EKIP– Expert Club for Economics and Politics A Different Opinion
Cities are where we can witness many of the problems that arise from poorly defined or poorly enforced property rights – most notably in the form of numerous negative externalities. The topic includes the often-discussed issue of road ownership (for example), but here the emphasis will be on the issue of planning in urban spaces and how it can happen in a much more optimal way through private property and voluntary contractual relations.
It is a practice around the world for political power, represented by various types of local administration, to plan the growth and development of the urban environment by creating rules and/or permitting/prohibiting initiatives to change the current state of a particular neighborhood, street, building, etc. [1] The main problems with this planning provided by public structures are its quantity and quality.
On the one hand, in places like Bulgaria, we have too little planning, which leads to indiscriminate and unaesthetic construction - a phenomenon that we often owe to the high level of corruption of the officials responsible for creating and implementing the plans, and to problems with determining property rights over plots. On the other hand, in Western Europe and the United States, we observe the opposite effect - too much and too bad planning.
Only two examples of the tragedy of urban planners in the developed world can explain the situation. One is the state of American cities with empty and dangerous centers (with an established link between certain regulations and high crime rates) to which giant, crowded highways from the suburbs lead. The result of the deliberate creation of places to live where cars are used almost exclusively for transportation.
The other is the so-called council housing in England, which led to the creation of thousands of ugly and dysfunctional crime dens across the country. Many places were built as social "experiments" that simply created worse living conditions.
The reason for the failures of centralized urban planning can be found in economic theory. First, Friedrich Hayek pointed out that the comprehensive knowledge needed to govern any market is lacking. Typically, individuals make decisions with knowledge specific to their time and place, which can never exist in a sufficiently concentrated and integrated form to be used by planners. That is, assuming that these regulators will seek to create good for society, not for themselves.
The second reason for the poor results of centralized planning compared to private planning is put forward by Israel Kirzner. He emphasizes that, unlike entrepreneurs, bureaucrats do not have access to the signals sent by prices in the free market. An investor understands relatively quickly whether the product he offers is liked or not. This is done through the amount of proceeds from sales or rents. When he has this information, the entrepreneur can be forced to change his previous behavior, to stop or, if possible, to correct himself. Something that becomes much more difficult for bureaucrats. The lack of feedback and corrective power leads to the huge failed projects like the ones mentioned in the paragraph above - there was no market to stop the great ideas of planners.
And these are the irregularities that arise if we assume that urban regulators are well-intentioned. Corruption among local politicians and administrators is not just an Eastern European phenomenon. The difference is that when failures occur in the US (for example), they are bigger and more expensive – like the Pennsylvania state capital, Harrisburg, which after years of municipal “investment projects” has become a nightmare. Here we are talking about a local government that has outdone itself - from a simple regulator it has become an active economic player.
But even seemingly simple and minor regulations can serve a vested interest and harm both entrepreneurs and consumers. For example, Los Angeles’ban on mobile food carts, a set of rules designed to protect established restaurants in the city that don’t like competition, is a case in point.
Finally, it is important to emphasize that planning itself is not bad or unnecessary, quite the opposite, when it comes to property rights of people living close to each other, it is actually more than necessary. The question is who should carry out this planning – should politicians (mayors and municipal representatives) and high-ranking officials (such as the chief architect of Sofia) or homeowners and builders.
In the first case, the one who makes the decision and the one who bears the consequences of it are not the same person. Whether there will be ten overpasses in the Mladost residential area is a problem for the locals, while the officials only plan (and maybe collect some fees). In the second case, either you yourself planned your living environment poorly (and accordingly you have to struggle in it), or your business project is unwanted and you are losing money because tenants or buyers do not like it.
[1] As well as taking care of the construction and (often) management of the infrastructure
Self-organization in construction is an extremely bad idea, just as bad as excessive planning.
An example of unsuccessful detailed planning are residential districts of the Lyulin type. There, the approach is a hard-handed design on a large scale, in which the designers have neglected a large part of the needs of the individual, for example, the absolute lack of cultural, commercial, etc. functions. Mass and impersonal construction also has a depressing psychological effect. In this type of district, at the same time, we observe self-organization, expressed in often unreasonable and obviously unaesthetically sustained modifications by private owners.
An example of unsuccessful construction with great freedom and poor-quality bureaucratic planning are neighborhoods like Manastirski Livadi. At first glance, the cooperatives there are new and attractive, but they lack the positive characteristics of neighborhoods like Lyulin, for example, large free spaces, the general vision, which contributes to a noticeably more pleasant atmosphere. The desire for maximum quick profit on the part of investors has led to not very functional spaces, sometimes poor-quality construction, etc. The negative effects of this type of construction are already known to consumers and interest in it is declining, therefore investors will correct their behavior - a direct effect of the market economy. The problem is that these buildings will not disappear in the coming decades, even a century. When we talk about urban planning and construction, the negatives are noticeable for extremely long periods of time, be they from bureaucrats or the poorly planned environment on their own. For this reason, I think that the trial-and-error method on the part of the individual is not a good idea.
Architects, especially those in high-ranking positions, learn from the past. This is also the reason why for years there has been a global trend towards multifunctional spaces that can be reworked in the future depending on specific needs. There is also a trend towards creating emergent spaces that follow the direction of people, rather than establishing the path that people should follow.
Another issue is that it is absurd for all bureaucratic power to be concentrated in the hands of one chief architect, especially in a city of two million people like Sofia. It is obviously impossible to review all projects in detail and the possibility of bribery is obviously enormous.
In conclusion, I will say that in my opinion the basic principle of libertarianism should be applied – a sound legal framework, limitation of bureaucratic power and freedom of the individual. As a person who regularly deals with the ZTA, I know that at the moment we have an infinitely restrictive, but at the same time unstable legal framework. The bureaucratic power is enormous. And there is no freedom on a large scale, there is lawlessness on a small scale.