Property Rights: Supreme Waffle

In its recent property rights rulings, the U.S. Supreme Court has been skittish about its approach to the "takings clause" of the 5th amendment. It shows far more deference, for example, to the 1st amendment and upholds Americans' right to view simulated child porn. Yet, in the case of the 5th amendment, the Court stands ready to balance a Constitutional right with the claims by local governments that they must regulate land use.

The case for top-down land use planning is weak and a relic of the Progressive Era. We now know that there are robust statistical correlations between prosperity and economic freedom, including secure property rights (www.FreeTheWorld.com). The other side fails to buttress its views with anything near this rich empirical record. Most international migrations are from countries with weak property rights to countries with stronger property rights. These findings corroborate the view that central planners inevitably do more harm than good because:

1. they simply cannot replace the information gathering and disseminating functions of the market; and,
2. their work is inevitably politicized and subject to what economists call rent-seeking, moving us from positive-sum outcomes to zero-sum situations. Top-down land use planning is not immune to these hard facts.

Some have suggested that land markets be freed, letting developers be the planners -- and letting traditional top-down planers attend to major infrastructure, thereby setting the "rules of the game". Land use would still be planned but it would be bottom-up, rather than top-down planning. Much of this is already happening in the U.S.

Since the early 1970s, most suburbanization has been via planned communities where developers do the master planning and where they establish property rules of governance and governing homeowners' associations. The development industry is highly competitive and all of these features must pass a market test. For the case of retail development, most of it is in malls which are also planned by their developers. To be sure, all of this occurs under the auspices of local government jurisdictions but most people have also been moving to the newer far-flung communities where established politics and lobbies are less entrenched.

Property owners naturally have a demand for property rules but they do not abide politicized rules that provide standing to all manner of"stakeholders" and dilute their own rights. The Court's rulings notwithstanding, people have been moving with their feet, away from top-down planning and in the direction of more bottom-up planning. The irony is that in strengthening the hand of the top-down planners, the Court inevitably speeds these migrations.

Peter Gordon, Ph.D., is director of the Master of Real Estate Development Program at the University of Southern California's School of Policy, Planning, and Development, where he has taught since 1971. Dr. Gordon writes extensively on the problems of the new urbanism and is the co-editor of the forthcoming Voluntary Cities. He is currently writing a book on the sprawl debate, and is co-editor of Planning & Markets, an electronic refereed journal.

Harry Richardson is a Professor of Planning and Economics in the School of Policy, Planning, and Development at the University of Southern California. He is the author of 21 books and about 170 papers, and his research interests include urban sprawl, metropolitan travel behavior, international urban development,natural disasters and economic impact models.