Reading Hayek in Holland

During a working vacation in the Netherlands, I had the dissonant experience of reading Friedrich Hayek’s The Road to Serfdom in one of the most comprehensively planned environments on earth. Hayek’s thesis is that central economic planning displaces competitive markets and, when broadly applied, paves the way for totalitarianism. The premise of Holland is that strict central planning is necessary to avoid being underwater. And the planning covers much more than water: in the Netherlands, centralized land use and transportation planning uphold a pleasant, sustainable lifestyle and growth pattern.

Although the Dutch experience is not a slam-dunk case against Serfdom, it certainly raises questions. It’s not only that the Netherlands has avoided becoming a totalitarian state, but it has largely produced an excellent built environment which the present author finds far more enjoyable than anything on offer in the U.S.

Several caveats are in order. Hayek did not predict that planning a single aspect of the national economy would lead to totalitarianism. He even offers ‘modern towns’ as an area where some planning is necessary (p. 48). One should read Serfdom with a sort of “inflation adjustment” for the apocalyptic rhetoric given that it was written during an apocalyptic era. Finally, I do not claim a unique level of expertise in either Hayek or Dutch spatial planning. This essay was informed by Barrie Needham’s book and conversations with planning officials from several Dutch cities.

Is it really central planning?

Unlike in the U.S., the Dutch built environment is centrally planned. Gemeenten (municipalities) are not free to diverge from national and provincial priorities, and any major greenfield development must win provincial and sometimes national approval. Regulation systematically imposes an integrated rational scheme totally unlike U.S. zoning.

Dutch spatial and transportation planning is the outcome of consensus decision-making within a fairly intimate professional class at various levels of government. This polycentricity may be part of the reason that the quality of the planning is so high and the system can execute across many domains (transport, development, water, etc.).

For example, Dutch governments at all levels have systematically prioritized cycling for decades, with strong public support. That priority is expressed not only in road building, but in all related domains. In a new Utrecht development, for instance, city planners are pushing the developers to provide five bike parking spaces per apartment, a costly proposition. With a less unified planning class, the whole system would become beset with bottlenecks.

There is no wizard behind the curtain directing the apparatus. But if this isn’t “central planning,” then we can dismiss that concept as a purely theoretical straw man.

In the U.S., by contrast, planning departments, zoning boards, water authorities, and state transportation departments frequently fail to communicate, let alone coordinate. For example, when the Metro was extended into Montgomery County, Maryland, in the 1970s, the county was under a moratorium on major new construction due to lack of sewer capacity. The county is still retrofitting its underdeveloped Metro station areas, which should have been primed for transit-oriented development from day one.

The Public Realm

The obvious tradeoff between American and Dutch cities is that the former provide generous quantities of private space while the latter offer an exceptionally attractive public realm. New subdivisions not only have thoughtfully executed walking, cycling, and driving access, they also have traditional waterways and open space. Somehow, even new subdivisions have mature trees.

The presence of cars in city centers has sharply declined since I lived in Holland in the late 1990s. One planner I spoke to said that although car ownership has risen during that period, kilometers driven has remained steady because the country has made large investments in improving transit and cycling infrastructure (it was already the best in the world, but it’s noticeably better now).

Today, Dutch cities are designed to draw cars toward highways, which are often quite narrow. Car-oriented businesses and manufacturing zones cluster in business districts along the highways; no suburban residential district is car-oriented. Instead, suburban streets are narrow, low-speed spaces with limited sightlines and brick paving. Some streets feel more like shared driveways than streets in the American sense.

It is a commonplace among New Urbanists and other American city-lovers to point to medieval European towns as exemplars of mixed uses, walkability, and other virtues that American cities lack. This is fine, but contemporary Dutch urban design is much more relevant and almost as attractive as the medieval cities – which, in any case, have a larger share of 20^th– and 21^st-century buildings than you might expect.

How does a Dutch planner integrate modern dwellings into a medieval center? Among other things, by requiring the builder to vary the heights of floors and windows in neighboring townhouses. Nothing is built in the Netherlands today that does not meet – and exceed – the design goals of American New Urbanists.

Competence and Trust

In Amsterdam, the Houthavens redevelopment features multi-million euro condos in buildings that rise like piers from the city’s main waterway, the IJ. A friend from Delaware, James Wilson, pointed out the ground floor windows about six inches above the waterline. Americans could never do this, he said. We would not trust the builder to make a building so watertight. We would not trust the window manufacturer. We would not trust the water authority to keep the water level perfectly constant. Our insurers would not insure this. Our families would not buy it. Our regulators would not permit it. Our builders would not attempt it.

The Dutch expect an equal level of competence in spatial planning. For example, the Hague’s major Ypenburg expansion brought it into conflict with the existing semi-rural settlement pattern. One old road posed a traffic conundrum: it would be a natural cut-through for the new traffic. In the U.S., this situation would either result in the whole development being blocked – the NIMBY solution – or the road becoming congested and [trigger warning] its rural character forever destroyed. The Dutch found a technical solution: a grade-level intersection where turns are impossible. As the picture below shows, the intersection’s curbs are built right up to the lane lines so that the only choice is to drive straight.

In the U.S., civil engineers are not intellectually equipped to innovate. The professional culture is driven by compliance to universal standards, not situational problem-solving.

The Dutch expectation of competence extends to public life. One afternoon, I was enjoying a beer and sandwich at a sidewalk café. An SUV was parallel parking, at the same grade, a few inches from the back of my chair. It did not occur to me until afterwards that this would have made me very uncomfortable in America. Whereas Americans, blessed with abundant land, use physical distance to create safety in many contexts, the Dutch rely on universal competence.

[Edit: James Wilson points out a paradox here. Dutch road design does not assume competence, or attentiveness from users; instead, it uses physical design to minimize the consequences of driver carelessness. Most importantly, city streets are narrow and turn frequently so that speeding is near-impossible.]

The Housing Crisis

Despite radically different spatial regulatory and planning systems, the U.S. and the Netherlands (and many other countries) have arrived at the same system failure: high housing costs in major coastal cities. Just as in the U.S., already-high home prices were exacerbated by a pandemic-era spike.

The Netherlands’ primary tool for providing social housing is along the same lines as inclusionary zoning, claiming 10 to 40 percent of units in new developments. Large non-profits manage much of the country’s social housing. As in the U.S., requiring below-market units in any development lowers profitability. But the cost effect in the Netherlands is likely dwarfed by the basic scarcity of developable land. Because the central planners fully control the levers of housing supply , they can extract deep concessions in terms of design, social housing, and infrastructure – so long as prices remain far above construction costs.

Dutch regulation is in some ways the reverse of ours; they have minimum densities, not maximums. Since American regulations have no density minimums, deregulation can only increase density. But Dutch planners firmly believe that deregulation in their context would result in larger lots and bigger houses. That leaves a market urbanist a little lost in the Netherlands: I like what the planners are producing, but not the way they produce it.

The Bike Path to Serfdom

Remember Hayek? This is an essay about Hayek.

I don’t expect totalitarianism from clever intersection design or bicycle parking mandates. But Hayek argues that planning should lead to significantly different outcomes than mere regulation. And he lays out some of those consequences in Serfdom.

Decline in the Rule of Law. That is, different rules apply to different people. This is clearly endemic to the Netherlands’ spatial planning, although it may be that no system is immune to the favoritism or speculation that attend spatial decisions.

One of the Hague’s planning priorities is to improve its neighborhood shopping streets by (further) demoting cars. A planner showed me one street that had gotten fantastic treatment: traffic calming, stone sidewalks, art, parking spaces above street grade, and room for sidewalk cafes – all without disturbing the mature plane trees. Not surprisingly, this was the main shopping street of the Statenkwartier, one of the richest neighborhoods in the city.

A similar street in a nearby middle-class neighborhood received decidedly simpler treatment. And the shopping streets I saw in immigrant districts were unimproved. As my host admitted, every business district wanted the slow-street treatment, but those with political connections got the first places in line.

More consequentially, permitted greenfield development is so lucrative that speculators buy up likely parcels outside cities, and municipalities lobby hard for provincial permission to expand. This tug of war takes place out of public view and yields no vacation photos but it determines urban growth and form and makes fortunes and careers.

Departures from representative government. Development can also involve hardball politics, to the point of sweeping aside rival political institutions in order to execute a plan. The Province of South Holland wanted to address its housing shortage by building a dense urban center in a former airfield and farmland across several suburban municipalities. The suburbs would have happily developed the land, but not as densely and with less social housing than the province wanted.

So the province redrew the municipal boundaries, giving the site to the Hague. Four suburban municipalities consolidated into two in an attempt to stop the annexation, but to no avail. The province wanted dense, urban development, and the Hague was willing and able to execute the plan.

Mission creep. Hayek contends that once planning begins, it will inevitably creep into other spheres in order to keep the plan from failing. This has not largely occurred in the Netherlands. The Dutch plan space and transport in morbid detail but are open to trade, sectoral shifts, and – significantly, given the housing pressures – migration. There are conflicts between industry and spatial planners which are not always resolved in the latter’s favor. For instance, industrial interests at the provincial level want higher-clearance drawbridges over major canals. Raising the clearance of a bike bridge from 1.5 to 3 meters doubles its cost – but the city of Delft might have to build the high bridges anyway.

“The worst get on top.” Hayek argues that totalitarian systems favor the unscrupulous. It’s not clear from Serfdom whether he thinks that central planning institutions in more liberal contexts also attract bad actors. The more obvious, quotidian risk is that politically connected incompetents get positions of power. That’s clearly not happening in the Netherlands. The planners could fairly be called bureaucrats or even ideologues, but they are very good at their jobs.

Regulation or planning?

The failures of planning in the Netherlands – high housing costs, occasional favoritism, and political hardball – are all failures common to just about every other government system. The greatest weakness may be that the Dutch system relies on a level of technical competence and professional harmony from its planners that exceeds the standard practice in the U.S. and, I think, most developed countries.

A more interesting question, I think, is whether regulation is as preferable to central planning as Hayek suggests. As a consumer, I vastly prefer the carefully, competently planned Dutch cities to the regulated but uncoordinated American ones. I suspect builders feel the opposite way. But is there any way to separate the institutional choices from the culture of competence and land scarcity? What would it look like for a U.S. state – or even a county – to replace regulation with central planning? I suspect it would be a sloppy mess, since no entity has the power, experience, or persuasiveness to bring together every aspect of good city-building.

And how much would the Netherlands change if it replaced planning with regulation? There are simply too many variables.