In the first post of this little series, I addressed the problems of top down land use regulation through the lens of Austrian economics. Because cities contain public space and infrastructure that is used by many residents and cannot be bought and sold in the way that many goods can be, Alon Levy suggests turning to collective choice to solve these problems. I will agree that collective choice, or its close cousin communal property rights can be employed well in cities. For example, business improvement districts can work together to undertake projects that would not be worthwhile for any business to take individually, benefitting themselves and their customers in the process. Similarly, these voluntary and emergent organizations can emerge among homeowners or neighborhoods, circumventing some of the coordination problems involved within communities. In a future post, I will go into further detail about the benefits of these types of organizations, whether they’re formal or informal. But now, I want to point out the problems of collective choice when carried out through legislation or land use regulation. As Alon points out, collective choice is inherently biased toward favoring a city’s or neighborhood’s current residents, against potential future residents. This makes policies created through collective choice inherently anti-density and anti-growth. It also means that cities come with a built-in vested interest that wants to protect their property. When planning departments allow this group to protect their interest through the political process, the market process is stifled because entrepreneurs cannot take advantage of available profit opportunities to increase urban density. Furthermore, collective choice leads to many unholy alliances, such as NIMBYs and historic preservationists, NIMBYs and environmentalists who want to protect open space, NIMBYs and those opposed to new transit projects, etc. In other words, collective choice leads to many of the results that urbanists criticize. […]
