Reading this from Tyler Cowen I’m once again baffled by the mainstream libertarian approach to land use and planning issues. As I see it, it may or may not be the case that the Tyson’s Corner area, when the Dulles Rail Extension is completed, proves suitable for the kind of density that exists in the walkable portions of Arlington County. I think Ryan Avent makes a strong case that it in fact is. But even if you think Ryan is wrong, why on earth isn’t the libertarian take on this that we should permit high density construction and let the market decide what happens?
In the standard economic account of why cities and metropolitan areas exist at all, you have on the one hand benefits from agglomeration and on the other hands costs of congestion—traffic jams, higher rents, etc. If it gets to be the case that growing density at Tyson’s, notwithstanding improved transit access, starts taxing local roads to an extreme extent then it will stop making economic sense to make Tyson’s denser. At that point, developers will stop making the area denser. Why on earth would free market economists want to call in central planners to decide in advance that there’s going to be too much density and impose a lot of regulatory restrictions? Similarly, there’s a pretty clear public choice argument about why these kind of planning boards are going to systematically err on the side of permitting too little density.
Maybe us urbanists are wrong, and even though it seems to be the case that suburban sprawl in the United States is systematically supported by a series of direct and indirect subsidies and regulatory mandates that it secretly also reflects underlying market preference and it’s all just some kind of giant coincidence. But why can’t we try to put this proposition to the test?