O’Toole Under More Fire

Consider that MTA spends $17 Billion every year to move people around NYC — 2/3 of which is from taxes. And that excludes the opportunity costs of labor; i.e., the 50K+ employees that cannot be put to other uses because they are driving buses, opening and closing subway car doors, etc.

And keep in mind that bridge and tunnel tolls are used to pay for subways, and not the other way around.

Google “state highway budgets” to see annual highways costs. I see that Arkansas is $1.9B. Washington is $3.5B. Pennsylvania is $2.4B.

Anyway, my point is NOT that transit should be replaced by highways. Instead, it is to illustrate that it is far from a given that transit is cheaper than highways.

Besides, there is nothing intrinsically “free market” about transit or highways.

For that matter, there is nothing free-market about less-restrictive zoning. As long as land is controlled by the government, the “free” solution is undefined.

For example, what if all rules for public sidewalk use were abolished? Let people run businesses on sidewalks, let them live there, let them operate Hummers on them, etc. Wouldn’t that increase “freedom”?

Same with zoning. Permitting unrestricted development is not free-market. High densities would lower the costs of living in those areas, but it would come at the expense of harming people who had some expectation of living in a low-density environment — as (sort of) promised by local zoning codes. In fact, the changing of zoning without the unanimous consent of everyone affected comes very close to eminent domain. That is, the government says, “We changed our mind and will toss the old zoning in the trash. It’s for the common good. And there are a lot more of them than there are of you. So…too bad for you.”

The mistake was probably having publicly incorporated cities and towns to start with.

Ehh, I’d read the comments (haha, i.e., my comment) before you give Ryan Avent too much credit. Sure, he’s on our side, but I tend to believe Randal’s calculations more than his.

Bill Nelson wrote [numbering is mine — BH]:

[1] “. . . there is nothing free-market about less-restrictive zoning. As long as land is controlled by the government, the “free” solution is undefined.

[2] For example, what if all rules for public sidewalk use were abolished? Let people run businesses on sidewalks, let them live there, let them operate Hummers on them, etc. Wouldn’t that increase “freedom”?

Same with zoning. Permitting unrestricted development is not free-market. High densities would lower the costs of living in those areas, [3] but it would come at the expense of harming people who had some expectation of living in a low-density environment —- as (sort of) promised by local zoning codes.”

Benjamin Hemric writes:

Regarding [1]: — I think “free market” is a misnomer in discussions of both urbanism (i.e., “free market urbanism”) and economics (i.e., “free market economics”). It seems to me that no successful market is ever totally free of any regulations whatsoever — such a market would quickly descend into anarchy. For example, although the New York Stock Exchange is a bastion of American capitalism, it has always had plenty of regulations regarding its market (e.g., what companies can be listed, how selling proceeds, etc.). Thus it’s probably more accurate — and ultimately less confusing and more useful — to instead use expressions like “market-based” (market-based economics / urbanism ) or “market-oriented,” (i.e., market oriented economics/ urbanism”) rather than “free-market.”

In terms of zoning, zoning that is less restrictive is indeed more market-oriented than zoning that is more restrictive; and zoning that is less restrictive does, indeed, lead to the development of settlements that are more market-based than those created by zoning that is more restrictive.

Regarding [2]:

I think this analogy is a poor one, as the two situations do not seem to me to be really analagous.

Allowing any kind of use on a sidewalk diminishes the usefulness and value of a sidewalk as a sidewalk. (The sidewalk would then become something else: commercial space, residential space or vehicular space.) Allowing any kind of use or building type on a plot of land does not diminish the usefulness and value of the land as land.

Regarding [3]:

While people are entitled to their preferences, why should their preferences become a government sponsored entitlement? And why should government legislate in favor of one preference (e.g., detached, single-family homes) and against another (e.g., apartment houses with stores)?

I think it’s useful to remember, too, that the kind of zoning that is under discussion, didn’t even exist until 1916.

P.S. — Just to complete my thoughts regarding [3], here’s a cut and paste (revised) from some related previous posts:

If one wants to live in a detached single-family home separated from others by a certain distance . . . one should then buy into a privately-owned community that is set up to provide such an environment (e.g., with restrictive covenants, etc.) — and not ask the government and other taxpayers to support their personal preferences, either directly or indirectly.

Single-family homeowners are not really “harmed” (in the sense that their property is being substantially damaged) by the construction of apartments or stores. Their neighborhood is just evolving into another type of neighborhood, and the evolution is just not their personal preference; the neighborhood is just becoming a new neighborhood that other new people value more highly than they do. They can still, however, sell their property and move somewhere else. This is unlike a case, though, where someone builds something next door that is truly harmful (e.g., emits foul, unhealthy orders, etc.), and the construction makes it impossible for someone to enjoy their property, and almost impossible to sell it. That person has truly been harmed.

But why should the government try and stop the evolution of a neighborhood into another kind of neighborhood that other people value more highly?

Bill,
I definitely don’t disagree with any of your transit thoughts. Those MTA numbers are startling! But I do disagree about zoning:

For that matter, there is nothing free-market about less-restrictive zoning. As long as land is controlled by the government, the “free” solution is undefined.

On top of what Benjamin commented, I view zoning (more specifically, property rights) as a moral issue – as I also view economics. Zoning is a moral abomination and just because it exists, doesn’t make it just. Compare it to slavery, not in severity or any other scale, but in concept. As a moral abomination, the institution of zoning should be abolished immediately. Sure, things would shift from status quo, but the moral injustice must not be allowed to continue any further.

For example, what if all rules for public sidewalk use were abolished? Let people run businesses on sidewalks, let them live there, let them operate Hummers on them, etc. Wouldn’t that increase “freedom”?

Sidewalks are an issue of “The Commons”. If they became completely unregulated, while publicly owned, freedom would not be improved. Chaos and abuse would ensue, as in the Tragedy of the Commons or any other situation where property rights are not asserted. However, while under proper private control, a private owner would justly be able to regulate the activity on his property. As long as sidewalks are “public”, meaning government-owned, they need to be regulated by their owner, the government. (of course, I prefer the private solution over the government solution…)

Market,

Zoning should be abolished? So, in your world, if you buy a piece of property and build your dream home and then I buy the property next to yours and build a pig farm with with all of the noise and smells that entails, you wouldn’t have a problem with that? With no zoning laws, it’s my property and I should be able to do whatever I want with it, right? If you don’t like it, too bad. You can always sell, I suppose, if you could find anyone who wants to live next to a pig farm.

Presumably your house would be in a neighborhood with relatively expensive land, which means it wouldn’t be very profitable to build a pig farm there. Humans need access to jobs, food, social events, etc., and they pay more to live close to them. Factors and pig farms, on the other hand, do not, and so they take advantage of the relatively cheap land that’s not suitable for people to really live on. Voila, problem solved, no need to bring zoning into the equation!

Furthermore, if you were a developer and you have a large plot of land, the interior of the plot is naturally shielded from the whims of others based on the fact that you own all the land around it. Many industries have inherent economies of scale, so it’s not unusual that real estate would have them, too. Only thing is, our current zoning situation negates those economies of scale. Presumably because homeownership (as opposed to renting a home in a large developer’s plot) is a good thing, although since the subprime meltdown that argument doesn’t look as solid anymore.

Hi Steve,

I appreciate your inquisition. It gives me the opportunity to explain further.

So, in your world, if you buy a piece of property and build your dream home and then I buy the property next to yours and build a pig farm with with all of the noise and smells that entails, you wouldn’t have a problem with that? With no zoning laws, it’s my property and I should be able to do whatever I want with it, right?

No, that is not the world I envision. Is zoning the proper mechanism to resolve pig smells and other blatant intrusions? I think zoning is far from being a reasonable form of justice in such matters.

I think other dispute resolution remedies must be in place to resolve issues among neighbors. That could be some form of covenants among land owners or nuisance laws, etc, etc. I see those pig smells and noises as a blatant infringement upon the property rights of the neighbor and are intolerable. Such aggressions should be forbidden unless agreed to by both parties voluntarily.

So, no. Abolition of zoning does not mean one can do whatever one wants on his/her property.

Zoning and similar regulations were a shortcut (and power grab) governments made to appear to solve nuisances without dragging down the courts. It can be seen as a move on behalf of corporate interest to enable them to not have to get dragged into court every time they wronged someone with pollution. A strict respect for property rights would also render the EPA obsolete when it comes to pollution.

Good point. Even the cheapest residential land is far greater in value than agrarian land. A pig farmer, in his right mind, would never locate in your relatively expensive neighborhood. If he did, it probably means your land was pretty much worthless before the pig farmer even got there…

Zoning is a moral abomination and just because it exists, doesn’t make it just. Compare it to slavery, not in severity or any other scale, but in concept.

What aspect of zoning is morally abominable? I would think that you most strongly object to individual decisions in living arrangements being replaced by politically-driven government coercion? (Let’s set aside the utilitarian arguments of optimal land use, densities, etc.)

If so, let’s consider the towns of Lodensityville and Privateville.

Lodensityville has politically-driven quarter-acre single-family zoning, and Privateville has a contractual guarantee of quarter-acre zoning. (And, interestingly, nearby Seniorville promises homeowners that they will not have youthful neighbors — and somehow gets around anti-discrimination laws…)

Over the years, the nearby city of Megasprawlopolis grows to the point where our two quaint towns are no longer being efficiently used as quarter-acre zoning. The planners of Lodensityville realize this and change the zoning laws; they are particularly eager to grab all the new taxes that will pour in. The owners of Privateville also want to cash in, but they can’t because of a contract that guarantees the homeowners quarter-acre zoning.

(This is not fictitious, and it even happens within New York City. A good example is Forest Hills Gardens, where covenants protect low-density residential use in the middle of one of the highest-density areas outside of Manhattan.)

And so, the homeowners of Lodensityville suddenly have to live among hi-rises, crowded streets, and all the other things that they object to. They live at the whim of government power to change zoniing. Of course, the “net benefit to society” was enormous — but then, we’re talking about morality and not utility, right? Privateville, though, was an anomaly; they were protected by contract. Lodensityville residents didn’t have that option, and so were sacrificed for the “greater good”.

Then there’s the third town, Zoneville, which is not private — but was zoned long ago to simulate the environment of Privateville. And despite the presence of Megasprawlopolis, Zoneville will not change its low-density zoning. It mimics Privateville.

If in a world absent of government controls, there would be more Privatevilles — then why should Zoneville be a moral abomination?

I claim that the abomination is not zoning — but instead is the government power to prohibit private contracts in land-use rights.

Or, actually, you said it best: just replace “sidewalks” with “land use rights”:

Sidewalks are an issue of “The Commons”. If they became completely unregulated, while publicly owned, freedom would not be improved. Chaos and abuse would ensue, as in the Tragedy of the Commons or any other situation where property rights are not asserted. However, while under proper private control, a private owner would justly be able to regulate the activity on his property. As long as sidewalks are “public”, meaning government-owned, they need to be regulated by their owner, the government.

Allowing any kind of use on a sidewalk diminishes the usefulness and value of a sidewalk as a sidewalk.

It diminishes the value of the sidewalk to whom? Not to me, if I want to drive my Hummer on it. In fact, the sidewalk’s rules are determined by the government because there is no private entity that says “No driving on the sidewalk.”

And why should government legislate in favor of one preference (e.g., detached, single-family homes) and against another (e.g., apartment houses with stores)?

For the same reason that government legislates sidewalk usage. And what gets taught in public schools. And who gets to live in public housing. And how much contractors get paid for working on projects of dubious value. When there is no owner, then there are no owner’s rights. Instead, government managers decide.

And when there is no owner of land-use rights, then the government will dictate.

Those MTA numbers are startling!

You can see the MTA operating budget here, and the MTA capital budget here.

Bill Nelson wrote:

It [allowing motor vehicles on the sidewalk] diminishes the value of the sidewalk to whom? Not to me, if I want to drive my Hummer on it. In fact, the sidewalk’s rules are determined by the government because there is no private entity that says “No driving on the sidewalk.”

Benjamin writes:

It seems to me that this issue, at least as originally worded, is a question of definitions (although that may not have been the original intention). You cannot really have a sidwalk with unrestricted cars, trucks, etc. on it because it is then no longer really a “side” “walk” anymore. (Perhaps such a sidewalk — one with unrestricted motor traffic — is an example of an oxymoron?) By its very defintion (in the generally accepted meaning of the term), a sidewalk has restrictions on motor vehicles. So allowing motor vehicles on a sidewalk — by defnition — diminishes its value as a “side” “walk” (the supposed purpose for which it was created).

But getting back to the larger issue (and using slightly different language, which might help), “public thoroughfares” (be they for pedestrians, vehicles or a mix of both) have basically always been a province of government control and not a marketplace activity. This is NOT true with regard to land use and building construction, which have been pretty much solely marketplace, not government, activities until relatively recently (i.e., essentially, post-1916).

– – – – – – – – – – – – – – –

Bill Nelson wrote:

[In a previous post, Benjamin Hemric asked, “]And why should government legislate in favor of one preference (e.g., detached, single-family homes) and against another (e.g., apartment houses with stores)?[“]

For the same reason that government legislates sidewalk usage. And what gets taught in public schools. And who gets to live in public housing. And how much contractors get paid for working on projects of dubious value. When there is no owner, then there are no owner’s rights. Instead, government managers decide.

And when there is no owner of land-use rights, then the government will dictate.

Benjamin Hemric writes:

Generally speaking, it seems to me that there is a greater public purpose to government activities that are generally accepted as “legitimate” government activities. So the examples of legislating usage of public thoroughfares, legislating what gets taught in public schools, and other similar examples of the “traditional” activities of government, all seem to me to have a legimate PUBLIC purpose (for the greater good of society at large). (I’m leaving out public housing and government laws on contractors’ pay as it’s arguable whether they have the same generally accepted public purpose and legitimacy.)

Regulating the “development” of land (in terms of types of uses and building types permitted, etc.) in order to favor one group over another group does not seem to me to be a legitimate government activity (i.e., to have a greater public purpose) and, in fact, it has not been a government activity until relatively recently (essentially post-1916).

So although government has the constitutional power to regulate land use and building types (and favor one group over another), just as it does with the usage of public thoroughfares, etc., I think its bad public policy for the government to do — just as it is bad public policy for the government to regulate economic activity in order to favor one group over another group. In both of these spheres, it’s better, in my opinion, for the marketplace to “decide.”

Benjamin,

Love the sidewalk humor….

“public thoroughfares” (be they for pedestrians, vehicles or a mix of both) have basically always been a province of government control and not a marketplace activity.

I can think of some pedestrian thoroughfares under private control:

shopping malls
outdoor lifestyle centers (such as one that I lived at briefly)
theme parks
sidewalks in gated communities
pedestrian bridges between buildings
building lobbies that cover a whole block and are accessible to the public (example: AT&T; Corporate Center / USG Building in Chicago)
college campuses
megablock developments such as Rockefeller Center

also, here’s a tip: you can quote blocks of text by typing ‘

‘ to start and ‘

‘ to end the quotation. (without the spaces)

Bill,

Thanks for keeping me on my toes.

What aspect of zoning is morally abominable? I would think that you most strongly object to individual decisions in living arrangements being replaced by politically-driven government coercion? (Let’s set aside the utilitarian arguments of optimal land use, densities, etc.)

It is the violation of property rights that is inherently coercive and thus immoral. I guess if there were some form of voluntary contractual form of zoning, I would have no right to object. But, “voluntary zoning” may be the logical equivalent of “sidewalks for SUVs”…

If in a world absent of government controls, there would be more Privatevilles — then why should Zoneville be a moral abomination?

Just because they have comparable outcomes does not mean they are morally comparable. I would imagine Privatevillians would be able to amend their voluntary agreement, just like you and I may agree to amend a contract we agreed to years ago.
In the situation you describe, they would have the economic inventive to do so, as collectively, the land is worth more upzoned. I would also imagine that such an agreement would likely have provisions to enable amendment based upon pre-agreed-upon situations. I wouldn’t sign a long-term land-use agreement that tied the signees hands too much with regard to amendments…

Adam,

While there are, of course, lots of examples of “pedestrian” thoroughfares under private control, Bill Nelson seemed to be referring specifically to “public” thoroughfares in his analogy, so I was really referring specifically to those in my post.

However, in addition to the types of “pedestrian” throughfares under private control that you mention, here are some others:

NYC has two somewhat famous ones (favorites of mine) that seem to fall outside the categories that you mention: Shubert Alley and Rockefeller Plaza (the street, not the sunken plaza).

Plus, both Grand Central Terminal (along with a number of connected surrounding structures) and, to a lesser extent, Penn Station (railroad terminal/station), and Rockefeller Center (office complex) have extensive pedestrian thoroughfares that are (or at least were, originally) under private control. Also, the New York General Building (current name?) office building has two really neat open air “pedestrian” thoroughfares under private control (I assume) that go right through the building. (I wonder who controls, or originally controlled, the automobile viaducts that go around GCT and through the New York General Building? I assume they are, or at least were, private streets.)

Some other interesting NYC examples that are favorites of mine are “quaint” and picturesque Washington Mews (essentially a private alley) in Greenwich Village, and (I believe) the “pedestrian” (and vehicular, too) thoroughfares that go through ungated (at least technically) middle-income urban renewal developments like Silver Towers and Washington Square Village. (These could really be spectacular if developed properly.)

Plus, as you (as a real estate developer) no doubt already know, there are a number of mid-block office buildings in Manhattan with through lobbies/corridors that serve, in essence, as “pedestrian” thoroughfares under private control. (And that’s not including all the mid-block pedestrian thoroughfares that have in been “bonused” through zoning — which makes these examples less clearly under private control.)

P.S. — Adam, I see that as I was working on my post above, about additional examples of “pedestrian” thoroughfares under private control, you were still adding to your original post. So, sorry for the “duplicates.”

The important question is not whether private streets can exist, but under what terms do private streets exist? In America the national constitution defines only one form of community ownership, the “incorporated” community, which is really nothing more than a branch of government and has no real autonomy or independence. (Tragically the business corporations are increasingly losing their autonomy and independence as well.)

The reality is that there may be multiple models of functional city incorporation, all with their own advantages and drawbacks. The only way to find out which is best is to let them compete, to allow the owners of communities (voters and/or taxpayers) to transform them and adopt different models. Over time the more successful models will drive out the less successful ones by merging and multiplying. There will be a free market of communities.

Of course doing this requires going around the politicians and political parties, who have a solid interest in preserving the status quo and their power. I don’t have a solution to that problem.

In the situation you describe, they would have the economic inventive to do so, as collectively, the land is worth more upzoned.

Again, I refer you to Forest Hills Gardens — and in your theoretical construct, would be worth much more upzoned. But it is private, and despite the allure of being adjacent to an LIRR station, one block from express subways to Manhattan, and on top of the Van Wyck Expressway and The Grand Central Parkway, the homeowners association does not appear to have any interest in cashing in, and making it look like the surrounding areas.

Their rights are protected by covenant — but what of people who live in “public” neighborhoods?

Sometimes, economic incentives are not enough. Or, more specifically: The economic incentives to whom? It reminds me of the holdout issue; why won’t those homeowners just realize how much money they can make by selling to the casino developer?

I don’t have any good answers. Establishing zoning rights would seem to be a good idea — but how does one do it? Maybe similar to how they granted property rights in Russia in 1990?

How’s this: Convert every town, village, and neighborhood into a private entity — and give existing land owners a share of the ownership. At that point,they become part owners in a corporation than can determine its own zoning. And, as part-owners, they can buy and sell their shares of zoning rights.

It’s messy, but at least it grants existing homeowners some control over their surroundings — and, at a price.

unmarket urbanism:

How much have highways been “subsidized”, %-wise? And how much paid for by gas taxes? I think gas taxes have covered over 80%. It’s been going down since about 1994 because of tax no increase.

Regardless, over 85% of adults own a car. Are government funds which go that many people really a subsidy? Any government project/program that covers 85% of the people is pretty rare.

Fewer than 4% use transit, yet about 2/3 of its cost come from taxes paid by all. But that’s okay for you? Please explain your hypocrisy.

Actually, to be consistent, if you are whining about subsides for highways, then you would have to agree for government to cut almost all spending that doesn’t cover ~90% of the population.

Taking opportunity cost as a factor into accounting for costs is inaccurate. Look at the 3 million sq.mi. of the US. For every land use that each property has, are you going to consider what else could be there instead? That’s ridiculous.

Your look at the land used by highways is wrong anyway. You say the land “cannot be used productively.” A highway is very productive. The land cannot be used without roads anyway, and easy interstate access adds value. “Capital diversion” can be a good point for much of gov spending, but you applied that inappropriately. For one thing, let’s use your reasoning & suppose the interstate system never got built; it would allow capital to be spent elsewhere. Well, the economy would be far less efficient & more expensive without that great transportation network.

For any purchase, something else could have been bought instead.
You, as with most lefties, get laissez-faire mixed up with anarchy. The main purpose of gov is to protect; basic infrastructure, for all, is secondary. Gov goes overboard in many areas. Of course, roads & other pure public goods are “massive” projects. When very useful, for more than the majority, & fiscally wise, they are fine. When used by few & very expensive (ie low cost-benefit), they are unwise; about any new transit project comes under that category.

Hi Randall,

It looks like you took some time to write your comments, which I appreciate. But, I’d like to encourage you to pursue a deeper rational examination. A few quick thoughts on your words:

How much have highways been “subsidized”, %-wise? And how much paid for by gas taxes? I think gas taxes have covered over 80%. It’s been going down since about 1994 because of tax no increase.

Perhaps its close to 80%, from a pure accounting analysis. There are a paltry few studies that attempt to quantify that. Regardless, opportunity cost cannot be ignored, as most infrastructure advocates conveniently forget. When considering opportunity costs, I’m sure it is closer to 50%. But, we’d both agree that opportunity costs should be applied to analysis of transit spending as well.

Regardless, over 85% of adults own a car. Are government funds which go that many people really a subsidy? Any government project/program that covers 85% of the people is pretty rare.

So, by that rationale, would you support this version of what you said?:

Regardless, over 85% of adults use toilet paper. Are government funds which go that many people really a subsidy? Any government project/program that covers 85% of the people is pretty rare.

Do you support socialized toilet paper? Or for that matter, health care, housing, etc… I think your use of this defense of government spending needs a little refinement.

Fewer than 4% use transit, yet about 2/3 of its cost come from taxes paid by all. But that’s okay for you?

No, it’s not okay with me.

then you would have to agree for government to cut almost all spending that doesn’t cover ~90% of the population.

Yes, I agree. To be more specific, I would rephrase to simply state, “for government to cut almost all spending.” period.

Taking opportunity cost as a factor into accounting for costs is inaccurate.

Let me stop you there. I don’t think you’ll find any economists that agree that opportunity costs are not a significant factor in economic analysis or decision making. Looking at the things forgone to make an economic choice is the essence of sound microeconomics.

A highway is very productive.

Ok, now I’m starting to think this is a prank. If so, hats off to the prankster – this is ingeniously funny!

You, as with most lefties, get laissez-faire mixed up with anarchy.

I’ve been called a lot of things on this blog. This is the first time I’ve been called a lefty. Please, enlighten us lefties with the difference between laissez-faire and anarchy.

Sorry: I went back and cheated as I thought of more…

How sweet of you to encourage me to pursue deeper rational thought. It’s funny how a person can reflect on others about what is evident in their self. I almost didn’t post my first response because you omit some principles, ignore facts, use inconsistencies, make inaccurate comparisons & misunderstand certain principles. It’s like you’re trying to talk about algebra, when you only understand basic math. I could type pages and really tear up your observations. In my being brief, there are many points that will not be fully understood. Your response showed evidence that you missed points, even ones that countered your response. For example, imagine a country without highways: efficiency would be greatly reduced & many costs would be increased. You seem to claim that highways have no productive use. How would people travel for most their passenger-miles? How would most goods be delivered?

As for the costs of the interstates, you say, “paltry few studies to quantify.” The numbers are available; it’s a matter of past annual expenses & gas taxes collected. I don’t know why you refer to collecting that data as a “study.” Regardless, you agree that gas taxes have paid for at least 80% of the interstates. When you bring up externalities, you are broadening the field of discussion. The topic is the “cost of constructing freeways.” Regardless, the externalities are the result of ~85% using (the other 15% benefit to, w/deliveries, as a passenger, etc.). So, who pays? All. It’s not like a small portion of the population adversely affect 100%.

When there is referral to the price of a house, there are an incredible amount of externalities & alternative opportunity costs that could be considered, but are not, such as waste (solid & liquid), habitat destruction, traffic, runoff, other possible uses of building materials, household energy consumption, etc. Where do these supposed external costs show up in dollar amounts.

For the rationale of general taxes paying [<20% of the costs] for a public infrastructure, you bring up an analogy about that to justify subsidized tissue. That is ridiculous. First, you are making a logical fallacy, going in reverse. There’s a certain name for that particular error, but I cannot remember. Secondly, there is a big difference between public goods & private goods. Thirdly, there’s a big dif between capital goods & usable goods. I could go on to other points & elaborate on all, but time & space are factors.

You seem to be against subsidized transit. So, increase tickets to full price (2-3 times); that’s fine. I would then guess that you would want tollways; there’s still the problem of charging for the non-freeway highways. However, you seem to be against any highways, regardless of how they are paid for. What is your idea of a good transportation network?

You still mis-understand opportunity costs & points I made about it. Just saying that economists take that into account, does not justify your position. For land, the US is <3% urbanized. You say that highway land could go into more productive use. What would that be? Your type of thinking could say that humans could be thinner if organs were removed, meaning, highways are a vital part of our economy & our lives. Suppose that highways occupy 0.1% of all land. What would be done with all that scattered [in lines] land instead? How would one get there [or anywhere] without highways?

You seem to think that laissez-faire = anarchy, since you claim to be unaware of the difference. If you are under that impression, it would take a lot of education for to absorb. I* recommend some sources for you to read.
reason.org mises.org capmag.com econlib.org fee.org
I’m guessing that you prefer limited government. I certainly agree with that.

I* recommend some sources for you to read.
reason.org mises.org capmag.com econlib.org fee.org
I’m guessing that you prefer limited government. I certainly agree with that.

I’m glad you are a fan of these great resources. I am too. I encourage you to join the in-progress discussion of Murray Rothbard on private streets and roads from Chapter 11 of “For A New Liberty”. The book is available for free online at mises.org:

Also, check out some of the academic links on roads on the “Academic Links” Page. There are some great pieces by Mises, econlib, and FEE folks.

I respect Market Urbanism for showing so much patience with you Randall, you certainly don’t deserve it. If a blogger lets you post on his blog and takes the time to respond, think of it as being invited into his house. And you return the favor by insulting his deco scheme and peeing on his rug? If you want to be an ass, Randall, there are plenty of blogs for you to troll around on.

epar, I dissected some inaccurate observations. My analysis was not even proven wrong. I don’t like hypocrites & like to expose people who falsely claim something with fallacious reasoning.

Please explain what you mean about being an ass, peeing & insulting.

Do you think bloggers should only agree. DailyKos is like that. I got kicked off of there within 2 hours of commenting (nothing even rude).

In regards to my comments, you seem unable to point out anything concrete that you think is an error.

Your comments add to my original belief that this site is leftist-leaning (or for some form of gov coercion) which is under a masquerade of “market.” However, I have hardly read much. I was so turned off by the head post for this thread that I became disgusted by the faulty analysis.

Although I do like the Economist Friedrich Hayek, for which there is a blog link. And I do like Peter Gordon’s ideology.

No, I do not think that everyone needs to agree with each other. Nor do they need to insult each other in the course of their disagreements, i.e. It’s like you’re trying to talk about algebra, when you only understand basic math. Get the difference?

Anyways, it’s not a wise accusation to make given your confusion between externalities and opportunity costs. It just so happens that economists take into account opportunity costs because it makes sense to do so. Does it make more sense for Tiger Woods to play golf or mop his kitchen floor? By mopping his floor he could save the expense of hiring a maid, so why doesn’t he do that? Land owners think in the same way – comparing the current use of their land to the potential highest and best use. Since a decision to use land as a highway has to factor in the foregone value from putting the land to another use, merely recouping costs on the highway does not make it the most “efficient”, or productive, land use.

I think you were making another point about taxes paying for highways as well, but I don’t understand what you are trying to say.

The “incredible” amount of opportunity costs and externalities you list in building a home are in fact capitalized in the home value. The waste, traffic, runoff, and habitat destruction – the externalities – are the reason why developers must conduct traffic and environmental impact studies. Municipalities then asses impact fees, require a site redesign, or mandate developer-funded infrastructure improvements based on those studies. Whether the fees are accurately determined or the process is free from undue considerations is debatable, but more recently municipalities have been trying to internalize those costs into the dollar amount on the house. The other uses of the building materials, being opportunity costs, simply show up in the cost of the house. The materialsmen wouldn’t sell to the builder if they had another customer with a better use who is willing to pay a higher price. The utility usage, as an operating expense, reduces the value of the home. The pollution from the energy consumption could be internalized via a carbon tax, which is why I support one.

If you’d like to advance your arguments, go ahead. But instead of charging into a discussion with the the intent of exposing fallacies and inflating your ego, show a little humility. It will help you to be taken seriously.

epar, Can you answer some of my questions posed in my 2 posts?
Particularly, what would you suggest that the 200,000+ miles of swaths of land where highways are, be used instead?
How would you get there or anywhere then?
How would transportation be negatively affected without highways?
In considering opportunity cost, the greatly increased transport cost & time needs to be factored in for not having highways. In general, imagine how the US would be without highways.

Your example of opportunity cost in a person’s money-value for time, is a different aspect of opportunity cost; for one thing, it’s labor, not heavy, long-term capital.

For opportunity cost, you seem to be saying that for every dollar (or let’s say $1 million) to be spent/invested, one should consider all the potential ways in that it could be spent? There would be endless considerations. Does that sound ridiculous?

Maybe, I’m too blunt in making an analogy (ie arithmetic vs algebra) which shows that certain things have been avoided in analysis & happens to be insulting. Like I said, I could type for pages about the errors, nut I try to be brief, which can leave concepts misunderstood. I see big hypocrisy in complaints about highways. The standard of living would be much lower without.

Highways may not have much alternative use, but local roads sure as hell do, and highways would be useless without those local roads. If you were to auction off any given stretch of roadway in NYC, can you imagine ANY of it being kept as a road? I’d guess that the developer would find it most profitable to build some sort of rail line (either above or below ground), and fill the rest with commercial and residential space. Now, you can argue that NYC is an isolated case, but as you start to privatize the streets of New York and other major cities, you’re going to see costs of living fall as rents fall due to an increase in capacity, and living in cities is going to become more palatable to Americans…especially when the only other option is to live in suburbs or exurbs where the price of road travel will rise due to the fact that it’s these areas where road travel is most heavily subsidized.

Also, you’re ignoring the fact that roads become artificially profitable based on density restrictions that are incredibly common in America, even in its largest cities. Density makes roads and cars more difficult (as adding capacity to a roadway is very expensive and almost always involves widening the road, which involves buying shit tons of valuable land), whereas it makes rail much more profitable (since there is tons of excess capacity due to the much smaller footprint that people take up when riding trains as opposed to their own private automobiles).

Both of these things are libertarian arguments, not leftist ones. You associate mass transit with leftism, which sort of understandable given recent history where mass transit is synonymous with public transit, but mass transit wasn’t always “public.” Around the turn of the century, tons of private mass transit companies were in existence, and in fact built the infrastructure (and much more of it that’s no longer in use) that the state has appropriated and now uses as a socialized public transportation network.

Hi Rationalitate,
The issue is not about local roads, but highways, right? BTW, there is a gray area in that many state highways (& some US routes) are “local” in their use. Then you go off another tangent of selling local roads; big problems there. Why would anybody occupy a building without road access? How would furniture & other goods be delivered? If the tenants have cars, where would they park & how far away? You would also be cutting off existing buildings from roads. Imagine the functionality, if NYC had no roads, as you theorize. I’m glad you realize that NYC is a bad example, being unique as in the most dense (26,000/sq.mi.) & the highest transit use (50%), with 2nd place being SF at a density of 16,000 & transit use at 33%. Keep in mind those are figs for the city not the UA (urban area).

Highways usually either have built up areas on each side or basically nothing [outside of urban areas], right? Well, there is a gradual transition (& a hodge-podge) going thru the transect, away from the core. So, for alternative uses (opportunity cost), there is potential for more development, between development, or more open space/farms between open space/farms. Either case would not “go” near the other, right? (no ag. in UAs & no random building in rural areas) In each case, there’s not necessarily a shortage of land; it depends—outward is an option, but often zoned against (roads still needed); highways might occupy 1-5% of the area’s land. Still, w/out highways there is a major problem of taking away transportation ability, which severely limits, if not eliminate, the potential value of most nearby land. Sure, there are local roads, which would be really over-burdened. Would you like driving on local roads for many miles with an average speed of 20-30 mph, compared to 40-80 mph on highways?

How did privatizing streets get into this? Imagine collecting money. High-speed freeways are somewhat conducive to being tollways, w/there being limited access, but for other roads, there are many difficulties with collection. London’s congestion pricing cost $300 million to set up the monitoring & collection infrastructure.

What do you mean by the profitability of roads? What’s artificial about a large customer base (ie high density)? Sorry, I fail to see the connection, again, in regards to highways being user-paid & having some gov support. As you are aware, public transit used to be private & profitable, with it replacing the horse. Once individual mobility became faster, more efficient & affordable with the car, people gradually [over decades] chose to use less public transit (<4% now vs ~90% a century ago), meaning, demand dropped, thus no more profitability. You do realize that if you take away government support (~2/3 of cost) for public transit, it is not financially viable? Highways could be 100% user supported with only about $0.40/gallon more gas tax. Yes, there are externalities, which require a far more encompassing view, with every little action causing a reaction & such. Shall we stick mostly to direct costs?

Good point, in that increasing density causes more congestion. City policy-makers often ignore the capacity of existing infrastructure when packing more people in, especially with this dumb growth, CNU (Communist New Union w/ Lord Duany), structured [sometimes ~forced] living pattern, which can still have merits, when freely chosen.

My earlier comments about leftism might have been overboard, but it seems like there is an effort for the gov. to coerce users to pay for indirect costs—many not measureable. How far is the Vienna School ideology to go in having limited government & privatizing most everything? Example, education could be not publicly supported at all. How much more ignorant would our populace be then? I admit, that’s off the topic of transportation, but under the subject of public goods, but then again it is excludable & easily chargeable compared to roads in general (w/out tolls). Sure, the market creates spontaneous order, but there are some guidelines & infrastructure needed to avoid complete chaos.

Clearly we are talking past each other. No one is saying that we should not have highways, or rip up every mile that is already in place. Rather I am (and I think MU is) saying that the subsidization of them produces an excess supply at which their opportunity cost is greater than alternative land use investments. Therefore we should not subsidize them.

I do not see the difference between opportunity cost of labor and opportunity cost of capital, much less a distinction between “heavy” and “light” capital. They are factors of production and receive a return in exchange for being deployed in an investment.

Yes, obviously agents don't consider *every conceivable* investment alternative. But the opportunity cost principle does not require that they do. Every time anyone declines a profitable investment because there is a potentially more profitable investment, they are thinking in terms of opportunity cost. So it is with highway construction vs. office construction for example, or any other land use a developer may conceive of. Even from a practical perspective, highly liquid and international capital markets allow individual and institutional investors to choose between many, many investment opportunities. This makes the applicability of opportunity cost as a guide for decision-making that much stronger

Randall,

For opportunity cost, you seem to be saying that for every dollar (or let's say $1 million) to be spent/invested, one should consider all the potential ways in that it could be spent? There would be endless considerations. Does that sound ridiculous?

Yes, this is what opportunity cost means. However, one does not need to spend a lifetime calculating each possible use of capital. In consideration of opportunity cost, one must examine the highest-and-best likely alternative use of that capital.

In other comments you seem to confuse opportunity cost with externalities. I do not advocate using externalities to determine opportunity costs. I think I made that clear in my “urbanism legend” post. I think examining externalities is important, but too subjective to properly internalize.

That said, it is absolutely important to consider the opportunity costs of the land, capital, and taxes that make up the highway system – not just the accounting of it. Does that mean I conclude there should be no highways? No way – I don't see how you draw that conclusion. But, at the margins, some highways should not have been built, or should exist at a lower capacity. This pared-down system could be more optimally utilized to fully capture the opportunity costs.

Keep in mind, I don't advocate destroying what has already been built, unless market forces dictate so. I would just prefer the government planners stop building roads that clearly do not pay for themselves on the margins.

I see big hypocrisy in complaints about highways. The standard of living would be much lower without.

I don't see why you seem to think that we advocate the complete abolition of highways. Under a free-market system, plenty of highways would still exist. Likely, there would be fewer highways in most places, and the system might be laid out in a completely different way.

It is not accurate for you to purport that a free-market system would not have highways, thus it is not accurate for you to compare the opportunity costs of having no highways vs the opportunity costs of the current overbuilt system. It's not a valid comparison. Clearly, the costs of having no highways would indeed be devastating. But, complete abolition of roadways would require a massive intervention into the marketplace by government far greater than the overspending on highways.

Thanks adron. I'll check out your blog.