No matter where you go or who you talk to these days, you are bound to run into a planner. Whether they are a private developer, private consultant (read: government consultant), a state officer or a local council worker, they are everywhere. Each and every one of them is armed with a seemingly endless list of buzzwords and hollow rhetoric such as the inappropriate use of words like “sustainability”, something David Friedman aptly described as “…an argument against whatever policies one disapproves of, in favour of whatever policies one approves of, and adds nothing beyond a rhetorical club with which partisans can beat on those who disagree with them”.
Planners are not bad people; in fact, I count many amongst my friends and generally feel that their views on “planning issues” are the result largely of an unfortunate monopoly that the government holds both on education and the career prospects of anyone who wants to get into development of any kind, especially urban and transport development.
This unfortunate fact means that we are almost certain to keep repeating the mistakes of the past. Decades of relying on government central planning for infrastructure provision – while I cannot speak for other States, Western Australia has operated with centrally directed, top-down detailed land-use and transport plans (the latest of which is Directions 2031) for decades, all of which bear a striking similarity to the 5, 10, 20 and 40 year plans once envisioned by the 20th century socialists – has created countless dilemmas that are being resolved with yet more intervention and top-down planning.
The favourite way to achieve these “smart growth” plans is through zoning. The Economist recently reminded its readers of one of the most fundamental of economic laws in response to a typical ‘planner’ comment expressing concerns about “allowing unlimited rapid development”:
…no one disputes that there is a value to preservation. Yet when private firms and individuals transact voluntarily, we understand that there is value creation, too. This value creation plays an important role in economic growth, and our presumption should be in favour of allowing such transactions to take place…The burden of proof should be on those who would intervene to prevent voluntary, mutually beneficial transactions and disrupt private spillovers. Otherwise—and empirical evidence supports this view—society will tend to get too few value-creating transactions and positive spillovers.
I know by now I may sound like a broken record, but the “problems” that are everywhere and will continue to be everywhere cannot be solved with more of the same “planning”. Today it is encouraging density or so-called ‘smart growth’, yesterday it was all about keeping business and residential districts apart. The only thing in common is that it is the same organisation – government – calling the shots. The “problems” are then institutional; people are acting within the rules to which they must abide (today’s planners) and are repeatedly producing poor outcomes because the payoffs for good outcomes are simply not there.
My theory is that it is because (primarily) the institution of private property has been eroded by decades of zoning and other restrictions on land use. The price system in most scenarios has been either completely distorted or is not existent (e.g., transport). People are no longer allowed to cooperate with each other to achieve efficient outcomes and instead must resort to constant bickering and political lobbying as they try to force their own subjective values onto others’ – something that, aside from their time, they do not have to PAY for. The result is that the local government, planning commission or politician is used to enforce subjective views at no cost to the individual or group lobbying for change but at massive cost to unseen people (e.g., people who want to move into an area but cannot afford to because of onerous zoning regulations driving up land prices).
My thoughts are that a lot of the “problems” that need to be “solved” would be taken care of spontaneously if prices were allowed to convey the knowledge needed to make ever-changing trade-offs. If we get the institutions right, a lot of work that today’s planners do – they are generally smart, articulate people – could be better used adding value in the private sector creating things that people actually want. A continuation of the policy of solving government-created problems with government regulation will simply further restrict important market coordinative information and will result in decisions that will always appear to be poor in any ex-post analysis.
As someone once said, it is always easier to believe narratives about heroic leaders than about complex self-reinforcing political and economic systems. Instead of repeatedly calling for someone with the right “vision” or “leadership” and consequently a further erosion of property rights and the coordinating function of the market (“leaders” will always need more power to enact their “vision”), the focus should be on getting the institutions right. Until that happens, any ad-hoc attempts to “solve” society’s “problems” with new commissions, new powers, better plans or bigger budgets will be like “groping in the dark”.