Market Urbanism

Liberalizing cities | From the bottom up

“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

Cul-de-sacs – Privatize ’em

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Daniel Nairn at Discovering Urbanism brings up a great point about cul-de-sacs. Are they public goods, or truly unnecessary “socialism in its most extreme form”?

Take the standard cul-de-sac that serves a handful of households. The purpose of this design is to exclude the general public from passing through while serving the automotive needs of a small number of individuals. Does it pass our intuitive sense of fairness to declare that the entire public, say the local municipal citizenry, ought to foot the bill for what could essentially be considered a shared driveway? Perhaps a more important question: How does the government’s decision of where to draw the line between public and private encourage or discourage the connectivity of the road system?

image from Discovering Urbanism

image from Discovering Urbanism

Dan discusses that Virginia’s DOT is looking at shifting funding away from roads that don’t play a significant role in the transportation network, by using a very well defined metric:

The link-node ratio is calculated by dividing the number of links (street segments and stub streets) by the number of nodes (intersections or cul-de-sacs). A perfect grid of streets will have a link-node ratio around 2.5 and a network of complete cul-de-sac or dead end streets with only one way in and one way out will have a link-node ratio of 1.0. It is suggested that a ratio of 1.4 will provide adequate connectivity in many situations.

The link-to-node ratio seems like a very rational approach to determining public roadway funding, if one chooses to concede that roads are a public good.

Unfortunately, owners of homes on cul-de-sacs have grown acustomed using their publicly-funded, communal driveways, and would suffer from decreased funding for roads they are entirely dependent upon. A viable solution would be for the municipality to grant the cul-de-sac roadway and land to the owners of the homes. The home owners could then use the street land per its highest-and-best use, and maintain their private communal driveway at their own expense. Observing the rise or drop in the value of those homes, we’ll then see if cul-de-sacs add value to the community, or are just sinkholes for public funds that benefit only a few home owners.

Comments

  1. I’m pretty well persuaded that our road system does not meet the standard definition of a “public good.” Every car on the road is that much less room – and that much more danger – for another car to use the road. I do think that user fees are appropriate, as far as technology allows these to be implemented, and a gas tax functions reasonably well if pricing is too difficult.

    Yet I’m not so sure about privatizing ownership. The transportation network is a massive and complex system that would seem to need some centralized coordination. The market works well organizing some pretty complex systems incrementally through millions of private decisions, but roads are tied closely to land, which has monopolistic qualities. I have hard time imagining how the market would organize this effectively.

    There are models of government ownership approximating a private market, like the national park systems or, at least to some degree, the postal service. These seem to work fairly well, as far as I can tell.

  2. I’m pretty well persuaded that our road system does not meet the standard definition of a “public good.” Every car on the road is that much less room – and that much more danger – for another car to use the road. I do think that user fees are appropriate, as far as technology allows these to be implemented, and a gas tax functions reasonably well if pricing is too difficult.

    Yet I’m not so sure about privatizing ownership. The transportation network is a massive and complex system that would seem to need some centralized coordination. The market works well organizing some pretty complex systems incrementally through millions of private decisions, but roads are tied closely to land, which has monopolistic qualities. I have hard time imagining how the market would organize this effectively.

    There are models of government ownership approximating a private market, like the national park systems or, at least to some degree, the postal service. These seem to work fairly well, as far as I can tell.

  3. I’m pretty well persuaded that our road system does not meet the standard definition of a “public good.” Every car on the road is that much less room – and that much more danger – for another car to use the road. I do think that user fees are appropriate, as far as technology allows these to be implemented, and a gas tax functions reasonably well if pricing is too difficult.

    Yet I’m not so sure about privatizing ownership. The transportation network is a massive and complex system that would seem to need some centralized coordination. The market works well organizing some pretty complex systems incrementally through millions of private decisions, but roads are tied closely to land, which has monopolistic qualities. I have hard time imagining how the market would organize this effectively.

    There are models of government ownership approximating a private market, like the national park systems or, at least to some degree, the postal service. These seem to work fairly well, as far as I can tell.

  4. I’m pretty well persuaded that our road system does not meet the standard definition of a “public good.” Every car on the road is that much less room – and that much more danger – for another car to use the road. I do think that user fees are appropriate, as far as technology allows these to be implemented, and a gas tax functions reasonably well if pricing is too difficult.

    Yet I’m not so sure about privatizing ownership. The transportation network is a massive and complex system that would seem to need some centralized coordination. The market works well organizing some pretty complex systems incrementally through millions of private decisions, but roads are tied closely to land, which has monopolistic qualities. I have hard time imagining how the market would organize this effectively.

    There are models of government ownership approximating a private market, like the national park systems or, at least to some degree, the postal service. These seem to work fairly well, as far as I can tell.

  5. I agree that full privatization is a hugely complex undertaking. It couldn’t be done overnight, or even over a decade. But, I think cul-de-sacs are the best place to start on the local level and congested highways are the best place to start on larger arteries.

    Think if the cul-de-sac where privatized and zoning were liberalized. Maybe a developer could buy the homes and the cul-de-sac and build a new, more urban development on the assemblage.

    The transportation network is a massive and complex system that would seem to need some centralized coordination.

    Complexity is a reason to decentralize control, as opposed to centralize it. Complex systems of interactions are better handled in a bottom-up manner, such as with the internet. Trying to manage such a complex system centrally will result in “knowledge problems“, such as those which led to the collapse of the Soviet Union. These knowledge problems occur because central planners cannot know and understand all the subtle complexities of the system, and cannot make decisions as well as individual agents that have local knowledge of their situation.

    Where a top-down public roadway system fails is in the signaling of needed resource allocation. This signaling breakdown can be seen in congestion of the commons, over-reliance on socialized services, and road overbuilding. In a publicly owned and managed system, needs are signaled by voters complaining of congestion and by lobbyists pushing certain projects, creating an unhealthy positive feedback loop. While in a private system, needs can be be signaled through pricing. Entrepreneurs pick up those signals, and supply more roads if prices indicate profit potential.

    I’d argue that the private system is more versatile and nimble; adjusting to changes more quickly and efficiently in the long-run.

  6. I agree that full privatization is a hugely complex undertaking. It couldn’t be done overnight, or even over a decade. But, I think cul-de-sacs are the best place to start on the local level and congested highways are the best place to start on larger arteries.

    Think if the cul-de-sac where privatized and zoning were liberalized. Maybe a developer could buy the homes and the cul-de-sac and build a new, more urban development on the assemblage.

    The transportation network is a massive and complex system that would seem to need some centralized coordination.

    Complexity is a reason to decentralize control, as opposed to centralize it. Complex systems of interactions are better handled in a bottom-up manner, such as with the internet. Trying to manage such a complex system centrally will result in “knowledge problems“, such as those which led to the collapse of the Soviet Union. These knowledge problems occur because central planners cannot know and understand all the subtle complexities of the system, and cannot make decisions as well as individual agents that have local knowledge of their situation.

    Where a top-down public roadway system fails is in the signaling of needed resource allocation. This signaling breakdown can be seen in congestion of the commons, over-reliance on socialized services, and road overbuilding. In a publicly owned and managed system, needs are signaled by voters complaining of congestion and by lobbyists pushing certain projects, creating an unhealthy positive feedback loop. While in a private system, needs can be be signaled through pricing. Entrepreneurs pick up those signals, and supply more roads if prices indicate profit potential.

    I’d argue that the private system is more versatile and nimble; adjusting to changes more quickly and efficiently in the long-run.

  7. Cul-de-sacs transferred from communal ownership (the misplaced term “government”) to house owners wouldn’t be in private ownership, they would have to be in some form of cooperative ownership since they are shared between multiple homes.

    The market works well organizing some pretty complex systems incrementally through millions of private decisions, but roads are tied closely to land, which has monopolistic qualities. I have hard time imagining how the market would organize this effectively.

    Land does not have monopolistic quality. It is just big, like oil or automobile companies. However there are literally thousands of cities and counties (land estates) competing with each other. The solution would be to create a market for land at the scale of cities and end the communal ownership of land.

  8. Cul-de-sacs transferred from communal ownership (the misplaced term “government”) to house owners wouldn’t be in private ownership, they would have to be in some form of cooperative ownership since they are shared between multiple homes.

    The market works well organizing some pretty complex systems incrementally through millions of private decisions, but roads are tied closely to land, which has monopolistic qualities. I have hard time imagining how the market would organize this effectively.

    Land does not have monopolistic quality. It is just big, like oil or automobile companies. However there are literally thousands of cities and counties (land estates) competing with each other. The solution would be to create a market for land at the scale of cities and end the communal ownership of land.

  9. Cul-de-sacs transferred from communal ownership (the misplaced term “government”) to house owners wouldn’t be in private ownership, they would have to be in some form of cooperative ownership since they are shared between multiple homes.

    It would still be private, although probably in the form of some cooperative or other collective ownership. But they could slice the land up among themselves if they wanted.

  10. Cul-de-sacs transferred from communal ownership (the misplaced term “government”) to house owners wouldn’t be in private ownership, they would have to be in some form of cooperative ownership since they are shared between multiple homes.

    It would still be private, although probably in the form of some cooperative or other collective ownership. But they could slice the land up among themselves if they wanted.

  11. Cul-de-sacs transferred from communal ownership (the misplaced term “government”) to house owners wouldn’t be in private ownership, they would have to be in some form of cooperative ownership since they are shared between multiple homes.

    It would still be private, although probably in the form of some cooperative or other collective ownership. But they could slice the land up among themselves if they wanted.

  12. Cul-de-sacs transferred from communal ownership (the misplaced term “government”) to house owners wouldn’t be in private ownership, they would have to be in some form of cooperative ownership since they are shared between multiple homes.

    It would still be private, although probably in the form of some cooperative or other collective ownership. But they could slice the land up among themselves if they wanted.

  13. I meant “monopolistic” in the sense that the attributes of a parcel of land are not entirely transferable. Especially in its relation to other parcels of land, each parcel is unique. There is only one here out there. This brings in some complications to a market for land use. For example, could I buy all of the land surrounding my neighbor, deny right of way through my property, and press charges against him for leaving his house? Certainly, some regulations of the market are necessary for transportation – if we presume that everyone has a right to move around society in some way. At least I think so. I’d be open to a case for how this could be managed.

    By the way, anytime I hear someone declare confidently that a truly free market would lead to a suburban driving utopia, I send them your way. 🙂

  14. I meant “monopolistic” in the sense that the attributes of a parcel of land are not entirely transferable. Especially in its relation to other parcels of land, each parcel is unique. There is only one here out there. This brings in some complications to a market for land use. For example, could I buy all of the land surrounding my neighbor, deny right of way through my property, and press charges against him for leaving his house? Certainly, some regulations of the market are necessary for transportation – if we presume that everyone has a right to move around society in some way. At least I think so. I’d be open to a case for how this could be managed.

    By the way, anytime I hear someone declare confidently that a truly free market would lead to a suburban driving utopia, I send them your way. 🙂

  15. I meant “monopolistic” in the sense that the attributes of a parcel of land are not entirely transferable. Especially in its relation to other parcels of land, each parcel is unique. There is only one here out there. This brings in some complications to a market for land use. For example, could I buy all of the land surrounding my neighbor, deny right of way through my property, and press charges against him for leaving his house? Certainly, some regulations of the market are necessary for transportation – if we presume that everyone has a right to move around society in some way. At least I think so. I’d be open to a case for how this could be managed.

    By the way, anytime I hear someone declare confidently that a truly free market would lead to a suburban driving utopia, I send them your way. 🙂

  16. We have to be careful about what we mean by private. Just because something is owned and available on the market does not make it private. There is such a thing as a public company, whose administration is made public but whose shares are privately owned. The relationship between the property and its owners are not the same regarding the shares and the company. It’s the same thing with a cul-de-sac. The houses are private, but the cul-de-sac is not. The administration of the cul-de-sac will be shared amongst many people in a cooperative system.

    This results from the fact that “land” in a urban setting is fundamentally different from land as it is historically understood. Land to our grandparents was something that one lived from in a homestead. It could be divided because it was mostly autonomous. In an urban setting, one lives from the roads, meaning we are renting land from a much larger landowner. The plot that a house sits on is not autonomous, the road that leads up to it is its sole reason to exist.

    Although a cul-de-sac can be turned into a cooperative like any condominium (courtyard housing in Paris has such an organisation), it cannot be subdivided like homestead land. And anyway the cooperative would still be depending on the roads to exist, and would still have to pay rent for that right.

    In an economy a enterprise has to exist at the scale of its largest indivisible good. A road is an indivisible good, and all the plots that exist from it are necessarily part of the same indivisible unit of land.

  17. We have to be careful about what we mean by private. Just because something is owned and available on the market does not make it private. There is such a thing as a public company, whose administration is made public but whose shares are privately owned. The relationship between the property and its owners are not the same regarding the shares and the company. It’s the same thing with a cul-de-sac. The houses are private, but the cul-de-sac is not. The administration of the cul-de-sac will be shared amongst many people in a cooperative system.

    This results from the fact that “land” in a urban setting is fundamentally different from land as it is historically understood. Land to our grandparents was something that one lived from in a homestead. It could be divided because it was mostly autonomous. In an urban setting, one lives from the roads, meaning we are renting land from a much larger landowner. The plot that a house sits on is not autonomous, the road that leads up to it is its sole reason to exist.

    Although a cul-de-sac can be turned into a cooperative like any condominium (courtyard housing in Paris has such an organisation), it cannot be subdivided like homestead land. And anyway the cooperative would still be depending on the roads to exist, and would still have to pay rent for that right.

    In an economy a enterprise has to exist at the scale of its largest indivisible good. A road is an indivisible good, and all the plots that exist from it are necessarily part of the same indivisible unit of land.

  18. We have to be careful about what we mean by private. Just because something is owned and available on the market does not make it private. There is such a thing as a public company, whose administration is made public but whose shares are privately owned. The relationship between the property and its owners are not the same regarding the shares and the company. It’s the same thing with a cul-de-sac. The houses are private, but the cul-de-sac is not. The administration of the cul-de-sac will be shared amongst many people in a cooperative system.

    This results from the fact that “land” in a urban setting is fundamentally different from land as it is historically understood. Land to our grandparents was something that one lived from in a homestead. It could be divided because it was mostly autonomous. In an urban setting, one lives from the roads, meaning we are renting land from a much larger landowner. The plot that a house sits on is not autonomous, the road that leads up to it is its sole reason to exist.

    Although a cul-de-sac can be turned into a cooperative like any condominium (courtyard housing in Paris has such an organisation), it cannot be subdivided like homestead land. And anyway the cooperative would still be depending on the roads to exist, and would still have to pay rent for that right.

    In an economy a enterprise has to exist at the scale of its largest indivisible good. A road is an indivisible good, and all the plots that exist from it are necessarily part of the same indivisible unit of land.

  19. We have to be careful about what we mean by private. Just because something is owned and available on the market does not make it private. There is such a thing as a public company, whose administration is made public but whose shares are privately owned. The relationship between the property and its owners are not the same regarding the shares and the company. It’s the same thing with a cul-de-sac. The houses are private, but the cul-de-sac is not. The administration of the cul-de-sac will be shared amongst many people in a cooperative system.

    This results from the fact that “land” in a urban setting is fundamentally different from land as it is historically understood. Land to our grandparents was something that one lived from in a homestead. It could be divided because it was mostly autonomous. In an urban setting, one lives from the roads, meaning we are renting land from a much larger landowner. The plot that a house sits on is not autonomous, the road that leads up to it is its sole reason to exist.

    Although a cul-de-sac can be turned into a cooperative like any condominium (courtyard housing in Paris has such an organisation), it cannot be subdivided like homestead land. And anyway the cooperative would still be depending on the roads to exist, and would still have to pay rent for that right.

    In an economy a enterprise has to exist at the scale of its largest indivisible good. A road is an indivisible good, and all the plots that exist from it are necessarily part of the same indivisible unit of land.

  20. Thanks for the referrals, Daniel!

    You are right that it’s not as simple as just privatizing and deregulating, without re-examining property rights. Without getting into anarchist theories, government probably needs some regulatory role in land use, even in the most free-market setting. This would be necessary to prevent situations like you mention, where one person owns the land surrounding a neighbor. That situation is referred to as “forestalling”, and is considered an act of coercion, even by the staunchest proponents of property rights. At a minimum, I would imagine property rights regulations would have to stipulate that one property owner could not hamper the use of an other’s property through forestalling or other acts of coercion.

    Nonetheless, I consider such discussions somewhat utopian in this day and age, but I think it’s worthwhile to liberalize what we can, and shift the dialogue in the direction towards a more free society.

  21. Thanks for the referrals, Daniel!

    You are right that it’s not as simple as just privatizing and deregulating, without re-examining property rights. Without getting into anarchist theories, government probably needs some regulatory role in land use, even in the most free-market setting. This would be necessary to prevent situations like you mention, where one person owns the land surrounding a neighbor. That situation is referred to as “forestalling”, and is considered an act of coercion, even by the staunchest proponents of property rights. At a minimum, I would imagine property rights regulations would have to stipulate that one property owner could not hamper the use of an other’s property through forestalling or other acts of coercion.

    Nonetheless, I consider such discussions somewhat utopian in this day and age, but I think it’s worthwhile to liberalize what we can, and shift the dialogue in the direction towards a more free society.

  22. There are varying definitions of private, but I meant privately owned by some entity (whether it be an individual or cooperative), as opposed to publicly… I do see your point.

    When I said “slice” up the land, I meant to infer that it doesn’t necessarily need to be used as a roadway. Perhaps they could agree to divide the former cul-de-sac into pieces and each could use it as a lawn, or whatever each chooses.

    Although it probably depends on roads to exist, such a cooperative property would still be adjacent to an existing road at the nearest nodal intersection. Residents probably don’t necessarily need to be mobile with an automobile within the cooperative. Perhaps, it could be developed as a large apartment complex with underground parking. But, property rights would have to be allowed such that the cul-de-sac itself does not need to stay in-tact.

  23. There are varying definitions of private, but I meant privately owned by some entity (whether it be an individual or cooperative), as opposed to publicly… I do see your point.

    When I said “slice” up the land, I meant to infer that it doesn’t necessarily need to be used as a roadway. Perhaps they could agree to divide the former cul-de-sac into pieces and each could use it as a lawn, or whatever each chooses.

    Although it probably depends on roads to exist, such a cooperative property would still be adjacent to an existing road at the nearest nodal intersection. Residents probably don’t necessarily need to be mobile with an automobile within the cooperative. Perhaps, it could be developed as a large apartment complex with underground parking. But, property rights would have to be allowed such that the cul-de-sac itself does not need to stay in-tact.

  24. There are varying definitions of private, but I meant privately owned by some entity (whether it be an individual or cooperative), as opposed to publicly… I do see your point.

    When I said “slice” up the land, I meant to infer that it doesn’t necessarily need to be used as a roadway. Perhaps they could agree to divide the former cul-de-sac into pieces and each could use it as a lawn, or whatever each chooses.

    Although it probably depends on roads to exist, such a cooperative property would still be adjacent to an existing road at the nearest nodal intersection. Residents probably don’t necessarily need to be mobile with an automobile within the cooperative. Perhaps, it could be developed as a large apartment complex with underground parking. But, property rights would have to be allowed such that the cul-de-sac itself does not need to stay in-tact.

  25. There are varying definitions of private, but I meant privately owned by some entity (whether it be an individual or cooperative), as opposed to publicly… I do see your point.

    When I said “slice” up the land, I meant to infer that it doesn’t necessarily need to be used as a roadway. Perhaps they could agree to divide the former cul-de-sac into pieces and each could use it as a lawn, or whatever each chooses.

    Although it probably depends on roads to exist, such a cooperative property would still be adjacent to an existing road at the nearest nodal intersection. Residents probably don’t necessarily need to be mobile with an automobile within the cooperative. Perhaps, it could be developed as a large apartment complex with underground parking. But, property rights would have to be allowed such that the cul-de-sac itself does not need to stay in-tact.

  26. “Private” roads are not a new idea. Many subdivisions are built with private roads that are maintained by the HOA or some other neighborhood funded body.

  27. “Private” roads are not a new idea. Many subdivisions are built with private roads that are maintained by the HOA or some other neighborhood funded body.

  28. “Private” roads are not a new idea. Many subdivisions are built with private roads that are maintained by the HOA or some other neighborhood funded body.

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