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Category Economics

Are You a Wright or Friedman Urbanist?

In a post blogger Eric Orozco called, ‘forerunner candidate for “most incisive blog post” of the year,’ Daniel Nairn of Discovering Urbanism discussed the seemingly conflicted camps of libertarianism when it comes to Urbanism.  His observations are based upon the comments in the Volokh article on planning and walkability linked in the previous post. Daniel (a non-libertarian) presents the opposing libertarian factions as The Wright Group, after Frank Lloyd Wright and his romanticism about individualistic prairie living and The Friedman Group, which “believes that the spatial distribution of development ought to be determined by a free market.” The Wright group seems to favor optimizing individual autonomy through spatial living arrangements even if doing so requires centralizing economic and political authority to some extent. The Friedman group seems to favor optimizing individual autonomy through market decisions even if doing so results in more people living in situations where full control over private property is compromised in some way. Daniel’s insightful choice of figureheads fascinates me from a philosophical point of view.  Frank Lloyd Wright was hardly a libertarian, but had strong individualist tendencies, and is said to be the model for Howard Roark’s character in Ayn Rand’s The Fountainhead.  Milton Friedman, a Nobel Laurette Economist, is probably one of the most famous figures of modern libertarian thought.  Despite Friedman’s steadfast defense of liberty, he had favored government roads on occasion. I think most would agree that The Friedman Group, as Daniel describes it, is more closely aligned with the thesis of Market Urbanism and the ideas of emergent order of the land marketplace.  Hayek or even Rothbard may also be considered appropriate, although less famous substitutes as figurehead. (note: I’m not sure what Daniel means by,  “even if doing so results in more people living in situations where full control over […]

Block vs Poole: The Public-Private Partnership Debate

The Orange County Register’s Freedom Politics website (check out my rent control article FreePo published in March) features articles discussing two differing takes on road privatization from notable scholars Walter Block and Robert Poole. In Robert Poole’s article, he discusses the merits of the increasingly popular use of Public-Private Partnerships (PPP) to fund and operate roadways: Four potential benefits are particularly important: Fewer Boondoggles: Elected officials often champion projects that yield political benefits but have costs greater than their benefits. But with PPP toll projects, nobody will invest unless the benefits exceed the costs to the extent that they can project a positive return on their investment. That’s a powerful safeguard against boondoggles. Avoiding “Big Dig” Disasters: Large-scale “mega-projects” like Boston’s notorious Big Dig are prone to large cost over-runs and schedule delays. In a well-structured PPP project, those risks can be transferred to the private sector, shielding taxpayers from those costs. Cost Minimization: Traditional highway projects are built by the lowest-bidder, which often means they are built cheaply and need lots of expensive maintenance over their lifetimes. But a PPP toll highway must be maintained for decades at the private company’s expense. Hence, it has every incentive to build it right to begin with, to minimize total life-cycle cost. Sustainable Congestion Relief: If you add ordinary freeway lanes, they tend to fill up and become congested. But today’s urban toll lanes use variable pricing (as on the 91 Express Lanes) to keep traffic flowing smoothly on a long-term basis. In contrast, Walter Block takes a more principled stand for complete privatization: Public – private partnerships (PPP) are thus part and parcel of both fascism and socialism; they constitute a partial state ownership of the means of production. As well, they are emblematic of fascism, and government is the senior […]

Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion

I’ve been meaning to address the public education system’s complex role in land use patterns, and found that Murray Rothbard does a better job in his 1973 manifesto, For a New Liberty than I ever could.  In summary, locally-funded public education is an engine of geographical segregation, which encourages flight from urban areas, and was a driving motivation for the popular acceptance of exclusionary zoning in newer suburbs.  As a result, wealth is consistently concentrated geographically, and housing affordability is at odds with these restrictions of supply intended to exclude poorer people from draining the property tax base. Here’s a paragraph from the chapter on education: The geographical nature of the public school system has also led to a coerced pattern of residential segregation, in income and consequently in race, throughout the country and particularly in the suburbs. As everyone knows, the United States since World War II has seen an expansion of population, not in the inner central cities, but in the surrounding suburban areas. As new and younger families have moved to the suburbs, by far the largest and growing burden of local budgets has been to pay for the public schools, which have to accommodate a young population with a relatively high proportion of children per capita. These schools invariably have been financed from growing property taxation, which largely falls on the suburban residences. This means that the wealthier the suburban family, and the more expensive its home, the greater will be its tax contribution for the local school. Hence, as [p. 133] the burden of school taxes increases steadily, the suburbanites try desperately to encourage an inflow of wealthy residents and expensive homes, and to discourage an inflow of poorer citizens. There is, in short, a breakeven point of the price of a house beyond which a […]

How Pricing Tolls Right Eliminates Congestion

Chris Bradford over at Austin Contrarian has been making some solid points in favor of congestion pricing. (here, here, here and here)  Chris’s core argument in favor of congestion tolling is that: congestion pricing does more than relieve congestion.  Congestion pricing tells us when a road needs more capacity.  Additional capacity costs money, and drivers are willing to pay only so much for it.  That “so much” is exactly equal to the price they are willing to pay to avoid congestion. The idea that toll profits send a signal to road operators to produce additional capacity is often neglected in discussions of the benefits of congestion pricing.  Without pricing, the only signal is the manifestation of congestion itself.  This is problematic, as the only solution is to build more roads when congestion is observed.  Actually if done right, years before congestion occurs with the help of foresight and luck on the part of transportation planners and agencies.  This problem feeds the dangerous new highway –> sprawl –> congestion –> highway expansion –> sprawl, etc., etc. positive feedback loop.  This feedback loop is quite a powerful mechanism that helps drive the unhealthy types of sprawl. Chris is on the right track, but sets a sub-ideal objective (in my opinion) when he says: The optimal congestion toll should be set just high enough to achieve free-flow (45 mph) traffic. Since the goal should not only be to avoid congestion, but to get the highest number of commuters through the system as possible, I would restate that as: The optimal congestion toll should be set at exactly the price that maximizes traffic flow. As Chris said, “Congestion pricing is hard.”  Although it seems complicated, you might be shocked at how easy it is, in concept, to price roads optimally.  That’s because it’s somewhat […]

The Nature of the Living City

Sandy Ikeda posted an abstract for a short essay he is contributing to a Festschrift honoring Jane Jacobs.  He quite eloquently describes the nature of the living city: A city is not a man-made thing.  Rather, it emerges from the actions of its inhabitants, who interact in unpredictable yet orderly ways.  Under the right conditions – the right “rules of the game” – what arises is vital, creative, radically unpredictable, and profitable:  the living city. Neither can it be inefficient, because that too presupposes a system-wide plan.  Both efficiency and inefficiency presume that we know how things ought to be, what success and failure look like, and that’s impossible in the urban dynamic.  Instead, borrowing from ecology (and certain heterodox schools of economic thought), we might say that a living city is a “dynamically stable” process, in which the forces of positive and negative feedback, as well as sudden mutation and diversity, combine under the right conditions to generate order through time.  It embodies trial and error, surpluses and shortages, apparently useless duplication, conflict and disappointment, trust and opportunism, and discovery and radical change.  These are in the nature of the living city. Another piece to look forward to!  Sounds like Sandy touches on some similar themes to Mathieu Helie’s upcoming piece on Emergent Urbanism. 

Intro to Emergent Urbanism

Mathieu Helie has been writing at a blog he calls Emergent Urbanism.  His most recent post is the first part of a series that will be published as an entire article entitled “The Principles of Emergent Urbanism” at International Journal of Architectural Research. This first part of the series, and hopefully the entire published article gives a great introduction to the concept Helie names “Emergent Urbanism.”  In my opinion as a Market Urbanist, Mathieu’s most remarkable contributions to urbanism revolve around the concepts of “emergence” as it relates to urban patterns, particularly with regards to Hayek’s ideas about “emergent order” or “spontaneous order”.  As Mathieu writes: How is it possible for what is obviously a human artifact to arise as if by an act of nature? The theory of a spontaneous order provides an explanation. According to Friedrich A. von Hayek (Hayek, 1973) a spontaneous order arises when multiple actors spontaneously adopt a set of actions that provides them with a competitive advantage, and this behavior creates a pattern that is self-sustaining, attracting more actors and growing the pattern. This takes place without any of the actors being conscious of the creation of this pattern at an individual level. The spontaneous order is a by-product of individuals acting in pursuit of some other end. In this way cities appear as agglomerations of individually initiated buildings along natural paths of movement, which originally do not require any act of production as dirt paths suffice. As the construction of individual buildings continues the most intensely used natural paths of movement acquire an importance that makes them unbuildable and these paths eventually form the familiar “organic” pattern of streets seen in medieval cities. This process still takes place today in areas where government is weak or dysfunctional, notably in Africa where urban planning […]

Undead Ideas: Rent Control

In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it.” (Assar Lindbeck, The Political Economy of the New Left, New York, Harper and Row, 1972, p. 39) Never underestimate opportunistic politicians when they smell blood in the water.  With housing prices already falling, politicians want to be seen as champions of the little guy and do something for “affordability” with one side of their mouth, and force housing prices to “recover” with the other.   With the economy in disarray, even widely discredited schemes such as rent control are making a comeback in politician’s playbooks of idiotic moves that please certain constituents. Rent control was implemented twice on a national scale in the United States.  Rents were first frozen during the difficult years of World War II, and frozen again in 1971 as part of President Richard Nixon’s wage and price controls intended to curb inflation.  After Nixon’s wage and price controls expired, many cities kept some form of rent control intact. Could President Obama resurrect an undead Richard Nixon to implement […]

Stadtluft Macht Frei (city air makes one free)

Thomas Schmidt wrote a great article for LewRockwell.com that covers a lot of urbanist ground, with some help from a broad selection of Jane Jacobs’ work.  Here’s a snippet: Though you might blame any number of obvious villains and historical processes for this, the name Ebenezer Howard would probably not come to mind. Howard created the Garden City idea of moving population out of concentrated urban areas like London and into a country setting, (inspired by the socialist polemic Looking Backward) and proved a major influence on urban planning; Radburn, NJ, where perhaps the cul-de-sac was invented, is an example of a place constructed to his ideal. He is one of the villains of Jane Jacobs’ magisterial classic, The Death and Life of Great American Cities, although she takes pains early on in the book to avoid overt criticism of his motives. Check it out the whole article, I think you’ll like what you read.

My Article at FreePo on the Resurrection of Rent Control

The Orange County Register’s new site, Freedom Politics just posted an article I wrote for them on rent control.  Here’s a snippet: In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it." The article is part of a series called “Undead Ideas” and I’m told the article is supposed to feature a humorously hideous illustration of a zombie Richard Nixon, which is the reason for the Nixon joke.  I will share the illustration once it is public.     Could President Obama resurrect an undead Richard Nixon to implement nationwide rent control in the face of the impending stimflation?  There’s a 93% chance his economic advisors wouldn’t let him do such a thing.  However, Nixon’s undead corpse has been spotted mumbling "I am now a Keynesian" in places like California and New York City where bad ideas never seem to die. I actually thought of the word “stimflation” on my own, but I checked and learned I wasn’t the first to think of it.  The domain stimflation.com had just been reserved last week… […]

How FDR’s TVA Went Wrong

Jim Powell’s latest article at Reason discusses the Tennessee Valley Authority, FDR’s most ambitious infrastructure program: It was heralded as a program to build dams that would control floods, facilitate navigation, lift people out of poverty, and help America recover from the Great Depression. Yet the reality is that the TVA probably flooded more land than it protected; much of the navigation it has facilitated involves barges of coal for coal-fired power plants; people receiving TVA-subsidized electricity have increasingly lagged behind neighbors who did not; and the TVA’s impact on the Great Depression was negligible. The TVA morphed into America’s biggest monopoly, dominating an 80,000 square mile region with 8.8 million people—for all practical purposes, it is a bureaucratic kingdom subject to neither public nor private controls. The article seems like it could easily be rescripted for just about any major government infrastructure project, especially our federal highway system. As a remedy for the Great Depression, the TVA didn’t work. It created no new wealth and, through taxation, transferred resources from the 98 percent of Americans who didn’t live in the Tennessee Valley to the two percent who did. Any spending that happened in the Tennessee Valley therefore was offset by the spending that didn’t happen elsewhere. Those taxes reduced net incomes. Much like any other complex public works project, it took an inordinate amount of time to build the TVA. Only three TVA dams were completed during the 1930s. The dams themselves were small—with less than one-twentieth the power-generating capacity of big western dams like Grand Coulee. Although the building process provided work for engineers and skilled construction workers—who earned above-average incomes—the dams simply came too late to have much impact on most people in the Tennessee Valley during the Great Depression. Nonetheless, expect governments to remake the same […]

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