, but I don’t think Randal read Avent’s post, or simply evades the arguments.  I’d like to see him rebut Avents arguments directly, as opposed to brushing them aside.  To assert that transit subsidies outweigh highway subsidies may be true when only considering the proportion of public vs private funding, but is absolutely absurd when compared on a national scale, especially over the past 70 years.  I’m more than willing to grant to him that transit is significantly over-subsidized, but the vast subsidies to highways over the years have empowered planners to shape the landscape irreversibly away from what one would expect when “unfettered by government subsidies”.

Nonetheless, O’Toole and Avent both understate the scale of highway subsidization when looking at explicit costs (or accounting costs) and neglecting opportunity costs.  First, highways take up a vast amount of real estate, which can no longer be used productively.  Second, publicly-run transportation enjoys tax-free status, saving agencies on property taxes, sales taxes, taxes on revenue generated, and other significant expenses.  At the same time, accounting costs neglect the opportunity cost of capital diverted from private investment for public projects, Capital projects should earn a return sufficient to “pay for itself” plus a profit for the capital put at risk, but funding for public projects usually come from low-interest, tax-exempt bonds.  I didn’t even mention parking mandates and subsidies, cost of policing and a vast array of externalities.

Thus, when considering opportunity costs under any accounting comparison, all transportation is clearly subsidized at an amount that is absolutely unsustainable by private (“unfettered by government” interventions) means.  For the intellectually corrupt “anti”planner to consider highway subsidies “tiny” is a completely absurd disregard for the rational examination of reality.

For more, read, Urban[ism] Legend: Gas Taxes and Fees Cover All Costs of Road Use.

or some of O’Toole’s rare attempts at analyzing gas taxes and highway subsidies:

http://ti.org/antiplanner/?p=88

http://ti.org/antiplanner/?p=500

Rothbard the Urbanist Part 2: Safe Streets

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The recent post, Public Education’s Role in Sprawl and Exclusion generated some interest and fantastic comments.   I recommend reading Murray Rothbard’s For a New Liberty in its entirety.  It is elegant in its consistently radical application of principles.  It is available for free from the Mises Institute as a pdf, and webpage.  I listened to the audio book version superbly read by Jeff Riggenbach.

It turns out the entire Chapter 11  called “The Public Sector, II: Streets and Roads” is actually a chapter on Market Urbanism. Bryan Caplan considers this chapter “the least convincing chapter in the book”, but as a Market Urbanist, I strongly disagree.  I do admit that his discussion of safety and policing of private local streets involves a great deal of speculation and reliance on faith in the action of individual agents, but the insights into road subsidization and land-use patterns was decades ahead of its time.  These insights may not seem so radical now, but imagine the resistance to these ideas in the days before urbanism gained much credibility.

I decided it would be valuable to share a thorough parsing of the chapter.  I checked with the Mises Institute, who informed me that I am welcome to quote large pieces of text directly from the book – so I will.  Over the next few weeks I’ll share parts of Chapter 11 for discussion.  Feel free to read ahead…

In response to the first Rothbard post, Bill Nelson commented:

That said, I think that Professor Rothbard unfortunately only sees what he wants to see through his “Austrian” lens, and is therefore missing other reasons why “poor” people are not welcome in the suburbs — or anywhere else. Specifically, most home owners are interested in keeping out not poor people — but instead people with sociopathic behavior — which is more common among people who are less well-off.

I responded that Rothbard has more to say on that topic.  In fact, as you’ll soon see, he has a lot to say on safety.  (Keep in mind that Rothbard wrote For A New Liberty back in the 1970s, prior to Times Square’s rejuvenation.  A lot has changed since then…)

Chapter 11: The Public Sector, II: Streets and Roads
Protecting the Streets

Abolition of the public sector means, of course, that all pieces of land, all land areas, including streets and roads, would be owned privately, by individuals, corporations, cooperatives, or any other voluntary groupings of individuals and capital. The fact that all streets and land areas would be private would by itself solve many of the seemingly insoluble problems of private operation. What we need to do is to reorient our thinking to consider a world in which all land areas are privately owned. Let us take, for example, police protection. How would police protection be furnished in a totally private economy? Part of the answer becomes evident if we consider a world of totally private land and street ownership. Consider the Times Square area of New York City, a notoriously crime-ridden area where there is little police protection furnished by the city authorities. Every New Yorker knows, in fact, that he lives and walks the streets, and not only Times Square, virtually in a state of “anarchy,” dependent solely on the normal peacefulness and good will of his fellow citizens. Police protection in New York is minimal, a fact dramatically revealed in a recent week-long police strike when, lo and behold!, crime in no way increased from its normal state when the police are supposedly alert and on the job. At any rate, suppose that the Times Square area, including the streets, was privately owned, [p. 202] say by the “Times Square Merchants Association.” The merchants would know full well, of course, that if crime was rampant in their area, if muggings and holdups abounded, then their customers would fade away and would patronize competing areas and neighborhoods. Hence, it would be to the economic interest of the merchants’ association to supply efficient and plentiful police protection, so that customers would be attracted to, rather than repelled from, their neighborhood. Private business, after all, is always trying to attract and keep its customers. But what good would be served by attractive store displays and packaging, pleasant lighting and courteous service, if the customers may be robbed or assaulted if they walk through the area?

The merchants’ association, furthermore, would be induced, by their drive for profits and for avoiding losses, to supply not only sufficient police protection but also courteous and pleasant protection. Governmental police have not only no incentive to be efficient or worry about their “customers’” needs; they also live with the ever-present temptation to wield their power of force in a brutal and coercive manner. “Police brutality” is a well-known feature of the police system, and it is held in check only by remote complaints of the harassed citizenry. But if the private merchants’ police should yield to the temptation of brutalizing the merchants’ customers, those customers will quickly disappear and go elsewhere. Hence, the merchants’ association will see to it that its police are courteous as well as plentiful.

Rothbard then goes on to describe two hypothetical ways private ownership would lead to safer streets – through joint ownership or management of city blocks, or ownership of the streets themselves by private operators:

Such efficient and high-quality police protection would prevail throughout the land, throughout all the private streets and land areas. Factories would guard their street areas, merchants their streets, and road companies would provide safe and efficient police protection for their toll roads and other privately owned roads. The same would be true for residential neighborhoods. We can envision two possible types of private street ownership in such neighborhoods. In one type, all the landowners in a certain block might become the joint owners of that block, let us say as the “85th St. Block Company.” This company would then provide police protection, the costs being paid either by the home-owners directly or out of tenants’ rent if the street includes rental apartments. Again, homeowners will of course have a direct interest in seeing that their block is safe, while landlords will try to attract tenants by supplying safe streets in addition to the more usual services such as heat, water, and janitorial service. To ask why landlords should provide safe streets in the libertarian, fully private society is just as silly as asking now why they should provide their tenants with heat or hot [p. 203] water. The force of competition and of consumer demand would make them supply such services. Furthermore, whether we are considering homeowners or rental housing, in either case the capital value of the land and the house will be a function of the safety of the street as well as of the other well-known characteristics of the house and the neighborhood. Safe and well-patrolled streets will raise the value of the landowners’ land and houses in the same way as well-tended houses do; crime-ridden streets will lower the value of the land and houses as surely as dilapidated housing itself does. Since landowners always prefer higher to lower market values for their property, there is a built-in incentive to provide efficient, well -paved, and safe streets.

Another type of private street-ownership in residential areas might be private street companies, which would own only the streets, not the houses or buildings on them. The street companies would then charge landowners for the service of maintaining, improving, and policing their streets. Once again, safe, well-lit, and well-paved streets will induce landowners and tenants to flock to those streets; unsafe, badly lit and badly maintained streets will drive those owners and users away. A happy and flourishing use of the streets by landlords and automobiles will raise the profits and stock values of the street companies; an unhappy and decaying regard for streets by their owners will drive the users away and lower the profits and the stock values of the private street companies. Hence, the street-owning companies will do their best to provide efficient street service, including police protection, to secure happy users; they will be driven to do this by their desire to make profits and to increase the value of their capital, and by their equally active desire not to suffer losses and erosion of their capital. It is infinitely better to rely on the pursuit of economic interest by landowners or street companies than to depend on the dubious “altruism” of bureaucrats and government officials.

I think it is easy to mistake Rothbard’s vision as some sort of privately-run pseudo-police state, clashing with Jane Jacobs’ vibrant public spaces.  Keep in mind that this was written in the 1970′s – when crime was at its peak in New York and many other cities.  But, as Jane Jacobs taught us, diverse, vibrant street life provides “eyes on the street” – a no-cost security measure.  As a commercial benefit, streets with high foot traffic also enable higher-rent ground-floor retail.  So, I think it’s important to add to Rothbard’s discussion of safety that a well-run block or street would be wise to encourage pedestrian-activated streets as both a cost reducing and revenue increasing measure.  Publicly-run streets lack this natural incentive.

Note: Rothbard does mention Jane Jacobs on page 247 in an unrelated chapter.

Stay tuned for more of this series. Feel free to read ahead or listen to the audio version of the chapter…