Faux Market, Faux Preferences: Cities, Suburbs, and Choice

16 March 2011 § Leave a comment

It’s a common refrain—the rallying cry of car-loving libertarians everywhere: “[i]f most Americans clearly prefer suburbs, then why would our elected representatives choose to pick a fight with them?”

It’s a talking-point meant to erode the free-market support for urbanism, density, and cities. “If the people are so fond of walkability,” the argument goes (or public transit, entertainment variety, etc.), “then why do they vote with their feet and leave?” Why—over half a century—have they consistently outmigrated to the suburbs whenever they have the means?

It’s an argument meant to undermine the paternalistic impulse to encourage (i.e. subsidise) “smart growth.” If we can’t trust ourselves to make lifestyle choices, then why expect our political overlords to fare better? Sure, riding the train could free up time for my morning emails, but something about my inner rational agent tells me “no.” It tells me to “drive!” It tells me “revel in the whimsy of the open road! (even if it means crawling along at a snail’s pace on the I-95).”

The standard response woefully eludes the issue. “Sustainability,” it is argued, trumps the uninhibited maximisation of each party’s self-interest. Why? It’s a tragedy-of-the-commons problem. The optimal utility of the whole (and each of its parts) goes unrealised by letting each party siphon off what they can. Pretty soon you run out of commons. Roads, like grazing fields, get consumed into scarcity—and everyone ends up the worse.

I don’t think that’s a convincing refutation. I think it works for oil—we can (and are) sucking the Earth dry. It’s a finite resource no matter now much we drill. But roads are limited only by our willingness to fund them. Tragedies-of-the-commons apply where a given resource is exhaustible, but that’s a big leap from merely being rival at any given time x. I think roads are rival—but that’s only a necessary (and not itself sufficient) precondition for exhaustibility.*

What is the economics argument against suburbs, then? And more importantly, does it countenance libertarians who object to externality-intensive “sustainability” models? I think the answer is yes. The reasoning is twofold:

1) First, you have to start with a prioris. The heart of the libertarian paradigm is revealed preference, and our consumption choices are a reasonable proxy. Revealed preference can only exist where it’s free from interference—or else it’s not “preference” and reveals nothing—but this only an aspirational hypothetical not really tenable in an imperfect world. So, libertarians aim to approximate it by minimising the barriers for the maximal amount of people. They do this because of a second a priori: rational egoism—that is, the belief that by maximising revealed preferences we can maximise social welfare. This results in opposition to (among other things) social norms, slavery, contracts of adhesion, subsidies, etc.

2) Second, you have to identify the opposition’s fallacy. They assume their initial point: outmigration to the suburbs is conflated with revealed preference. It’s a classic petitio principii. Does the choice to live in the suburbs arise unobstructed, as in the theoretic ideal—or is it indeed the product of those obstructions? Are we choosing an auto-centric lifestyle, for example, because we intrinsically default to it, or are we just suckers for a juicy handout? Do we love single-family detached two-stories because we’re drawn to embodying stereotypes, or are we just exploiting the mortgage-interest loophole?

Ultimately, the classic libertarian critique of urbanism leaves a lot to be desired. But its single most egregious shortcoming is a failure to abide by its own terms. This is why here, as in the future, I will be citing to many of my “market urbanist” fellow travellers. Some can be found in the Blogroll—others to be peppered throughout the posts.

*Note that I depart in this view from the common consensus that roads are neither exhaustible nor rival. And I’m not alone on that score.

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