JUNE 01, 1981 by EDWARD FACEY
Dr. Facey is Assistant Professor of Economics at Hillsdale College in Michigan.
All men on earth are ceaselessly striving to substitute more suitable conditions, as they view them, for the ones currently confronting them. They trade means for ends because they value the ends more than they do the means.
A land developer expends means, hundreds of thousands of dollars, acquires a portion of land and constructs a department store or an apartment block. He has decided to do this because he anticipates that the proceeds from the store or apartments will be greater than the sums he expends so as to make the chosen venture worth his while. In the process the real estate developer must bring forward apartments or store products that his fellow men will appreciate and pay money for; otherwise, “all is lost.” And all across society other persons are, in turn, determining what is the best use (end) now for their properties (which are their means to happiness) so that the difference between the value of the ends they seek and the means they employ will be the greatest and will advance them the farthest on the road to happiness.
Enterprisers—and we are all enterprisers in determining where to place our labor and land—are careful to avoid loss. An enterpriser using his land for a bookstore, when a grocery store might have done better, may suffer the loss of his property by bankruptcy. However, when he anticipates consumer preference well and consumers eagerly respond to his offerings, he begins to expand his business. He may have orders for his products from far and near. He bids for laborers to work for him. He buys equipment. Other enterprisers, noting his outstanding financial success, are enticed to buy lands to set up enterprises similar to his. Still more products of this nature are brought to the public and the price of the product is reduced. Soon there may no longer be enough return to warrant still further expansion or the rearing of new business structures for this business; capital, land and labor will no longer be withdrawn from other possible uses.
In the market the land and property owner in business to serve must “love his neighbor as himself.” If he does not serve his neighbor he, himself, cannot succeed.
In a free market society the land will be assigned to those ends highest in the esteem of the owners in relation to their costs. If a land is in residential use then an owner might value that use more than the $40,000 he expends to get possession of the property. If another person should offer him $50,000 for the property, planning to make another use, then the owner might decide to take the $50,000 and move somewhere else, his place being taken by someone who values the property more than $50,000. All involved prosper.
A Vital City
A city can be seen to expand in this manner. A former home may be converted into a tenement building or a storehouse. Jane Jacobs in her book The Death and Life of Great American Cities acknowledges the wondrous diversity in the variation of uses in a vital city. She notes buildings in various states of age with old buildings being acquired for businesses just starting out or for businesses with low clienteles, such as bookstores, bars, foreign restaurants. On the other hand, she sees other more successful businesses able to expand into newer structures (chain stores, chain restaurants) and able to afford the higher rents that go with these new buildings. In this way the customers of the city street get a variety of goods to choose from at stores serving many different tastes and preferences.
To plan the enterprise of a community is beyond the knowledge of any one person. How each part fits in with the other parts takes wisdom and planning, feasibility studies and surveys, and, perhaps, a call for Divine guidance as each individual enterpriser sets down his structure on a portion of one side of a street. The business may succeed and it may not. If it does, the profit seeker will cultivate it with care and it will become an established and valuable addition to the community. If it does not, then the property may have to be redirected by someone to a more satisfactory use.
Diversity of Use
In the market there will be separation as well as diversity of use. Gasoline stations will not locate in the interior of a residential section because there is little business for them there. They will be found, instead, at strategic locations confronting major thoroughfares. Heavy industries that emit sounds or odors will not seek sites near residences. Junk yards will be found in remote or low valued sites; they cannot compete in successful city districts, notes Jane Jacobs:
Deadening and space taking low economic uses like junk yards and used-car lots grow like pigweed in spots which are already uncultivated and unsuccessful. They sprout in places that have low concentrations of foot traffic, too little surrounding magnetism and no high- value competition for space.
These are some of the evolutions which may be seen in a free society where persons’ rights are respected and where the persons are free ever to strive for more well-being and an improved state in life. Now, let us see what happens when the politicians intervene.
Eminent Domain and Zoning
When I talk of the politicians I refer to people who use the political means of acquiring wealth. The political means, according to the sociologist Franz Oppenheimer in his book The State would be the acquiring of another man’s property by expropriation. The most easily noted instance of this is taxation. Another instance of it is eminent domain.
Objectors might say that, while with eminent domain the person’s property is taken for public use, he is provided with just compensation. I would quarrel with that in that first, the government, not the original owner, decides the compensation and second, the government commits a new aggression when it confiscates the funds to make “retribution” for the previous invasion. And, thus, another compensation should be made to requite the second fellow’s loss . . . and, thus, a third would be confiscated and so on ad infinitum.
Still, eminent domain is a rather costly business. Taxation is not destined to bring hosannahs. Political planners using urban renewal with its condemnations and resales have found this very expensive. The beauty of zoning, from the political planners’ point of view, is to move to their ends without the cost of eminent domain and its “just” compensation. Without zoning the political planners are severely handicapped. This is glimpsed by Linowes and Allensworth in The Politics of Land Use. They write:
. . . zoning is planning—that is, it represents the reality of planning. Communities do not really plan at all; they just zone . . . The plan . . . is the outercover; zoning represents the reality of the situation . . .
Zoning determines the basic pattern of development in the community, and subdivision controls must work within the general frame established by zoning . . . Once the zoning ordinance is adopted and applied, the character of community development is set and cannot be changed without a change of zoning . . .
Zoning will have to be tapped by anyone interested in molding land-use patterns, no matter what his objectives might be.
For those persons who think that men still have their property rights under zoning, let me cite an opinion by Justice Stephen J. Field in the Munn v. Illinois case:
The same liberal construction which is required for the protection of life and liberty in all particulars in which life and liberty are of any value, should be applied to the protection of private property. If the legislature of a State, under pretense of providing for the public good, or for any reason, can determine, against the consent of the owner, the uses to which private property shall be devoted, or the prices which the owner shall receive for its uses, it can deprive him of the property as completely as by a special act for its confiscation or destruction. If, for instance, the owner is prohibited from using his building for the purposes for which it was designed (and, one might add, for which the owner would like it designed) it is of little consequence that he is permitted to retain the title and possession . . .
Social Effects of Zoning
The results of zoning in practice for the American market have been striking. The zoners, for example, with their love for single family dwellings and homogeneous use districts have spread the population out into the countryside. This has led to more road travel for the working man and his wife just to get through the day. The government has aided this with tax-supported highways (which has added unnecessarily to the pollutant emissions coming from automobiles). Two cases are cited by John C. Sparks in his article “Zoned or Owned?”:
. . . zoning ordinances which prohibited buildings of more than thirteen stories in . . . Los Angeles . . . (and) Washington . . . (Robert A.) Futterman contends that as a result of such restriction it is impossible to develop sufficient downtown work population density to support a rapid transit system. Hence, the automobile overtaxes the highway and street facilities.
Without the markets many businesses would not move into the thinly settled districts even if they were allowed. These districts do not have density of use, they do not have shoppers, sight- seers, browsers, people walking to and from work, people coming cross district to specialty shops. And so, instead, mothers get into their cars and drive long distances to shopping centers. Teenagers get into their cars to go where there is excitement. Fathers get into their cars to go to work. All find it necessary to leave their home territories and enter “foreign” lands.
In our history, according to Raymond Buker, “the cities, towns and rural hamlets of our nation have developed as integrated neighborhoods, where people lived close to the stores or factories where they worked. These have been the thriving, happy communities where people visited at the corner groceries and the village stores. They gathered with their neighbors to enjoy good times together and to help each other out in time of trouble. Also these people did a good job of policing themselves because it wasn’t necessary for them and their young people to travel far outside their own neighborhood.”
The zoners have induced many areas to become monotonous with their single use requirement, and with their same lot size, same setbacks, same side, front and back yard requirements. Linowes and Allensworth write:
Zoning seems to be especially well designed to assure the misuse of land; it promotes sameness and a routine monotony unequalled in the history of man . . . the endless rows of look-alike houses dotting the outlying metropolitan landscape . . . the absence of variety does not permit a proper blending of development styles into the environment.
One might argue that this pattern is dictated by builders who by constructing the same house time and again or by using a few standard models can build at economies of scale . . . So long as zoning requires one house per lot and permits nothing else the building industry will work for the greatest uniformity possible, saving on construction costs so as to be able to charge lower prices and thereby attract the broadest possible segment of the home-buying market. Thus builders and developers cannot be held entirely responsible for the condition of our suburban areas. Their actions are strictly regulated and constrained by local government, especially by zoning.
When the political planners come to influence where commercial sites and housing projects are to be allowed they become subject to pressures for placing them here instead of there. With the changing forces of the market what was useful for residential in one time period becomes more useful as commercial in the next. Landowners ply the zoning commission with arguments hoping that the members of the commission will allow them to move from a less valuable use to a more valuable one. Will they be allowed? They may or they may not. Some will be glad and some will be sad.
The establishment of more governmental bureaus, more regulatory bodies at a time when the newspapers tell us time after time of the opportunity for and the use of the political positions as means to political privilege and favor is most discouraging. “Reports persist,” says the National Taxpayer Union’s Dollars & Sense (September, 1972) of campaign contributions being “sug gested” to businessmen otherwise they will face enforcement of the environment protection administration’s provisions. And what of zoning? Might not a few favors delivered to members of the commission studying a special use permit, or discussing a use variance, be helpful? Evidence shows they have and indicates they will continue to be helpful.
Bernard Siegan was told by an investor in real estate that a more appropriate title for his book Land Use Without Zoning would have been "Goodbye Graft." Siegan cites the often fine distinctions between zoning districts and the possibility of dressing up “most any decision on the basis of some ‘pure’ planning principles.” He says:
It is most distressing to speculate how many major developments have come about only as the result of the payment of graft or fees to certain parties . . . .
Dennis O’Harrow known to many as “Mr. Planner,” now deceased and formerly executive director of the American Society of Planning Officials, once said at an annual convention of the society that in too many instances zoning has failed because it has become a “marketable commodity.” He quoted a planning official who assured him that “you can buy with money any kind of zoning you want in half the communities of the United States.” There is of course, no way of investigating or validating the allegation, but that it was cited by one of the most knowledgeable persons in the country on zoning makes it difficult to dismiss.
Do not mistake me! I am not hereby entering a plea for stricter enforcement of the codes plus a bureau to be set up to supervise and prevent tribute taking by the officials. I agree with Siegan that tougher enforcement would be worse and that at least with the graft it is possible for some enterprises to make their way through the regulations rather than be stopped entirely. The answer to this problem is repeal of the zoning ordinances!
Other Consequences of Zoning: Locking Out the Competition
Siegan refers to other problems with zoning. The planners find it necessary to make suggestions in the private development or their (the planners’) size requirement may call for more costs than otherwise would be the case. The zoners’ prevention of multifamily units will put pressures on rents and lead to a shortage of housing. This can mean poor quality service on the part of those multifamily unit owners in the permissible districts, who do not have to worry about competition from landlords in nearby districts because the latter have been zoned out.
The same can be said of shopping centers. Their competitors are zoned out so as to make the shopping center feasible. Siegan is aware of this. He cites the anti-monopoly tradition in the United States, then compares it with the practice of zoning which promotes monopoly. A reviewer of Siegan’s book has written:
If several real estate developers agreed together to restrict the number of apartment buildings in a community so as to give themselves a monopoly advantage, the public would be scandalized. But if these same developers were to go to the local zoning board and suggest that good urban planning, protection of property values, (whose? theirs?) and preservation of the existing pattern of community life called for such restrictions, then this would be civic responsibility of a high order and applauded by all right-think-ing people. This is because we persist in thinking that monopoly is bad but zoning is good. Tunnel vision like this keeps us from seeing zoning for what it is—an agency of monopoly and government granted private advantage.
Summary and Conclusion
In this time of crisis we need to throw off the costly restraints that government is putting on the productive forces of America. Free men working in the free market can bring the goods forward where they are wanted, when they are wanted and to the extent they are wanted. Poli ticians are not qualified to make decisions on land development because they are subject to forces other than economic. The political planners are buffeted by constituents, by homeowners and land developers, by political persons and other reformers outside the district where the devel oping is to be done. These planners will find it necessary to compromise amidst these pressures and, when they do, they will really satisfy no one.
The most qualified persons to develop the land toward socially desirable uses are the owners. Sure they make mistakes, but, unlike the politician, they have investments at stake so they will be careful to avoid mistakes. And, if they err, they will use the experience to do better next time. With opportunity open to them to fulfill demands wherever such demands may appear, they will provide an ever greater array of goods and services that will give us a land of plenty. And, in the process, we will all be free.
But we need planning, say the zoners. Indeed we do. Dr. Ludwig von Mises put the issue most clearly in these words: “The alternative is not plan or no plan. The question is whose planning? Should each member of society plan for himself, or should a benevolent government alone plan for them all? The issue is . . . autonomous action of each individual versus the exclusive action of the government. It is freedom versus government omnipotence.”