I've been reading The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future by Randal O'Toole. The book gets my highest recommendation.
The chapter I'm reading now is titled "The Planning Profession". This chapter falls in Part Four: "Why Planners Fail". If you're a city planner, you're not going to like this section.
O'Toole begins Part Four with a rip-snorting quote on liberty by former U. S. Supreme Court Justice (1916 - 1939), Louis Brandeis:
Experience should teach us to be most on our guard to protect liberty when government's purposes are beneficial. Men born to freedom are naturally alert to repel invasion of their liberty by evil-minded rulers. The greater dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding.
O'Toole then follows that with his observation of the profession of planner:
"We shape our cities," planners love to say, "and then our cities shape us." If the pronouns are a bit vague, planners hope that the "we" who shape the cities consist of architects and planners while the "us" who are shaped include everyone else. ...Planners want to use urban design to shape human behavior.
O'Toole then goes on, in "The Planning Profession" chapter, to compare developers with planners:
The contrast between planners and developers is stark. Developers can easily judge the success or failure of their projects by the bottom line: did they make or lose money? Developers generally must put up their own money to finance at least part of each development, so if it fails, they pay much of the cost. This gives them a powerful incentive to get it right, as determined by what potential buyers and renters want. As Joel Garreau observes, developers' "unshakable observation was this: if they gave the people what they wanted, the people would give them money."
Developers can rapidly learn from their mistakes because they carefully watch how projects by other developers fare in the marketplace. The development world quickly evolves in response to changing tastes, changing costs, and changing regulations. While developers may grumble about government regulation, in the end those rules are just a part of the development environment. Most regulations passed by a city council apply to all developers in that city, so they simply pass the costs onto the buyers or renters.
In contrast, planners working for government agencies don't have to back up their plans with their own money. This means that success or failure is not determined by whether the plans can make or lose money. If the regulations written by planners force developers to do projects that would lose money, the developers, of course, won't do the projects.
Now here is the point that made me sit right up and rush to the keyboard to relate what I read. City councils and planners pass and administer regulations regarding what sorts of projects can be built on what sorts of land. When developers refuse to do projects that they know will lose money based on these regulations (emphasis added),
Planners tell themselves this is a market failure and respond by looking for tax breaks or other subsidies that they can offer the developers to entice them to do the projects. The projects may get built, though at a net loss when the subsidies are subtracted from any benefits they produce.
"Market failure"...how many times have you heard or read that expression voiced by a government figure? When do they say it? When people that actually have to earn a living refuse to cooperate with the grand vision of the legislators and bureaucrats.
The L's and the B's are terrific at packaging and selling their vision with politically attractive language, studies, fanfare, and smiling faces on TV. But those darned developers (and the public in general) just don't cooperate sometimes. That certainly doesn't mean that the laws or the regulations are at fault, oh, no! We must support our vision and see to it that it comes true by offering tax breaks and subsidies.
From zoning and land use to boosterism for light rail; from a city-owned steam plant to ever-expanding TIF districts; from subsidies for public transportation to planning for sidewalks...we are in the grip of planning fever.
Even the U. S. Supreme Court got into the act with its Kelo decision a few years ago that opened the way for cities to declare that neighborhoods were "blighted" so that they could give over that land to developers to erect commercial buildings and malls. I think that Brandeis would have justly codemned that decision.
So when you hear the phrase "market failure" again, consider this: how much of that "failure" was caused by governmental bodies getting frisky with land use and zoning, legislation and regulations?
In Neenah, our new Community Development Director is a great fan of regulation; while he was Chief City Planner, his most notable quote was "Anything not specifically permitted is forbidden." I look forward with great anticipation to hearing the phrase "market failure" from him many times in the near future.