Maybe the delay in posts led you to believe the Rothbard Series was complete.  The good news is that there are a few more posts to go, and the ones coming up next should be the most interesting to urbanists. 

If you haven’t kept up with our discussion, Murray Rothbard’s classic For A New Liberty can be downloaded free from Mises.org as pdf, web page, and audio book read by Jeff Riggenbach, and you can read the first five posts:

Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion

Rothbard the Urbanist Part 2: Safe Streets

Rothbard the Urbanist Part 3: Prevention of Blockades

Rothbard the Urbanist Part 4: Policing

Rothbard the Urbanist Part 5: Diversity and Discrimination 

Not long ago, I posted a video from a friend showing one traffic intersection in Cambodia that appears to function well without any signaling.  Here are some other resources on the emergent order of traffic without signals:

• Econtalk podcast with Mike Munger on Cultural Norms
• Cafe Hayek: The arc of emergent order and Traffic without Traffic Signals.
• Kids Prefer Cheese:  Movie from atop the Arc
• Tom Vanderbilt: News for Traffic Signal Manufacturers
• Infrastructurist on the Dutch City of Drachten

I caught some flak from a commenter who considered it “disingenuous” to present the video of the intersection as evidence “of a workable intersection.”  Of course I had to remind the commenter that I don’t consider these types of intersection something that I advocate as a “free market” solution: 

Don’t mistake me as an advocate of a world without traffic signals. I am quite certain that some sort of traffic signaling would likely emerge from a free-market street system. But, my bigger point is that when information is dispersed widely among decision-makers without government monopoly, sustainable solutions emerge from the uncoerced behavior of individual agents over time.

This is a case where governance is needed, but not necessarily provided by government.  Some sort of cooperation would emerge among road operators, just like with technologies such as USB, DVD, or plain old electrical outlets and light bulbs.  A coercive government authority is not needed to dictate to manufacturers to use certain standards, manufacturers choose to produce industry-standardized equipment simply because it is what the customer desires.  If a lighting manufacturer decided to make a bulb that did not fit into standard sockets, who would buy it?  Probably nobody. 

I see roads as no different.  Road customers will likely choose to avoid intersections as nerve-wracking as the one in the Cambodia video if they have a more stress-free option.  Thus road operators will work to optimize flow through their intersections while minimizing unpleasantly stressful situations. 

Of course, Professor Rothbard communicates this more elegantly. I find the railroad example particularly interesting:

The principle that property is administered by its owners also provides the rebuttal to a standard argument for government intervention in the economy. The argument holds that "after all, the government sets down traffic rules — red and green lights, driving on the right-hand side, maximum speed limits, etc. Surely everyone must admit that traffic would degenerate into chaos if not for such rules. Therefore, why should government not intervene in the rest of the economy as well?" The fallacy here is not that traffic should be regulated; of course such rules are necessary. But the crucial point is that such rules will always be laid down by whoever owns and therefore administers the roads. Government has been laying down traffic rules because it is the government that has always owned and therefore run the streets and roads; in a libertarian society of private ownership the private owners would lay down the rules for the use of their roads.

However, might not the traffic rules be "chaotic" in a purely free society? Wouldn’t some owners designate red for "stop," others green or blue, etc.? Wouldn’t some roads be used on the right-hand side and others on the left? Such questions are absurd. Obviously, it would be [p. 208] to the interest of all road owners to have uniform rules in these matters, so that road traffic could mesh smoothly and without difficulty. Any maverick road owner who insisted on a left-hand drive or green for "stop" instead of "go" would soon find himself with numerous accidents, and the disappearance of customers and users. The private railroads in nineteenth-century America faced similar problems and solved them harmoniously and without difficulty. Railroads allowed each other’s cars on their tracks; they inter-connected with each other for mutual benefit; the gauges of the different railroads were adjusted to be uniform; and uniform regional freight classifications were worked out for 6,000 items. Furthermore, it was the railroads and not government that took the initiative to consolidate the unruly and chaotic patchwork of time zones that had existed previously. In order to have accurate scheduling and timetables, the railroads had to consolidate; and in 1883 they agreed to consolidate the existing fifty-four time zones across the country into the four which we have today. The New York financial paper, the Commercial and Financial Chronicle, exclaimed that "the laws of trade and the instinct for self-preservation effect reforms and improvements that all the legislative bodies combined could not accomplish."³

3. See Edward C. Kirkland, Industry Comes of Age: Business, Labor, and Public Policy, 1860-1897 (New York: Holt, Rinehart, and Winston, 1961), pp. 48-50.

Related Posts:

• June 2, 2009 -- Rothbard the Urbanist Part 2: Safe Streets (3)
• August 25, 2009 -- Rothbard the Urbanist Part 5: Diversity and Discrimination (8)
• August 3, 2009 -- Rothbard the Urbanist Part 4: Policing (6)
• June 18, 2009 -- Rothbard the Urbanist Part 3: Prevention of Blockades (6)

In the comments of my most recent post, insightful commenter, OldUrbanism pointed out some items that need attention:

The last two factors, legal costs associated with eminent domain and opportunity costs of land, are in fact often included in typical project cost estimates for both public and private projects. The former is fairly straightforward, as it is a project-related cost. The latter, opportunity cost of land, is simply the purchase price of land.

In the case of this example, where land acquisition costs are assumed as part of the project cost, OldUrbanism is exactly correct. I’m truly embarrassed for being sloppy in that statement and will correct it.

Of course, I still stand by my exposure of the ignorance of land opportunity cost by those who assert that existing highways “pay for themselves.” I invite you to check out the discussion of that matter (and other items) with OldUrbanism in the comments of the post.
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The other day, Reason Foundation’s Samuel Staley had some very generous things to say about Market Urbanism:

I just ran across the Market Urbanism web site, and it has a lot of really good analysis and resources available for anyone following urban policy issues. The sub-title of the web site is “Urbanism for Capitalists/Capitalism for Urbanists”. The blog includes lots of references to F.A. Hayek, free markets, and even takes the Cato Institute to task for advocating “socialism for roads.”

and

This site is well organized and designed. I think it’s a great addition to the debate and discussion, and its refreshing to see a new voice enter into the fray.

Thanks Samuel!! I share Reason’s objective of “Free Minds and Free Markets.”

I just have to admit I found it a little ironic that he had such nice things to say after I blasted reason.org on twitter for their recent pro-government infrastructure pieces (here, here and here).
————–
Ed Glaeser wrote a book review for the New Republic discussing his mixed opinions towards Jane Jacobs and Robert Moses. Of course, my opinions of Glaeser’s piece are also mixed: wrong on infrastructure, right on NIMBYism.

Tyler Cowen and Matt Yglesias also chime in.

Related Posts:

• August 29, 2008 -- Weekend Reading: Jane Jacobs, Agglomeration, Farms, NIMBY Songs (6)
• July 18, 2008 -- Reason.org’s Staley Not in Favor of Property Rights if… (3)
• August 25, 2009 -- Rothbard the Urbanist Part 5: Diversity and Discrimination (8)
• June 2, 2009 -- Rothbard the Urbanist Part 2: Safe Streets (3)

I probably won’t make any friends today, but now I’ve read one too many urbanist (many who’s ideas I usually respect) use unsound logic to support high speed rail. This argument often includes something like this: “…and furthermore, highways and airports don’t come close to paying for themselves, therefore high speed rail need not meet that hurdle either.”

Here’s some examples of the typical contradiction many usually-reasonable urbanists are making when arguing for high speed rail-

Ryan Avent in an article plagued with this pseudo-logic:

Government is going to build more capacity. Given that, what is likely to be the best investment, all things considered?

Available alternatives, as it turns out, are not all that attractive. Roads do not appear to pay for themselves any more than railways do. Receipts from the federal gas tax come close to covering federal highway expenditures, but gas is used on highways and non-highways alike, indicating that at the federal level, highways are subsidized.

and:

I respect Mr Cowen very much, but I think it’s long past time we stopped listening to libertarians on the issue of whether or not to build high-speed rail. Who will ask whether road construction remotely passes any of the tests they’re so prepared to push on rail? And if we begin charging an appropriate fee on drivers to maintain existing roads and reduce congestion, what do they all think will happen to land use patterns and transportation mode share?

Some have emailed to ask me why I dislike Randal O’Toole so much.  The main reason is because people like Avent will always be able to point to the government highway-lover from CATO and rashly proclaim all libertarians have forever lost credibility when it comes to transportation and land use.  Of course, Avent’s narrow-mindedness on this topic deserves contempt too.

And Infrastructurist’s take seems to be favored by Avent, Yglesias, and others:

The construction of a high-speed rail line would require a large environmental sacrifice – construction crews would need to shape the land, poor concrete, lay the tracks, and build the stations. This work would release millions of tons of carbon dioxide into the atmosphere. But building a new highway such as Texas’ planned I-69 would require similar work and would almost certainly be just as ecologically damaging. On a somewhat smaller scale, the same can be said for new terminals or runways at airports.

In a rapidly growing state like Texas, though, a serious need for a transportation capacity upgrade is bound to arise over the next decades – especially between the state’s two biggest cities. The construction of this infrastructure would require carbon emissions on a large scale–but since we don’t yet have competing plans for highway or airport capacity expansions if the high-speed system is not built, the most meaningful question for us is the rail system’s environmental effects in operations rather than construction.

So, in other words, building either of the options, roads or rail both require “a large environmental sacrifice”, but all other options must be kept off the table, so let’s just sweep that under the rug.  Yet, there is an other option to consider for those who really think something should be done about carbon: STOP WASTING MATERIAL AND ENERGY ON CONSTRUCTION OF INFRASTRUCTURE BOONDOGGLES THAT SUBSIDIZE TRANSPORTATION!  That still goes double for roads and airports, where congestion and carbon emissions could be reduced through revenue-generating measures such as congestion tolling.

To me, the high-speed rail logic just doesn’t sound much different from what O’Toole might say (just interchange some words and continue to ignore facts):

Not only did the Interstate Highway System cost much less and move much more than our visionary rail network is likely to do, interstate highways have the virtue of being 100 percent paid for out of user fees. The rail system would require subsidies for pretty much all of the capital costs, most or all of the periodic rehabilitation costs, and at least some of the operating costs.

In the Infrastructurist article quoted above, Yonah Freemark smear’s Ed Gaeser’s back of the envelope critique of high speed rail (I admit, a little sloppy) with a hand-waving claim sounding eerily similar to the type Mr. O’Toole is so often criticized for making, “High Speed Rail Pays For Itself”.

He backs this bold claim with a calculation that shows how a hypothetical Dallas-Houston high speed corridor would cost $810M annually for construction and maintenance, while providing $840M in benefit.  Surely, we will see many more people use this analysis as evidence to back claims that high speed rail is good without proper scrutiny.  However, this analysis doesn’t even pass the O’Toole-level test of credibility, because it claims it pays for itself with 150M annually in carbon savings.  I can understand making the case for analyzing carbon savings as a “benefit” to society, but one must compare against all other options for use of cash to reduce carbon emissions – at least against a no-build + congestion toll option.  Just think of all the alternatives one might consider with a $810M annual budget for carbon reduction. At say $20/ton, that comes to 40 million tons a year.

On top of that, Freemark ignores all the other opportunity costs Randal O’Toole conveniently omits when claiming roads pay for themselves.  These omissions include:  opportunity cost of investment capital, opportunity cost of right of way land used, legal costs of eminent domain and related delays, inevitable cost overruns, accounting for optimism bias, and interest on bonds.  In my opinion, the largest of these is the opportunity costs of investment capital, which I would guess at over 15 percent compounding annually (vs a non-compounding 5% generously assumed by Glaeser and Freemark) for all costs during the 10 years (just a little optimistic?) of construction, and 8-10 percent once ridership is stabilized.  Responding to Matthew Yglesias’ hasty endorsement of Freemark’s analysis as “A real cost-benefit analysis of HSR”, Tyler Cowen similarly noted:

I’m not sure what discount rates he is using but even if we put that problem aside this screams out: don’t do it.  Given irreversible investment, lock-in effects, and required hurdle rates of return, this still falls into the "no" category.  And that’s an estimate from an advocate writing a polemic on behalf of the idea.  I’m not even considering the likelihood of inflation on the cost side or the public choice problems with getting a good rather than a bad version of the project.  How well has the Northeast corridor been run?

The urbanist in me would love a vast high speed rail network – it would centralize density at rail nodes and aid agglomeration.  But it just won’t be viable until government first stops wasting money subsidizing automobile and air travel.  In the meantime, HSR advocates commit an intellectual fraud similar to ones Randal O’Toole and his ilk make regarding roads when they make claims that HSR can pay for itself. 

If Ryan Avent is expecting to keep any credibility on infrastructure spending using these words:

In this country, we do not build transportation infrastructure for profit. Perhaps this is upsetting to the libertarians among us, but that’s how it is and how it should be.

Then, perhaps he should think twice next time he thinks of laying into Randal O’Toole for attempting to reconcile infrastructure spending using similarly shoddy arguments. Otherwise, similar to O’Toole, all the HSR advocates are saying is, “Never mind billions of dollars that must be appropriated from people of future generations. Never mind that most of those footing the bill will never ride high speed rail if they’re not fortunate enough to afford a ticket or don’t live in one of the chosen cities. Never mind the drastic effects of the construction on the environment. High speed rail would be a pretty neat thing for some cities, so ‘build baby build’.”

Related Posts:

• January 12, 2009 -- Urban[ism] Legend: Positive NPV Infrastructure (1)
• May 29, 2009 -- Yglesias Has My Head Spinning… (8)
• June 10, 2008 -- CATO Podcast: Transportation (8)
• June 6, 2008 -- Free Market Impostors (8)

This 5th installment of the Rothbard Series dovetails well with the most recent post on segregation by guest blogger, Stephen Smith, as well as a post back in July over at Austin Contrarian. 

If you haven’t kept up with our discussion, Murray Rothbard’s classic For A New Liberty can be downloaded free from Mises.org as pdf, web page, and audio book, and you can read the first four parts:

Rothbard the Urbanist Part 1: Public Education’s Role in Sprawl and Exclusion

Rothbard the Urbanist Part 2: Safe Streets

Rothbard the Urbanist Part 3: Prevention of Blockades

Rothbard the Urbanist Part 4: Policing

In the comments of the first post of this series on public education’s roll in segregation, the discussion delved into the topic of discrimination.  Bill Nelson and I shared our thoughts on discrimination by co-op boards, while another guest inquired about my statement, “elitist institutions often exclude others to their own detriment”  (Rothbard’s words further below make a similar case)  I also referred the guest to a great article on the economics of discrimination and a snippet from an article discussing how private streetcar companies fought discrimination:

The Market Resists Discrimination

The resistance of southern streetcar companies to ordinances requiring them to segregate black passengers vividly illustrates how the market motivates businesses to avoid unfair discrimination. Before the segregation laws were enacted, most streetcar companies voluntarily segregated tobacco users, not black people. Nonsmokers of either race were free to ride where they wished, but smokers were relegated to the rear of the car or to the outside platform. The revenue gains from pleased nonsmokers apparently outweighed any losses from disgruntled smokers.

Streetcar companies refused, however, to discriminate against black people because separate cars would have reduced their profits. They resisted even after the passage of turn-of-the-century laws requiring the segregation of black people. One railroad manager complained that racial discrimination increased costs because it required the company to “haul around a good deal of empty space that is assigned to the colored people and not available to both races.” Racial discrimination also upset some paying customers. Black customers boycotted the streetcar lines and formed competing hack (horsedrawn carriage) companies, and many white customers refused to move to the white section.

In Augusta, Savannah, Atlanta, Mobile, and Jacksonville, streetcar companies responded by refusing to enforce segregation laws for as long as fifteen years after their passage. The Memphis Street Railway “contested bitterly,” and the Houston Electric Railway petitioned the Houston City Council for repeal. A black attorney leading a court battle against the laws provided an ironic measure of the strength of the streetcar companies’ resistance by publicly denying that his group “was in cahoots with the railroad lines in Jacksonville.” As pressure from the government grew, however, the cost of defiance began to outweigh the market penalty on profits. One by one, the streetcar companies succumbed, and the United States stumbled further into the infamous morass of racial segregation.

From Jennifer Roback, “The Political Economy of Segregation: The Case of Segregated Streetcars.” Journal of Economic History 56, no. 4 (December 1986): 893–917.

So, now we get to hear what Professor Rothbard had to say about discrimination:

Street Rules

One of the undoubted consequences of all land areas in the country being owned by private individuals and companies would be a greater richness and diversity of American neighborhoods. The character of the police protection and the rules applied by the private police would depend on the wishes of the landowners or street owners, the owners of the given area. Thus, suspicious residential neighborhoods would insist that any people or cars entering the area have a prior appointment with a resident, or else be approved by a resident with a phone call from the gate. In short, the same rules for street property would be applied as are now often applied in private apartment buildings or family estates. In other, more raffish areas, everyone would be permitted to enter at will, and there might be varying degrees of surveillance in between. Most probably commercial areas, anxious not to rebuff customers, would be open to all. All this would give full scope to the desires and values of the residents and owners of all the numerous areas in the country.

It might be charged that all this will allow freedom "to discriminate" in housing or use of the streets. There is no question about that. Fundamental to the libertarian creed is every man’s right to choose who shall enter or use his own property, provided of course that the other person is willing.

"Discrimination," in the sense of choosing favorably or unfavorably in accordance with whatever criteria a person may employ, is an integral part of freedom of choice, and hence of a free society. But of course in the free market any such discrimination is costly, and will have to be paid for by the property owner concerned.

Suppose, for example, that someone in a free society is a landlord of a house or a block of houses. He could simply charge the free market rent and let it go at that. But then there are risks; he may choose to discriminate against renting to couples with young children, figuring that there is substantial risk of defacing his property. On the other hand, he may well choose to charge extra rent to compensate for the higher risk, so that the free-market rent for such families will tend to be higher than otherwise. This, in fact, will happen in most cases on the free market. But what of personal, rather than strictly economic, "discrimination" by the landlord? Suppose, for example, that the landlord is a great admirer of six-foot Swedish-Americans, and decides to rent his apartments only to families of such a group. In the free society it would be fully in his right to do so, but he would clearly suffer a [p. 207] large monetary loss as a result. For this means that he would have to turn away tenant after tenant in an endless quest for very tall Swedish-Americans. While this may be considered an extreme example, the effect is exactly the same, though differing in degree, for any sort of personal discrimination in the marketplace. If, for example, the landlord dislikes redheads and determines not to rent his apartments to them, he will suffer losses, although not as severely as in the first example.

In any case, anytime anyone practices such "discrimination" in the free market, he must bear the costs, either of losing profits or of losing services as a consumer. If a consumer decides to boycott goods sold by people he does not like, whether the dislike is justified or not, he then will go without goods or services which he otherwise would have purchased.

All property owners, then, in a free society, would set down the rules for use of, or admission to, their property. The more rigorous the rules the fewer the people who will engage in such use, and the property owner will then have to balance rigor of admission as against loss of income. A landlord might "discriminate," for example, by insisting, as George Pullman did in his "company town" in Illinois in the late nineteenth century, that all his tenants appear at all times dressed in jacket and tie; he might do so, but it is doubtful that many tenants would elect to move into or remain in such a building or development and the landlord would suffer severe losses.

While Rothbard had some good things to say on how the free market enables diversity in terms of racial discrimination and diversity among and within districts, he missed the opportunity to specifically address ideas relating to Jane Jacobs’ generators of diversity within urban districts other than stating, “commercial areas, anxious not to rebuff customers, would be open to all.”  Jacobs generators of diversity:

1. The district, and indeed as many of its internal parts as possible, must serve more than one primary function; preferably more than two.  These must insure the presence of people who go outdoors on different schedules and are in the place for different purposes, but who are able to use many facilities in common.
2. Most blocks must be short; that is, streets and opportunities to turn corners must be frequent.
3. The district must mingle buildings that vary in age and condition, including  a good proportion of old ones so that they vary in the economic yield they must produce.  This mingling must be fairly close-grained.
4. There must be a sufficiently dense concentration of people, for whatever purposes they may be there.  This includes dense concentration in the case of people who are there because of residence.

Obviously, Jacobs wasn’t referring to racial diversity, and I’m glad she wasn’t because the abuse of the concept has gotten tiresome to me.  She was referring to the types of diversity in the built environment that are necessary to make a urban places vibrant. Nonetheless, Rothbard’s analysis of racial discrimination and diversity could be applied to the built environment, because a landlord would have market incentives to provide as much space as is economically optimal to as many potential tenants as possible, likely forgoing personal preferences and prejudices. Thus, mixing of uses is likely to occur when a landlord is unlikely to discriminate one use over another or give undeserved preference to one type of tenant over another.

I can see a system of fully private ownership emerging into two very distinct patterns: – aglomerative consolidations and bottom-up dispersion of ownership, each existing in certain circumstances.

• One could argue that Jacobs’ generators of diversity would likely exist within large privately-owned districts, but a landowner would likely need to consolidate a significantly-sized district in order to properly capture the positive externalities associated with diversely mixed uses.  At the same time, large, privately-owned gated communities would likely exist in less centralized locations where private space and separation could meet the desires of those who are willing to pay a premium for the extra space.
• In other locations it would be optimal for land to be owned by smaller dispersed entities.  In this case, diversity would simply emerge bottom-up through the free-market process, as it had prior to zoning.  I could imagine that, left unhampered by government coercion, diverse patterns that meet people’s specific needs and natural pursuit of interaction would inevitably emerge through dispersed and competitive ownership of smaller parcels.  (See Mathieu Helie’s Emergent Urbanism)

I would think the larger-scale commercial activity and gated communities will occur in the former, and just about everything else, the later. 

Related Posts:

• October 19, 2009 -- Rothbard The Urbanist Part 6: Traffic Control (1)
• June 2, 2009 -- Rothbard the Urbanist Part 2: Safe Streets (3)
• May 28, 2008 -- Rent Control Part 3: Mobility, Regional Growth, Development and Class Conflict (0)
• May 23, 2008 -- Rent Control Part 2: Black Market, Deterioration and Discrimination (4)

by Stephen Smith

Discovering Urbanism has a nice post up about early 20th century urban planner Charles Mulford Robinson and his planning textbook, and it includes the following corrective to the notion that zoning originated as a way to separate polluting industry from places of residence and commerce:

There’s a common narrative about how zoning unfolded in America. First, planners needed to find ways to separate dangerous and unhealthy factories from the places where people lived. Once the legal basis for this tool was secured, it was eventually employed to separate businesses from residents. The final stage of zoning was to segregating different kinds of people from each other. That’s how we reached where we are today.

However, the Robinson textbook indicates that this progression was, if anything, reversed. In reality, residences at the time couldn’t be separated much from industry, because many of the working classes had to be within walking distance from their jobs. On the other hand, some of the very earliest uses of zoning were explicitly intended to separate “exclusive” neighborhoods from the lower classes, whether by requiring minimum densities or barring anything but detached single-family housing.

Originally posted on my blog.

Related Posts:

• February 6, 2009 -- The Nation’s mass transit hypocrisy (5)
• December 29, 2008 -- Another Angle on Planning in Houston (4)
• May 29, 2009 -- Yglesias Has My Head Spinning… (8)
• May 13, 2009 -- Do We Need “New Urbanism” To Fix “Unwalkable Sprawl”? (10)

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