Civil Society / Economics / Policy

Can we privatise town planning?

The answer to this question is predictable: ‘Of course not, that is why we have town planning in the first instance. Private individuals cannot be trusted to take into account those around them. We should leave the decision to experts.These are legitimate concerns—cities are complex creatures. Cities suffer from knowledge coordination problems on multiple levels and at multiple scales through time. But the very fact they appear as complex adaptive systems implies the importance of contextual knowledge in their design. And that knowledge rests in the minds of individual citizens; not in the dictates of governments.

We are continually told that town planning is the task of government. But the question of planning has long been: at what level does planning take place? Privatizing town planning is the process of returning the  planning to where it began: the individual.

One cannot quickly rule out the capacities of private citizens in favour of some omnipotent (and supposedly benevolent) top-down planner. There are costs and benefits in operating either through bottom-up or top-down institutions. Although the conventional wisdom is that experts can do what individuals cannot, for a brief moment let us assume that the experts are not so benevolent nor the private sector so helpless? Who, then, should be the ‘planner’?

The planning of cities began with governments laying out sewage systems, roads and public transport. This top-down planning was necessary for very basic economic reasons—large efficiency gains come from the ‘optimal’ layout of a city (e.g. if all sewage systems line up). These were not aesthetic or environmental policy concerns—they were economic concerns. These were legitimate because it is difficult to argue that individuals would be able to coordinate on such a broad scale to achieve such objectives. This is the logic of collective action—the idea that many individuals (with diverse interests and high transaction costs) will find it prohibitively difficult to coordinate their actions.

But the role of planners—from heritage overlays to restrictive zoning—has far exceeded their ‘knowledge coordination’ role. These are aesthetic, civic, environmental and political goals. Governments are constantly impeding on localised issues. And as we move further towards more localised problems the ability of individuals to solve the problem quickly begins to outweigh the ability of governments to do so. There are two main reasons for this.

First, on a local level it is individuals with the knowledge about their particular circumstances (a la Hayek 1945). And it is individuals who are best placed to make these decisions. By placing decisions in the hands of ‘experts’ we are quickly losing all of the important data in the system—the knowledge that individuals hold over their own situation, street, and neighborhood. To argue that individuals do not care for their city is tantamount to arguing they do not care for the neighborhood, or street, or home.

And second, designing cities from the bottom-up is a much more flexible, organic and adaptable process. It is this process of spontaneous order and sorting that enables cities such as Houston, Texas to organically create ‘zoning’. This zoning is not of the top-down variety (i.e. governments dictating ‘this is a commercial building’, ‘this is a house’, and so on). The ‘zoning’ emerges from the decisions of individuals taking into account network effects and externalities they pour on each other (i.e. cafes want to be near other cafes).

Thus the ‘planning question’ is whether that discovery process of an optimal city design should be placed in the heavy hand of governments or in the hands of individuals. The first is a series of sporadic inflexible decisions inherently resistant to change. The second is a bottom-up organic process that generates order through the decisions of individuals.

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