The eye recognizes the sharp angles and patterns of carved stone amongst a field of flowers; the stone is not of the field. The casual observer recognizes the slums neighboring the prosperous commercial block; the slums are not of the city. Often people wonder why a city looks as it does, why cities can look so differently, why anomalies – like the slums – seem so out of place. To answer these fine questions, I believe one must understand how a city is formed, the rest follows simply.
Spontaneous order is perhaps the simplest and most misunderstood concept in economics. Spontaneous order is a coincidence of wants; acting upon this is called trade. I want a store’s ginger ale, the store wants my two dollars; I prefer to have the ginger ale instead of two dollars, and the store prefers to have two dollars rather than the ginger ale. We then physically trade the goods and an ordering has occurred. This simple example holds for all voluntary transactions; even those of land and buildings. This may seem a bit like a lecture to an economic tenderfoot but keep in mind, this escapes even those who hold a Nobel Prize in economics. The importance of this lesson cannot be underestimated.
Cities are nothing more than a large collection of the above sorts of trade. The reasons people seek cities are as sundry as the people. It is only important to know that they desire to cohabit or work within the city. This desire or want lends itself to a coincidence of wants and therefore to trade. The aging city dweller may want to leave the city for more open spaces; the young entrepreneur believes the population of the city will boom and there will be an urgent need for housing. The two parties trade and the city now has a slightly different ordering. In this respect cities are no different than a community of distant farm houses or the largest metropolis.
Cities and rural towns seem to be treated differently as if there are two sets of economic laws governing them. However, no logical line can be drawn, both are simply people engaging in trade. It is because of this that case studies into specific cities are worthless. One need not know how Budapest fairs under government intervention to make a conclusion on how New York or St. Louis will do under the same sort of intervention. Failing to realize this will lead an otherwise capable human being into tremendous displays of buffoonery. Consider the following from Paul Krugman, this year’s Nobel prize winner in economics:
At least New York’s transit system allows those who can’t afford to live in the glamorous parts of the city to commute to jobs. Imagine being poor in a sprawling heartland city with no rapid transit and a poor quality bus system. Central New Jersey is part of the Zoned Zone, but less expensive than the city; still, manual workers can’t afford to live anywhere closer than Trenton, and I can’t imagine how they get to their jobs.
The emotion that Krugman expressed is typical of many economists, even amongst those without such a strong sense of social justice. If government had not intervened in New York, what would have happened?
Since cities emerge from a coincidence of wants and a vast matrix of trade, one can reason that any interference in this process will by necessity distort otherwise voluntary transactions. Trade is voluntary; both parties benefit from the action. Think of a pond disturbed by a boulder falling into it, crest and troughs now exist instead of a tranquil surface. Government intervention within a city is no different. By forcing one man to engage in an action he otherwise would not have, one party benefits at the expense of the other party; a true zero sum scheme. Consider the case of Times Square. Once Times Square was mall of pornography, now it is as kid friendly and colorful as the oddly placed Disney store that represents this transformation. On the surface, it appears better in it’s newer state. However, what is forgotten is the cost to the people who were forced out, the shop owners and customers. If Disney or anyone else wanted to transform Times Square, why didn’t they purchase it from the pornography shops? The answer to this question is precisely the reason why the transformation of Times Square is so onerous. People wanted porn in Times Square more than they wanted a Disney shop. By government’s forceful action a group of people benefited, but only at the expense of another, more economically vested group of people. New York city is poorer because of it.
This applies to all types of government intervention, not just zoning laws. Subsidies function in much the same way by forcing people to make choices at the margin out of the market. It is perhaps this reason that so many urban cities are experiencing a mass exodus for the sprawling suburban wilds which are less regulated. It is also for this reason that those who believe one can plan a perfectly ordered city are the same that would denounce these “sprawlers” as demon kin and attempt to force them back into the city.
Urban revitalization or new-urbanism is one of these ways. Proponents of these seek to order an urban environment by what they feel it should look like. These utopian ne’er-do-wells dazzle the masses with charts, graphs and numbers supposedly showing the optimum amount of population density, coffee shops, stoops, automobiles, distances from work and pretty much any other facet of a person’s visible life. It shouldn’t come as a surprise this movement is a grand failure; for all the same reasons explained above.
Cities are natural and organic things arising from an ordering that is never planned, but ordered nevertheless. Government intervention, in whatever flavor, only disturbs this process. If you look upon your city and find something that just doesn’t seem to fit, chances are it doesn’t and some city planner, rent-seeker, or new urbanist zealot is behind it.