[ The following column appeared in Liberty News, the monthly publication of the Libertarian Party of Boulder County, in the March 1996 issue.]
Growth and the Free Market
The issue of controlling growth is of vital importance for any campaign in Colorado this year. The proliferation of growth-restraining referendums on the past several ballots all along the front range (not just in Boulder anymore) indicate that containing urban sprawl is a high priority among many local governments, and the fact that many of these issues pass reflects a corresponding concern among many voters. But the whole issue of restricting growth and dealing with the consequences -- of both the growth and its restraint -- is unfortunately framed by a set of false assumptions.
The first is that government intervention is absolutely required to effect any reduction in growth rates. In this view, without appropriate ordinances growth would run amok, and within a very short time the entire Front Range would resemble Los Angeles. The second false assumption is that the business interests which provide growth where they are permitted to do so are fundamentally and inherently destructive. A third is that any obstacle to growth which may arise is inherently inimical to business. To judge from the rhetoric in the last election in Boulder, it's a clear choice between utter Californication and widespread bankruptcy. This of course is nonsense. Yet this is the kind of spirit which seems inevitably to inhabit the debate when the real focus of the argument is on who should control the government that controls all of us, and for what ends.
In the first place, businesses that supply the demand for growth (e.g. real- estate developers) are not acting out of malice. They are providing a product or a service for a fee. They expect that the revenues they realize will exceed their costs, allowing them to produce a profit. (To be sure there are people in Boulder who are so steeped in the collectivist culture of aggression that they consider that the desire for profit is in itself malicious; but these poor souls I'll ignore, just as they ignore the fact that virtually the entire civilization in which they live was created mainly by humans motivated by personal profit.) The developers' customers desire the homes and offices they create, enough to part with the money they are charged for them.
With these facts in hand, it should be clear that all that is necessary for the amount of building going on to decrease is a sufficient increase in the costs to producers, a sufficient decrease in the price tolerance of consumers, or some combination of the two that results in an equilibrium where profit- making is difficult or impossible. Instead of facilitating this situation, Boulder has long opted for modest artificial restrictions on supply which do nothing to reduce the profitability of the growth that is allowed. The predictable result, in the face of undiminished demand, has been an increase in price, sufficient to cause much righteous wailing and self-flagellation (and prompt suggestions for yet more government programs to combat the lack of affordable housing) but insufficient to stem the demand for more growth.
One might well ask what else the cities of Boulder County could do that would be draconian enough to slow and eventually stop growth, yet would not destroy the local economy, or alienate too many voters. The answer is in principle absurdly simple: instead of relying on our curiously fickle yet inflexible government, employ the best mechanism ever devised for allocating scarce resources and implementing direct democracy. It's called the free market. How can the market be unchained and put to work limiting growth? The following are a few proposals that come to mind:
Stop subsidizing growth. Allow cities to refuse to provide water, sewer, roads, police and fire protection and other goods and services at taxpayer expense. New developments, residential or commercial, could be required to furnish all these things -- up to code -- entirely at their own expense. Associations and cooperatives could be formed to contract for the services of private companies. In exchange, new development would be exempt from current fees and property taxes intended for infrastructure construction and maintenance. The true cost of all of these items would then be reflected up front in the sticker price, instead of being hidden in the aggregation of decades of tax payments.
Instead of zoning to minimize the impacts of conflicting usages (i.e. industrial versus residential) by mere geographical sequestering, allow mixed-use zoning but require 100% neighborhood nuisance abatement. In this system the more impact a given development project has on neighbors, the more these abatements will cost -- if they are even possible at all. An automatic preference would be given to less polluting, less traffic-intensive, lower impact industries. Transit needs would also be expectably reduced. Remove all regulations against home-based businesses, subject to the same nuisance abatement rules. These reforms would scriven the end of all these rancorous debates about governmental "givings" and "takings."
Allow formation of cooperatives to privately purchase open space, parkland, or indeed existing development for conversion back into open space. This is necessary to allow economic votes to be cast with dollars for non-development, or undevelopment, which is a perfectly valid outcome.
Remove all barriers to private transportation for hire services. Allow jitney companies armed with global positioning devices and dynamic route schedulers to create a door-to-door transportation network. The only way to get good public transportation is to allow private transportation to be made widely available to the public. And, lack of road-building subsidies would appreciably raise the cost of driving.
Would these and related ideas conspire to create a perfect community? Probably not. Would there be unforseen problems? Almost certainly. The virtue of the market is not that perfect solutions are mandated, but that superior solutions are cultured, and can evolve according to the preferences of consumers. We don't know the solution to every problem of urban development, and neither, we may be sure, does anyone on City Council. But if we create a system that allows for maximum flexibility and responsiveness to the desires of the public, by placing our reliance on companies that have no choice but to provide the public what it wants or face extinction, we have the best chance of balancing our scarce resources among competing needs, getting exactly the amount of growth our citizenry is really willing to tolerate, and mitigating the ill effects of the growth and change that are increasingly an unavoidable part of our everyday lives.