Government Planning Doesn't Work.
We now know New Deal planning did more to prolong the Depression than it did to end it. We know urban-renewal planning in the 1950s and 1960s displaced more than a million, mostly black, low-income families from their homes and turned some inner city neighborhoods into bombed-out landscapes. We know President Nixon's wage-and-price controls led to energy shortages but didn't stop inflation.
Despite these failures, governments continue to plan. Almost every city and county in the country has a planning department. More than a dozen states have passed laws requiring local governments to write comprehensive land-use plans that place strict limits on how people can use their property. Congress has passed numerous laws requiring federal agencies to plan, including the National Environmental Policy Act of 1969 (which requires agencies to write detailed plans for any action affecting the environment), Resources Planning Act of 1974 (which gives the Forest Service authority to plan both public and private forest lands), and Intermodal Surface Transportation Efficiency Act of 1991 (which, along with successive laws, requires states and metropolitan areas to prepare detailed long-range transportation plans).
Of course, government agencies need to plan their budgets and individual projects. They create crises, however, when they write long-range plans (five to 50 years or more), comprehensive plans (plans that attempt to account for all of the various side effects of agency actions), or plans that try to control other people's land and resources. Many plans attempt to do all three.
Who writes these plans? The Bureau of Labor Statistics says the United States has about 32,000 professional planners. About 30,000 of them belong to the American Planning Association, which says two out of three of its members work for government agencies. Most of the rest work for private consulting firms that either contract to government agencies to write specialized plans or help private developers negotiate the complicated planning mazes that must be followed to build any project.
The recent housing bubble is a result of "government planning." More than four out of five Americans say they prefer in a house in the suburbs over higher-density housing near jobs, shops, and transit. But planners believe a greater share of Americans should live in high-density housing, partly because planners erroneously think people living in higher densities will drive less.
Starting with Hawaii and California in the 1960s, an increasing number of states have passed laws encouraging cities to limit low-density suburban development. This has made single-family homes in these states very expensive. Meanwhile, many cities have subsidized high-density housing to encourage people who would rather live in suburban homes to live in apartments or condos instead.
By 2000, Arizona, Connecticut, Florida, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, Oregon, Rhode Island, Vermont, and Washington had joined California and Hawaii in passing "anti-sprawl" laws. These states suffered the greatest housing bubbles, while less-regulated fast-growing states like Georgia, North Carolina, and Texas enjoyed only modest increases in housing prices.
A standard measure of housing affordability is the median home price divided by median family income. At a price-to-income ratio of 3, a median family could pay off a mortgage on a median home in about 15 years. At a ratio of 4, it would take more than 30 years. At a ratio of 5 or higher, it becomes almost impossible. As of 2006, the average price-to-income ratios in Hawaii and California were more than 8. Ratios in most other states with strict planning laws were between 4 and 5. Meanwhile, ratios in Georgia, North Carolina, and Texas remain between 2 and 3.
Most people know the housing bubble is sending tremors throughout our economy, but few realize it was ultimately caused by planners trying to socially engineer our cities. Yet that social engineering isn't working: while dense housing may attract people who don't want to drive, studies show it doesn't significantly change the travel habits of people who prefer to drive.
Planners also argue we need to limit low-density development to protect open space. But 95 percent of the U.S. is rural open space. Given that unaffordable housing and congestion hit low-income families the hardest, government efforts to protect open space are a tragic misplacement of priorities that simply exacerbate housing, mobility, and other serious problems.
Urban planners admit they want to emulate European cities with their higher densities and intensive transit service. Yet they are following models that have already failed. European governments emphasized high-density housing in the 1950s and 1960s. By 1970, western Europeans were sick of government housing and began demanding more privately owned single-family homes. Three out of four homes built in Sweden in the late 1960s were multifamily apartments; by 1980, three out of four were single-family.
After the fall of the soviet empire, eastern Europeans also began abandoning the high-density housing projects communist planners had built for them. Recent high-density developments in Portland look nearly identical to housing projects built in eastern Germany in the 1960s. The difference is that (despite high vacancy rates) Portland is subsidizing more of them while Germany can't tear them down fast enough to keep up with people leaving for single-family homes.
Europeans' apparent fondness for transit is also an illusion. Though Europe spends roughly $100 billion a year subsidizing urban transit and intercity rail, they are losing market share to the automobile. Americans drive for 82 percent of all their travel; Europeans for 78 percent. If dense housing and huge transit subsidies don't work in Europe, how can they work here?
Urban planners have given us surpluses of condos and apartments, shortages of single-family homes; surpluses of open space, shortages of developable land; surpluses of public transit, and shortages of highway capacity. These are only some of the surpluses and shortages government planners have foisted upon an unsuspecting public.
It is time to say the emperor of planning has no clothes. Congress and the states should repeal planning laws. Instead of long-range planning, cities and counties should solve problems using markets and user fees.