Letting Markets Work: Urban Planning

Urban planning has unexpectedly become a trending subject on social media, and even more peculiarly, it has taken on ideological dimensions. Advocates on the left typically support government-managed public transportation and state housing initiatives in the name of community welfare. Conversely, many on the right advocate for suburban expansion and government-funded highways to benefit single-family dwellings and car usage. Both sides seem to demand public subsidies to support their preferred lifestyles. However, when it comes to urban planning, it’s crucial that we reconsider the role of government intervention.

Across different regions, the negative repercussions of modern urban planning are becoming evident. In the United States, the Highway Act of 1956, combined with the Urban Renewal initiatives of the 1960s and 1970s, led the federal government to finance highway constructions while state and local authorities tightened regulations on building practices. This resulted in the demolition of entire neighborhoods for highway expansion, exacerbating racial divides and causing a decline in the availability of ‘third places’ (locations beyond home or work where social interactions occur). As a result, Americans have less opportunity to engage with one another than before.

In Argentina, a different but similarly heavy-handed approach to urban planning has led to substantial challenges. By continually subsidizing highway development and energy costs over many years, various Argentinian governments have encouraged the growth of low-density suburbs and gated communities that are increasingly unsustainable. As market prices gradually revert, many homeowners are awakening to the reality that they have been living beyond their financial capabilities. They now face perpetual traffic congestion, a legacy of the government subsidies that initially incentivized their suburban living.

The shortcomings of urban planning are, in many ways, to be expected. Following the philosophies of Hayek and Mises, it’s clear that centralized planners lack access to the diverse knowledge held by market participants, rendering them unable to successfully manage economic agendas. This raises the question: why would urban planning be any different? Urbanism inherently involves navigating scarcity, and unfortunately, devoted planners often strive to mold public preferences rather than simply accommodating them.

Nonetheless, there is a growing movement in the U.S. towards revising building regulations and permit processes to allow for denser housing solutions. In countless cities, parking mandates are being curtailed or eliminated altogether, with zoning modifications permitting builders to create more housing within smaller footprints. This is being countered by staunch opposition from NIMBYs (those who advocate “not in my backyard”), who aim to limit the housing supply to preserve their property values. Their motives are arguably self-serving, yet they recognize the economic realities: increased housing typically leads to lower home prices, as evidenced by recent developments in Austin.

A higher supply of housing indeed drives prices down. Surprising, right?

<spanWhile the left may embrace an increase in available housing, there’s often a call for governmental intervention to provide public transit, compensating for the anticipated drop in automobile usage. However, it is unnecessary for these systems to be state-operated or subsidized. Historically, transportation networks have developed organically from private enterprise and consumer demand rather than through top-down directives. It’s a frustrating reality, yet not an unavoidable outcome, that urban planners feel compelled to impose regulations on transportation.

In urban centers throughout the Western world, particularly in older districts with narrow streets, heated discussions about vehicular access are prevalent. Some support tighter restrictions on cars, while others oppose them vehemently.

Each situation is unique, but in assessing street modifications, why not align with public demand? A reduction in cars on a street decreases the number of drivers, which certainly impacts their convenience. Yet, what about other road users? If evidence suggests that a specific area is more beneficial for pedestrians and cyclists than drivers, why should we continue to prioritize the latter with subsidies?

If all roads were privatized, the debate over resource allocation would be moot—an idea that might seem radical to many. However, as Murray Rothbard articulated in his work For a New Liberty, privatization isn’t unfeasible. Nonetheless, progress is being made. New York City’s recent congestion pricing is a positive step forward. It’s time to stop allowing drivers to receive subsidies at the expense of non-drivers.

The left’s push for government-provided housing also prompts questions about its effectiveness in reducing market prices. Moreover, utilizing public funds for housing inevitably leads to inefficiencies, as these resources could be redirected to more productive enterprises. Lastly, government projects tend to take longer to execute and contribute to bureaucratic costs that add to financial burdens.

As the saying goes, relying on the government for assistance is akin to it breaking your legs and then offering a single crutch. In the arena of urban planning, government complicates issues and is ill-equipped to resolve them.

It’s vital to recognize that the push for significant government involvement in urban policy remains persistent. The interests of NIMBY advocates, car manufacturers, and highway construction firms thrive from urban planners who possess the power to influence development in their favor. Nevertheless, the resulting detriment to renters and pedestrians, escalating with time, should not dissuade libertarians from promoting a more inclusive approach to urban policy. All individuals deserve consideration in our urban strategies.

The market can serve the interests of everyone—if we allow it.

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