Market Growth: The Libertarian Solution to Community Development

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Market Growth: The Libertarian Solution to Community Development

by Ari Armstrong, January 5, 2000

We all want "smart growth" in our communities. But what makes that possible? If politicians and voters uncritically swallow some miracle cure that claims to promote smart growth, we may end up with dumb growth instead.

Even though the list of specific proposals for growth control seems endless, the ideas boil down to two competing visions. The first vision, supported by Al Gore, backers of Colorado's failed Amendment 24, and (to a lesser extent) Governor Bill Owens, is most aptly called "political growth," which means growth controlled by politicians, bureaucrats, and their regulations. The alternative is "market growth," which means growth based on well-established property rights and voluntary social arrangements.

Presumably, we want the system more likely to foster pleasant communities. After all, most Coloradans have similar desires. We want to be able to afford a nice home, often with a comfortable yard, especially if we have children. We want to be able to travel to work quickly, without getting bogged down in heavy traffic. We like to have a nice view and enjoy open spaces, ideally with other friendly people around.

Libertarians believe market growth is the best way to achieve livable communities. Not only does political growth often fail to achieve its goals, but it produces undesired results. This should not come as a surprise: centralized, authoritarian control didn't work very well for the Soviet economy, so why would we expect it to work for smart growth?

Political growth places its trust in government regulators. Market growth trusts people to make their own decisions. Political growth puts people's property under the control of bureaucrats. Market growth respects property rights and agrees with the principle outlined in the Colorado Constitution: "Private property shall not be taken or damaged, for public or private use, without just compensation" (Article II, Section 15). Political growth relies upon centralized control; market growth allows for individual choice and diverse solutions.

The following ten points outline the market growth approach. The first five points describe the sort of market institutions that help people deal with growth. The last five points criticize existing political impediments to smart growth.

Principles of Market Growth

1. Encourage market stewardship of wilderness lands and open spaces.

Some of the most effectively managed wilderness areas in the United States are owned by voluntary (private) groups. Unfortunately, some environmentalists shirk their responsibility for caring for wilderness areas and call on politicians to do the job with "Other People's Money" (OPM). Libertarians believe wilderness lands and open spaces are best protected by voluntary groups. Americans have a long history of charitable giving to worthwhile causes, especially when they're allowed to keep more of the money they earn.

2. Allow people to regulate growth through community covenants and other voluntary arrangements.

When people want to develop a plot of land for their homes, they are able to create a community contract for land management. Any plan the "New Urbanists" can conceive of can be accomplished through such voluntary arrangements. New developments can have mass transit, paths for biking and walking, open spaces, and so on. People are free to create such communities on the free market, but they are not free to force their visions on others who may want a different lifestyle.

3. Restore Common Law protections of private property.

Zoning laws simply aren't necessary to handle conflicting land uses. To take a hypothetical, if someone wanted to start a pig farm right next to a residential home, the home owner would pursue restraints and restitution through the courts. The home owner has a prior property right which would be infringed by the smells and noises of the pig farm. On the other hand, today in Palisade many fruit farmers are worried that newcomers will restrict their pre-existing farming rights. Common law accomplishes what zoning laws can't: the protection of property rights and a sensible blend of land uses.

4. Look to free market innovations.

Most American roads are controlled by politicians and bureaucrats. It's no wonder, then, that they are inefficient and they sometimes back up in traffic jams. However, numerous market solutions are available, such as High Occupancy Toll lanes and peak-load pricing. Some people already work from home by computer. Better technology has led to better cars and increased air quality. Most people develop social networks much wider than the block they live on, made possible by telephones, cars, and the internet. Improvements in technology are fostered by low taxes and reduced government regulatory burdens.

5. Rely upon persuasion, not force.

Some control freaks in the environmental movement think they should be able to dictate everybody else's lives. They think the suburbs are soulless. They don't like the architecture, they don't like automobiles, and they want to push their own tastes on the rest of us by force of law. But many people enjoy their homes in the suburbs. They like the freedom an automobile gives them. After all, developers build the homes that people want to buy. Why should some people get to tell other people where and how they must live? Unfortunately, some who already live in the suburbs don't want to let others enjoy the same lifestyle. Libertarians rely on persuasion as the fundamental tool of social change. (For instance, a libertarian might distribute copies of *The Fountainhead* in order to encourage people to look to more wholesome forms of architecture.) Advocates of political growth resort to force.

Political Growth Doesn't Work

6. Stop subsidizing urban sprawl.

Gordon and Richardson (cited below) do not see subsidies as playing a major factor in so-called "sprawl." However, the federal highway system provides a subsidy to some commuters. Some infrastructure expenses, such as electricity hook-ups and sewer, are also subsidized. If people want to live in the suburbs, they should have to pay the full expenses of doing so.

7. End tax discrimination and other social engineering schemes.

Sometimes cities tax discriminate in order to draw new businesses (new revenue-generators) to the area. This skews the natural growth of communities. Even though the practice is a flagrant violation of property rights, some cities abuse the property condemnation process in order to force small business owners out and make room for larger enterprises. (Again, this increases overall tax revenues for the city.) Such practices are inconsistent with market growth and they should be stopped.

Owens wants to restrict cities' ability to annex new areas, which should help a little.

8. Scale back restrictive zoning laws.

Zoning laws often get in the way of people who want to live in integrated communities. If people want to build their homes in among businesses where they can walk rather than drive, why should they be stopped? Again, common law will assure that land holders don't substantially interfere with each other. If zoning laws are not repealed altogether, they should at least be scaled down. Unfortunately, Owens' plan would further entrench zoning laws (as well as subsidies for development).

Building restrictions are akin to zoning laws. It's ironic that the environmentalists in Boulder passed restrictive building laws which increased housing prices and led to sprawl and longer commutes.

9. End travel restrictions.

Some laws restrain market solutions to our transportation problems. For example, taxi service is restricted, as are such innovations as "jitney" service, which is basically an expanded, for-profit system of carpooling. Instead of wasting tax dollars on rails that few people use, legislators should free up the market for road travel.

10. Solve the problems of city living.

Let's face it: some people move to the suburbs because city life is often problematic. Crime is higher in cities than in the suburbs, and government schools are often worse than their counterparts in the suburbs. Of course, the problems are diverse and complicated. Libertarians call for lower tax and regulatory burdens, which will increase economic prosperity and opportunity in the cities. Libertarians call for the repeal of drug prohibition, which will reduce gang violence and put street pushers out of business. Libertarians also note that city laws which disarm the citizens give criminals the advantage. If city life were better, fewer people would move to the suburbs.

Our choice is between market growth and political growth. If we have more of one, we necessarily get less of the other. The more power politicians and bureaucrats have, the less power individuals have to cooperate voluntarily using market institutions.

Too often, debates about growth merely pit one sort of political growth against another. Yet we needn't settle for any sort of political growth. Instead, we can choose the path of individual property rights, voluntary social arrangements, and pleasant communities. We can choose market growth.


Resources on Growth and Sprawl

A Guide to Smart Growth: Shattering Myths, Providing Solutions
To purchase, see the following link or call 800.326.0996. ALL OTHER LINKS are internet documents.
http://www.laissezfairebooks.com/product.cfm?op=view&pid=en8332&aid=10025
Edited by Jane S. Shaw and Ronald D. Utt
The Heritage Foundation / Political Economy Research Center, 2000
"This splendid little book is a cogent examination of the history and consequences of the search for space, air, views, schools, and safety that has resulted in suburbanization. It explodes some myths as it examines the effects of suburban growth on wildlife and nature. It contrasts the results of big government-imposed 'solutions' with those of local initiatives and private-sector creativity. It explores the failures and successes of efforts to restore core values and quality to inner-city life. It should become the handbook for those officials who seek to maintain both quality of life and the access to it by those who are just now rising to afford it." -- The Honorable Malcolm Wallop

Critiquing Sprawls's Critics
http://www.cato.org//pubs/pas/pa-365es.html
by Peter Gordon and Harry W. Richardson
Cato Policy Analysis, January 24, 2000
"The assertions by the critics of urban sprawl do not stand up to scrutiny. Widely available data undermine most of their claims. The charge that urban sprawl fosters inequality, unemployment, and economic blight is disproven by the fact that lack of human capital, not workplace inaccessibility, is the main cause of poverty. Moreover, smart-growth plans exacerbate the problem of workplace inaccessibility by increasing housing costs for the poor, making it difficult for them to locate near areas that are growing economically."

Sprawl for Me, But Not for Thee
http://www.cato.org//dailys/04-26-00.html
by Jerry Taylor and Peter VanDoren
April 26, 2000
"Perhaps the oddest political coalition in America today is that of anti-suburban intellectuals and suburban "slow growth" activists... [W]hy would suburbanites make common cause with those who loathe both their communities and their way of life, who sneer at their tacky, soul-less neighborhoods? Because both factions seek the same goal: the end of migration from the major cities."

Free-Market.Net
http://free-market.net/spotlight/sprawl/
extensive links, introductory essay
"For those of us who want our housing choices and our scenery, there are voluntary alternatives to coercive "smart growth" plans. The Thoreau Institute has developed a proposal for protecting the countryside through land trusts and scenic easements. Existing subsidies for development would be eliminated, so that people would be free to build on their land as they wished -- as long as they shouldered the costs."

The Common Law: How It Protects the Environment
full text: http://perc.org/ps13.htm
summary: http://perc.org/issdep.htm#law
by Roger E. Meiners and Bruce Yandle
PERC Policy Series, Issue Number PS-13, May 1998
Jane S. Shaw, Series Editor
"Long before there was an Earth Day, people protected the quality of their air, streams, and land through common-law court cases. This approach was more successful than people usually think and offers an alternative to still more government regulation..."

How Government Highway Policy Encourages Sprawl
http://www.cato.org//dailys/8-18-98.html
by Howard P. Wood
August 18, 1998
"Taxpayers... shouldn't have to pick up the tab for other people's preferences for suburban living, yet that has been the effect of the federal interstate highway program since the mid-1950s."

So-Called Smart Growth: Elitist Assault on the American Dream
http://i2i.org/SuptDocs/Enviro/SmartGrowth.htm
by Wendell Cox
No. 6-2000, September 22, 2000
"Portland's urban growth boundary has made its housing affordability the worst in the nation outside California. Limitations on retail construction and competition are likely to increase product cost. The result could be to 'pull up the ladder,' so that low income and minority citizens are less able to enter the mainstream of the U.S. economy.

How "Smart Growth" Intensifies Traffic Congestion and Air Pollution
http://i2i.org/SuptDocs/Enviro/AirPollutionSmartGrowth.htm
by Wendell Cox
No. 7-2000, September 25, 2000
"The problem of traffic congestion is very simple: it has to do with too many cars in too small a space. It would seem that the best approach to solving the problem would be to take actions to disperse traffic and to make it move faster. But just the opposite strategies have come into vogue. Advocates of so-called "smart growth" policies believe that traffic congestion and air pollution can be improved by forcing more people and more cars into smaller areas."

Opponents of "Urban Sprawl" Should Use Market-Based Solutions, Scholars Say
http://perc.org/lonemtn_comp.htm
"Signed by more than 100 academics, scholars and public policy officials, the [Lone Mountain Compact] argues that it is possible to improve the way communities develop without driving housing costs through the roof, but only if government eschews centralized, one-size-fits-all plans that give local residents little say in the development of their neighborhoods. Communities should instead use market-based solutions to ease traffic congestion and preserve open space, the group says."

Letters by Various Authors
http://perc.org/dec_sum00.htm
Political Economy Research Center
"[I]t has never been shown that zoning solves any social problems or improves land use." -- James Rolph Edwards

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