Foundations of the city and the anti-city

[jaws]

How a city is created
A city may be founded by an entrepreneur perceiving an economic need for a city on a rural or empty site. He purchases the property and founds a city by developing the infrastructures and subdividing the property into lots, which he will then sell to profit from the enterprise. In order to purchase a lot, the new citizens must agree to the terms of governance of the city. The value of the lots depends on the desirability of the terms of governance. Exploitative terms will not find any buyers and the enterprise will be a failure. Two sets of property rights are created. The property right of the city as a whole, and the property right of the individual lot.

[This is the origin of many of Europe’s finest cities. They were founded by aristocratic estates or bishops and governed by the heirs of their founder for centuries. Unfortunately they were all forcefully expropriated and collectivized in the period 1793 (The French Revolution) – 1918 (Overthrow of the German, Austrian and Russian empires), marking the beginning of the decay of the city and the ascendancy of modernism. The remainder were mercantile “free cities” (free of aristocratic oversight) governed, but not owned, by associations of merchants. London, Paris and the free imperial city of Frankfurt am Maim were such cities, and in fact the City of London miraculously remains under this model. Paris was also privatized temporarily under the Emperor Napoleon III who directly commanded its governor, the famous George Eugène Haussmann, with happy results.]

The economic need for urbanization must always come before the founding of a city. The failures of the planned “New Cities” and territorial planning efforts are easily explained by the fact that they attempted to create a city where no economic need was present, or to suppress the economic need in one area to shift it to another area. One does not simply build a city in the middle of empty land and declare that “if you build it, they will come.” If the people who might move into your cities have no way to support themselves, they will stay where they are. If enterprises that might move to your city will not increase their profits by doing so, they will stay put. If a city is to be able to import the goods that it needs, it must have a profitable, competitive export business. The one case where a city may be built wholly from scratch is that of the capital city of a state, where the city is supported by taxes and thus no competitive export is required. Such a capital can be built absolutely anywhere and survive so long as it receives tax income.

That demand must come before supply does not mean that demand is a completely exogenous event. It is obvious that government actions can create demand where there previously was none, such as in the previous case of capital cities. The construction of a major road will create demand for urban zones from the urban zones the major road connects to. The expansion of infrastructure, such as water and sewers, into rural zones will make them relatively more attractive than adjacent zones where no such infrastructure exists, but will not necessarily create enough demand to justify full urbanization. Without being certain that there will be future demand for urban zones in that location (meaning there is discounted demand for urban zones today) it is likely that such long term planning will be a total waste. The ideal course of action is to urbanize and expand infrastructure simultaneously, that is to follow the old “subway suburb” model where the company that owned the transportation also owned all the adjacent land. When they predicted economic demand for an urban zone they conducted both the expansion of transportation and the urbanization of the zone, and thus collected all the profits. There is therefore no justification for government involvement in infrastructure production.

Governance, capital and economic calculation
Capital productivity depends on the competences of the owner. Robinson Crusoe, alone on his island, knows exactly the cost and productivity of all the resources available to him. He knows how many mangoes he will have to give up in order to produce a fish, or a fishing rod. Once another character is introduced into his society, the possibility of division of labor appears. Crusoe knows that he can use a fishing rod to produce 1 fish a day. If Friday knows that he is a much better fisher and can produce 5 fish a day using that same rod, he can offer Crusoe 2 fish a day in exchange for the rod. Without having to know anything about fishing himself, Crusoe can profit by giving up the use of the fishing rod to Friday in exchange for a part of his catch. Both parties thus increase their productivity by trading capital. No matter how many individuals are added to the island, there is always one individual that is the most productive with any capital good the island economy can fabricate. All individuals on the island thus gain by offering capital goods on the market. If the price they can get for a capital good is lower than their own productivity, then they know that they are the most capable producer and owner of this good.

The exchange of capital can take place because each individual in society specializes his knowledge and skills into a narrow field in order to achieve the greatest productivity using his scarcest resource, time. This explains the fundamental source of failure of communist systems, that is that out of all the individuals making up the commune only one individual has the best knowledge to manage any productive enterprise, having invested more time than any other individuals into acquiring this knowledge, and yet may not act on that knowledge of his own will. Before he can act he must expend his scarcest resource, time, into convincing others to go along with the project. In most cases the cost in time does not outweigh the benefit of success, if the operation has any hope of success at all. The cost goes up the more individuals there are in the commune, which is why democracies have a long reputation of being unmanageable beyond a certain size.

Things only get worse in a representative system. Politicians are not required to run a city profitably and thus do not perform any economic calculation, but instead resort to political calculation. Their economic interest is assured by allocating resources and regulations to ensure their immediate re-election or dynastic continuity. Politicians are also elected not based on the fact that they have invested their time on building the skills required to effectively run a specific enterprise, in this case a city, but have invested their time in developing political skills, such as good charisma and powerful connections. A successful politician is therefore by definition incompetent at any managerial and entrepreneurial task. If he was able to defeat rival politicians, he must have invested more time into his political skills than the other, and thus less time in any productive skill set. At the municipal level, elections are often used as training grounds for politicians who wish to climb the ladder to more important offices, thus they have absolutely no incentive to become productive urbanists once in office either. If it were possible to substitute an incompetent mayor for a competent one through the electoral process, one would run in the previous problem of time-costs, thus making the whole democratic-collectivist project utterly nonsensical and wasteful.

What defines private ownership
A city can be said to be privately owned if the property rights to the city as a whole can be disowned and sold, that is to say their full capital value (the value of all future discounted income) can be traded in for money or other assets. The ability to sell property rights to capital goods makes possible economic calculation.

A limited liability corporation can be said to be private property as the individual shares can be disowned, making it possible for shareholders and investors to undertake economic calculation. A homeowners’ association subdivision is similarly tradable as a single person could purchase enough properties to take control of the covenant. However the simple fact that a resource is privately owned does not guarantee that it will be employed optimally, only that the most productive user can appropriate it. In the case of a HOA subdivision the governance is made up of regular, non-specialist homeowners, whose interest is to preserve the homogeneity of the subdivision, thus not providing a system applicable to a full-use city. What private ownership provides them is the cost information of the HOA system. If the value they earn from their stake in the HOA is less than what they could make if they sold their stake on the market, they know that there is a more efficient system than their own.

The incentive to agglomerate and the incentive to sprawl
A private owner of a city, having invested in infrastructure in a central area, will profit by building up the optimal density of land use within his urban zone. That implies that infill development will be the preferred means of investment, as it will re-use as much infrastructure as possible and limit the capital expenditures of the city. The upper bound for density will be defined by competition from suburban areas, but as a new urbanization necessitates a completely new investment in infrastructure and services there is always an advantage in building up the inner city so far as the density is tolerable. Making density tolerable and even beneficial through advantageous regulation is therefore also an incentive of the owner.

How then is sprawl possible? Sprawl is possible because communistic cities do not perform economic calculation. Their regulations and expenses are determined by people who have no interest in building up the capital of the city as a whole, and no competence in doing so either. Every agent, whether they may be mayors, traffic engineers, fire department chiefs, subdivision developers or big box stores, citizen groups left and right or regular old NIMBYs, would rather shape the city to their own advantage, externalizing as much of their costs as possible on the city while not having the competence to evaluate the results of their actions on the whole. This results in a gradual decay of established cities and creates an incentive to start off fresh in a zone that is not yet urbanized in order to escape the waste.

[Luca]

Jaws; I still can’t fully get my head around how you envision this commercial city would work.

Suppose some guy buys a whole bunch of land. Then plats it, builds roads, sewers, cable, shopping . etc. He then sells the plots to individuals/companies. Given time value of money he’ll want to sell up as quickly as possible, all else being equal. Once he’s sold all the plots, he doesn’t really own the city anymore, right? He might own the roads but that’s not too easy to extract value from, maybe a user fee, don’t see how he would much own the city. Or are you thinking about the landlord selling long-term leases? Or just renting places out?

[jaws]

You have to take the neoclassical blinders off. You can sell a lot and still retain some rights to the city as a whole. Property rights are divisible. Within the same space, two property rights can exist. The covenant applying to the whole city, and the physical access to the individual lot itself.

[Linda_D]

I think you are full of a lot theoretical bull manure.

Oh, yeah, those great cities were just wonderful places to live prior to 1793 -- if you were well off -- but then, so are modern cities.

[jaws]

Originally posted by Linda_D

I think you are full of a lot theoretical bull manure.

Oh, yeah, those great cities were just wonderful places to live prior to 1793 -- if you were well off -- but then, so are modern cities.

If you can't attack the theory, the theory is right.

[RichmondJake]

Originally posted by jaws

If you can't attack the theory, the theory is right.

That's faulty logic, and you know it.

[jaws]

Originally posted by RichmondJake

That's faulty logic, and you know it.

Let's ask a professor of mathematics

2B: What makes you sure you're right and the orthodox architectural establishment is wrong?
NS: I'm trained as a scientist. Incidentally, so is Christopher Alexander. And scientists are trained to discover facts about the universe. When we think we have discovered something and it is tested by scientific methods, as opposed to political methods, then we are absolutely secure in our convictions. We are aware of entire fields of civilization based on myths and superstitution. So we are ready to defend a scientifically-derived idea against millions of people, and certainly against other so-called established disciplines, because we know that ideas are selected, like in a Darwinian process. The scientific arena is a fierce and highly competitive arena in which ideas are selected by means of verification and reproduceability of results. All the scientists attack the ideas, but those that survive, that means they are verified by the scientific method.

http://www.2blowhards.com/archives/000735.html

[Linda_D]

Originally posted by jaws

If you can't attack the theory, the theory is right.

Uh-huh.

A theory is based on observable facts, but your fantasy is based not only on your ignorance of historical fact but also illogical assumptions about human behavior.

[Linda_D]

Originally posted by jaws

Let's ask a professor of mathematics

http://www.2blowhards.com/archives/000735.html

How about including the entire quote???

The method of selection of ideas in the architectural world is chiefly authority. Architects and architectural students believe something because it is given by a figure of authority. Scientists, on the other hand, believe something because it has been attacked by other scientists and it has survived. It has survived because you can do an experiment and test it, or because 60 other people have done the calculations and said, Yes, this is correct. That's totally different. After it has passed this process it goes into the textbooks and it becomes authority.

So, what experiments support your supposed "theory"?

[jaws]

It's logic, not experimentation. Logic is infinitely reproducible, falsifiable and verifiable. If the logic is wrong, you should be obviously capable of pointing out why.

This isn't a thread for discussing epistemology. If you have any argument that might refute the theory, which I continue to claim is 100% true and fool-proof, then please present them so that we can examine how my logic is wrong. You can't dismiss the truth by claiming there's no such thing as truth, because then we have no reason to believe what you claimed.

You're on the right track to a real argument when you claim that I'm using illogical assumptions about human nature. Now you need to explain what these assumptions are and how they are illogical.

[btrage]

Originally posted by jaws

You're on the right track to a real argument when you claim that I'm using illogical assumptions about human nature. Now you need to explain what these assumptions are and how they are illogical.

People don't always base their decisions on purely economic considerations. Throughout history, people have based decisions on bigotry, hatred, contempt and thoughtlessness. Oftentimes, these decisions have ultimatly resulted in harm to the person or entity in power. This is the very basic reason why governments were created.

Now...I've answered your question about humans making illogical decisions. My questions for you is..."What happens when the owner of one of your private cities begins to make illogical decisions because he is a racist. What happens then? What happens when his "city" has been in existence for 500 years, but he decides he doesn't like how his father ran the city and he wants to discriminate based on race?

Your logical argument would be that rational people would reject his line of thinking and that the "owner" would change his mind, or people would just stop buying lots. But what happens if all the lot owners agree with him and they decide to not sell any lots to African or Asian people?

I hope my stream of conscience thoughts are not so illogical that you won't respond.

[Luca]

Originally posted by jaws

You have to take the neoclassical blinders off. You can sell a lot and still retain some rights to the city as a whole. Property rights are divisible. Within the same space, two property rights can exist. The covenant applying to the whole city, and the physical access to the individual lot itself.

Don't be so defensive... neoclassical blinders indeed... I'm just asking what property rights the uberlandlord would retain and what his/her interest in the 'city' would be once all the lots are sold (or would they be)?

[jaws]

Originally posted by btrage

People don't always base their decisions on purely economic considerations. Throughout history, people have based decisions on bigotry, hatred, contempt and thoughtlessness. Oftentimes, these decisions have ultimatly resulted in harm to the person or entity in power. This is the very basic reason why governments were created.

That's inconsistent. Governments are made of people. If people are bigoted, hateful, contemptuous and thoughtless, then so are governments.

Economic science is a logic of action. It says that if someone acts only on impulse there will be negative consequences.

Now...I've answered your question about humans making illogical decisions. My questions for you is..."What happens when the owner of one of your private cities begins to make illogical decisions because he is a racist. What happens then? What happens when his "city" has been in existence for 500 years, but he decides he doesn't like how his father ran the city and he wants to discriminate based on race?

Your logical argument would be that rational people would reject his line of thinking and that the "owner" would change his mind, or people would just stop buying lots. But what happens if all the lot owners agree with him and they decide to not sell any lots to African or Asian people?

That is fully their right. If they prefer to be around people of the same cultural subgroup, they can legitimately exclude others. A racist has the right to keep other races out of his home. If we do not have the unlimited right to exclude others from our property, we do not really own private property.

If someone inherited a property, then wanted to drive out all the members of an ethnic group, one would have to pay the cost of this act. This would be a loss of income that could not instantly be replaced. The act could very well drive the estate into bankruptcy. It is not illogical to be a racist, only to believe that racist actions will not have consequences.

Note that this works in all directions. If someone wanted to start a Chinatown, Afrotown, Queertown or Hippietown they could also do that by either starting off fresh or buying one of the established neighborhoods from the brink-of-bankruptcy previous owner.

Originally posted by Luca

Don't be so defensive... neoclassical blinders indeed... I'm just asking what property rights the uberlandlord would retain and what his/her interest in the 'city' would be once all the lots are sold (or would they be)?

It's impossible to perfectly predict what a free market would produce. I've only given one possible arrangement based on historical evidence. I'll leave you free to imagine other possibilities.

[bluehour]

This Private owner of a city is akin to a God model.

The owner is omnipotent, always correct, acts only in the interest of buiding along infrastructural lines to optimal density and thence to profit. In a perfectly free market, of course.

The historical summary of european cities (2nd paragraph) is too general and does not touch on the detailed ways the cities mentioned have been built over thousands of year. It implies that an owner "built" London, Paris and Frankfurt which is not true.

And these nasty communistic cities not doing thier economic calculations. Tsk Tsk. They should be moving towards profit at all times, not balances a multitude of different needy groups!


what is this anyway, a PHD chapter?

[Reductionist]

Originally posted by bluehour

what is this anyway, a PHD chapter?

No it's just the latest thread in Jaws' effort to rationalize what is essentially the "benevolent dictator" model of urban planning and governance with Baron Haussmann and Napoleon III ostensibly being the prototype we should follow.

There is some truth to this of course, and it works great when you have a visonary such as Haussmann, but watch out when you get a Robert Moses type figure at the helm.

[jaws]

Originally posted by bluehour

This Private owner of a city is akin to a God model.

The owner is omnipotent, always correct, acts only in the interest of buiding along infrastructural lines to optimal density and thence to profit. In a perfectly free market, of course.

I nowhere mentioned anything about a perfect free market. All I said is that, out of the whole population, there is only one individual that is better than all the others at any possible task. This applies to urban planning as well. In the free market, this most qualified individual naturally climbs into a position where he may act on his qualifications. Under communism it is impossible unless one has the necessary political skills, meaning that one is not the most qualified urban planner because time has been spent acquiring political skills instead of urban planning skills.

Originally posted by Reductionist

No it's just the latest thread in Jaws' effort to rationalize what is essentially the "benevolent dictator" model of urban planning and governance with Baron Haussmann and Napoleon III ostensibly being the prototype we should follow.

There is some truth to this of course, and it works great when you have a visonary such as Haussmann, but watch out when you get a Robert Moses type figure at the helm.

I am getting tired of this kind of slanderous attack on the free market economy. It is not an economic dictatorship. Having unlimited freedom to decide what takes place on your property is balanced by having to exchange goods with others in order to stay in business. Ultimately it is the consumers who always decide what goes on, the producer only shows them what can be made available.

If you want a dictator, this is exactly what Robert Moses was, and everything he did was 100% legitimate under democracy, paid for by people other than himself.

[michaelskis]

So would business, residents, and others just rent space or it is more like a site condo where the occupant owns the physical structure, but not the land, but even then a condo association would need to be formed because the primary land owner would still have to provide legal access and rights to the structure.

On a very small scale (Condo Project) I think that it is very possible, however for an entire city it would not be economically possible for sustainability.

[jaws]

Originally posted by michaelskis

So would business, residents, and others just rent space or it is more like a site condo where the occupant owns the physical structure, but not the land, but even then a condo association would need to be formed because the primary land owner would still have to provide legal access and rights to the structure.

On a very small scale (Condo Project) I think that it is very possible, however for an entire city it would not be economically possible for sustainability.

It would be exactly like it is now and was before, except you can buy the rights.

[michaelskis]

Originally posted by jaws

It would be exactly like it is now and was before, except you can buy the rights.

Which if a group owned the access rights (such as in a condo association) a legal based hierarchal board would have to be formed... which in reality is a very local form of government. Each owner would have a vote based on the ‘rights’ that they owned... AKA Democracy in a very simple form.

[jaws]

Originally posted by michaelskis

Which if a group owned the access rights (such as in a condo association) a legal based hierarchal board would have to be formed... which in reality is a very local form of government. Each owner would have a vote based on the ‘rights’ that they owned... AKA Democracy in a very simple form.

No. Pay attention to what I'm saying. If each member of the group owns his share of the rights and can sell them, a market is possible. The group can be bought out by a single person. Economic calculation is possible. This is how a LLC works, and to a certain extent a HOA as well.

Under democracy people do not own their votes. Economic calculation is impossible.

[michaelskis]

Originally posted by jaws

No. Pay attention to what I'm saying. If each member of the group owns his share of the rights and can sell them, a market is possible. The group can be bought out by a single person. Economic calculation is possible. This is how a LLC works, and to a certain extent a HOA as well.

Under democracy people do not own their votes. Economic calculation is impossible.

The more that I pay attention, the less I think that you truly understand what your talking about.

To start with, I don’t think that you understand how condo associations work. Lets take mine condo building as an example. We have exactly 100 units in our building. There is a condo board. The board overseas general stuff such as low cost expenditures and such.

Each member of the association board is elected to the board based on a simple idea. Each condo is equal to one vote. If you own two units, you have two votes... if you own 80 units, you have 80 votes. A person can buy and sell these condos at will, resulting in buying or selling their number of votes. I own one condo in my building, there for I have one vote. I also own 1% of all of all of the “commons area” including the exterior of the buildings, weight room/ fitness center, parking lot, car ports, front lawn and such, all of which are controlled by the association board with has been created by the unit owners by voting. Therefore resulting in a democracy!

For American cities, it is the same thing on various levels. As an example, Maister and I both got to vote for one of two people running for Governor. Maister, however had to choose from a different list of state reps because we do not live in the same city. It is based on where we live.

Even in a fully privatized situation where people reside and own property, a diplomatic process is created to preserve the general good of all the people and not just one person.

Rental units are very different, a person as no ownership writes and very limited access rights. Would your city be completely rental? In which case people would be at the mercy of a potentially evil dictator while neighbors realizing that they have no real vested interest in the property are less likely to maintain it resulting in less than desirable conditions for everyone.

[jaws]

Originally posted by michaelskis

Each member of the association board is elected to the board based on a simple idea. Each condo is equal to one vote. If you own two units, you have two votes... if you own 80 units, you have 80 votes. A person can buy and sell these condos at will, resulting in buying or selling their number of votes. I own one condo in my building, there for I have one vote. I also own 1% of all of all of the “commons area” including the exterior of the buildings, weight room/ fitness center, parking lot, car ports, front lawn and such, all of which are controlled by the association board with has been created by the unit owners by voting. Therefore resulting in a democracy!

If I can totally control the board because I own the majority of units, it is not a democracy. A democracy is a system where everyone gets one vote and no more than one vote, and thus cannot sell their vote, and thus cannot conduct economic calculation.

Originally posted by michaelskis

Rental units are very different, a person as no ownership writes and very limited access rights. Would your city be completely rental? In which case people would be at the mercy of a potentially evil dictator

Just like they are at the mercy of the dictators Wal-Mart, Safeway, Citibank, a hopeless slave in a system where they have no say?

while neighbors realizing that they have no real vested interest in the property are less likely to maintain it resulting in less than desirable conditions for everyone.

That is part of the costs that must be economically calculated. Of course since modern cities are in ruins and filled with dirt, I have to ask why you thought this example would support your argument.

[michaelskis]

Originally posted by jaws

If I can totally control the board because I own the majority of units, it is not a democracy. A democracy is a system where everyone gets one vote and no more than one vote, and thus cannot sell their vote, and thus cannot conduct economic calculation.

In my building, no one owns the majority of units.

However having said that, there are still several ideas based on representation where a democratic system will not have equal votes. For example, take the House of Representatives and US Senate. The Senate is based on two senators per state, regardless of how many residents you have in your state. The House is based on percentage of total population of the united states that reside within your boundaries. So in the House, California has more votes than Vermont, however in the Senate both are equal.

Regardless of how you want to label it, you can’t get away from some aspect of a government from being formed. People have them in HS, College, their churches and neighborhoods, Ford, GM, Disney, NBC, K2, Wells Fargo, Wal-Mart, and just about everything under the sun have some aspect of a voting system in place to prevent some power happy dictator from taking control.

It is in our nature going back to primitive times. People would form social groups where a hierarchal from of control would form. As I have said before, wolves, chimps, and any non reactionary animal will do it.

If your theory works, great, prove it or show where it has been successfully implemented from start to finish, and why the people choose to live there.

[jaws]

Originally posted by michaelskis

In my building, no one owns the majority of units.

However having said that, there are still several ideas based on representation where a democratic system will not have equal votes. For example, take the House of Representatives and US Senate. The Senate is based on two senators per state, regardless of how many residents you have in your state. The House is based on percentage of total population of the united states that reside within your boundaries. So in the House, California has more votes than Vermont, however in the Senate both are equal.

It doesn't matter. If votes are not owned, meaning that one cannot sell his vote for its full value, then economic calculation is impossible. It doesn't matter if people in Vermont have 100 times more weight than people in California, they still do not own their vote.

If your theory works, great, prove it or show where it has been successfully implemented from start to finish, and why the people choose to live there.

I already presented a historical reference right at the beginning. Pick up some history books.

Since the theory is based on logic, it is already proven. If you cannot refute it, it is 100% true, as true as a mathematical proof.

[ssnyderjr]

This is what I want to do with a campground when I retire. I own it, you rent/lease a space in it - you agree to my rules -and if you don't like them I can kick you out. I can make or change the rules at any time. I can rent out part of the campground for special events or for longer terms if I like. I can put in infrastructure (i.e. roads, drainage, restrooms, water, electric, cable, etc.) if I choose to-or not to. I can maintain that infrastructure if I want to or don't want to (i.e. patching potholes, mowing, etc.). I can place cabins or campers or tents on sites as I wish. I can put in public facilities (i.e. putt putt golf, a swing pool, an arcade) and even sell goods to my tenants (i.e. T.P., cereal, milk, eggs, bologna) at an inflated rate.
In a nutshell, JAWS is talking about a campground. My only question is - why aren't all campgrounds huge money-makers and big successes??????

P.S. Trailer park can be substituted for campground in this scenario.