No, they're not. I've seen the markets in action, and one ends up with shopping malls surrounded by four-lane streets with no crosswalks. As the my sibling comment points out, markets are great for maximizing incoming for the stores leasing space in the malls. One prime example I'm thinking of was 25 years ago, let's go to Google's sat view and see if much has changed...nope, looks like it's just as car-centric as it was when I lived there.
Now one can go all "no true Scotsman" on me, what with regulation and all, but there has been regulation long before either of us were born so one might as well argue that are no true markets because the sky is blue. It also ignores the fact that folks like the Simons (owners of malls across the U. S.) might have a little hand in how those regulations get written. What regulation has brought about in cities like Redmond is that if you're building streets, you're building them for everyone so there will be sidewalks and bike lanes.
That's almost never "the market" in action. For one thing, street design is obviously under the purview of the local (and possibly state and federal) department of transportation, not private developers. Plus, local zoning regulations usually have minimum parking requirements that strongly incentivize those kinds of car-centric shopping malls. It's hard to build a pedestrian-friendly area if the law says you need to use a ton of space (often more space than is used for the actual buildings) for car parking.
> Now one can go all "no true Scotsman" on me
It's not "no true scotsman", it's simply the truth that it's the government pushing car-centric design. Now, in some cases the market might ALSO want car-centric design, but it's hard to tease that out when the rule of law is so strong to begin with.
You should look up the zoning codes in your city, as well as a zoning map. They are incredibly detailed, and extremely prescriptive. What we have in the US is very far from a market-based solution!
And those rules and regulations absolutely have worsened with time. Look at cities from 100 years ago, how they had nice downtowns where people could walk around (and also drive, but slowly) and they were relatively dense.
http://www.nytimes.com/interactive/2016/05/19/upshot/forty-p...
This is an official map of the city where I live: http://i.imgur.com/N0X8HTh.png (Screenshot of http://ims.kiel.de/extern/kielmaps/?view=stpl&coords=3257435... with the layer for zoning enabled and the layers for PoIs disabled)
Purple are the areas for which any zoning restrictions at all exist – in the rest, no zoning regulations exist, as long as you follow normal building law, and get a normal permit, you can build what you want, skyscraper or single family home.
You can visit the specific plans for each area by going to , for example, http://ims.kiel.de/extern/bplaene/1008.pdf (this for the area marked as 1008 in above map).
Sometimes they look like this: http://ims.kiel.de/extern/bplaene/919a.pdf (Very restrictive new post-2005 development, only terraced housing, single family housing, and some small apartment buildings), or sometimes they look like http://ims.kiel.de/extern/bplaene/907.pdf (left half is "mixed use", right half is a shooting area), but sometimes they have no regulation at all except specifying "have around 40% mixed use, mkay?". Or even like this http://ims.kiel.de/extern/bplaene/919c-1.pdf where there are some dotted arrows with the label "foot paths", kinda showing where maybe someday foot paths will be made (IRL they were made completely differently, after demand has been evaluated based on where people walk the grass down)
This is probably a far better mix than the overly restrictive situation in the US – regulations are good when they help consumers, small businesses, or to keep the market balanced, but regulations to help developers make profit are often a bad idea.
Generally, the largest difference is that we just zone 90% of what we zone as mixed use, and let the market decide what it’ll be.
Obviously mass transit can help if it is reliable, cheap, and expansively deployed in the city, but that's not a typical case in the US. Otherwise you're going to have to accommodate cars, and lots of them. That means big fast busy roads that are unfriendly to pedestrians.
Also, it's nothing for me to bike 5 miles to go somewhere by myself, but if I have to bring my 3 year old twins along and then haul several kilos of groceries or other heavy/bulky items back that bike ride starts to look rather impractical.
People absolutely do live downtown. Indeed, one of the biggest trends in housing is people moving back in to downtowns.
> It doesn't make sense to make a walking mall in an area where few people will live in walking distance.
So why all the zoning regulations to forbid it? Markets generally won't build where it doesn't make sense. So let them do their job.
> "big fast busy roads"
You can't build your way out of congestion: http://www.citylab.com/commute/2015/11/californias-dot-admit...
As for the zoning question, it's probably the result of busybody town governments trying to control every aspect of the city lest some developer ruin their perfect vision of the city. I can guarantee that if you propose to build a big shopping complex in the middle of the city you will have people out to protest for all kinds of reasons. They will protest because it will raise their land values (and taxes) too much and force them to move. They will protest because it will bring in people and ruin their "quiet" neighborhood. They will protest because it will affect local water prices. This is how a lot of regulation gets started, because someone is trying to prevent something from happening to their backyard.
There are legitimate complaints, I think - no one wants a pig offal disposal site next door in their residential neighborhood. But we've gone way overboard in letting zoning dictate what can go where.
> They are not a typical case.
But they absolutely are on YC's radar, because San Fran and the bay area in general are ground zero for the housing crisis in those kinds of desirable places.
...assuming perfect knowledge and the absence of externalities, either of cost or benefit, since (assuming perfect knowledge of costs and benefits) markets optimize the net utility of the direct participants in each exchange, but not net social utility (because externalities are ignored.)
In the absence of externalities, this should be obvious. And in the presence of externalities, I did not claim that markets optimize either net social utility or net individual utility. I claimed only that markets work at least as well as any other solution (and that government regulation works worse, on average).
As far as your specific example, modern advertising, is concerned, I'm not clear about whether you think externalities are significant in this case or not.
From a post from davidw further down: You should look up the zoning codes in your city, as well as a zoning map.
I'll take you up on that, as it's been ages since I last did, and I don't recall having done so to any great detail for my adopted city of Redmond. And I get the impression that you might be a little more recently informed than I, so I should get caught up in the conversation. :-)
If someone can make money by building a store, that's great, what's wrong with it?
Zoning should be about keeping truly noxious activities away from residential areas, not about keeping a corner store away from where people could possibly walk to it.
The net often gets cast too widely though - so that the corners stores can't be built either.
I live in a quiet mostly rural neighborhood. I wouldn't object to a corner store replacing the nearest house. I would object to the house and all of its land getting cleared to drop a home depot in.
Unfortunately, zoning regulations prohibit both - as if there were no difference between them.
There can be plenty of things wrong with it. I don't subscribe to the idea that whatever makes money is instantly the best thing.
And I never said that I want to keep corner stores away from where people could walk to it. I said that leaving everything up to the "free market" doesn't always yield the best solution for everyone. It only yields the most profitable solution for those with the money.
That's currently what we have; nothing at all resembling a free market where you can buy a piece of property and more or less do what you want with it. The rules and regulations in place are absolutely about enshrining the car-centric city.
With a more market-oriented solution, some people could have their "burbs" and others could have other kinds of housing and neighborhoods.
Developers generally aren't the ones pushing for restrictive zoning laws, residents are. For decades Americans have lived under the impression that businesses near homes is somehow a corrupting influence, and that putting businesses far from homes is somehow a feature and not a bug.
The current suburban landscape in America is the result of both overzealous urban planners, too eager to create a magnum opus of central planning, and the residents who eagerly bought into the concept believing that the best life is a carefully manicured, highly restrictive one.
This is also why I'm skeptical of YC's thing here - this smells lot like how these misadventures in central planning have begun in the past. Sam's thought elsewhere about relocating startups to help bootstrap the new city's economy is also a bit disconcerting - these exist, they're called company towns, and they tend to be economically fragile (all non-diverse economies are) and good examples of central planning run amok.
I sincerely hope anyone applying to this is very well versed in urban planning and its history world-wide, because there have been many misadventures in planning, and those who don't know history are doomed to repeat it.
I think this is one of the most insightful comments here vis a vis YC's plans, and it's one of the reasons I'm in the "markets" camp. I know I'd prefer to see more mixed-use, bike/pedestrian friendly cities, but ultimately I'm wary of even my own "plans" and think the freedom to have people doing different things, and let cities evolve naturally beats even the best of plans.
Very, very economically efficient with huge economic diversity and competition, but nonetheless unpleasant (and unsafe!) in many ways.
Complete freedom is likely not the right answer, but neither is the extremely prescriptive type of planning that has dominated American cities since the 50s, the type that Jane Jacobs rails against in her famous book.
Oddly enough we were really good at this between the late 1800s and early 1900s. The places in America that people continue to enjoy being (and now have become enormously unaffordable) have almost all come of age in that era. I'm still not entirely sure what the x-factor was, but part of it was probably a more "gardener/enabler" philosophy to urban planning than the "prescriptivist/masterpiece" thought that dominates now.
Planning in many places in that era was more about setting the foundations for the market to grow productively, rather than monumental projects designed to micromanage the conditions of every day life. See for example the Commissioner's Plan of 1811 in NYC.
I agree with you completely: I'm not a 'markets' guy because I think they're the answer to all problems all the time, but because I think in this case we could use more of them.
Back then there was no metro, there was a sea of private jitneys and buses fighting each other for bus stops. Traffic safety was utter shit.
The government had minimal involvement in food safety. Private "certifiers" sprung up to plug the gap, but piracy of food safety certification stamps was rampant, and the whole having to check the packaging to see if some product was certified safe by your preferred certification provider was a persistent stressor.
Building codes technically existed but enforcement was non-existent. Partial building collapses were common. The skies were a tangle of wires running overhead from competing TV, phone, and other companies, each of which needed their own set of last-mile infrastructure. A lot of it was poorly installed, accidental electrocutions weren't uncommon. It was all kind of Blade Runner-esque in hindsight.
The way I see it, I lived in the libertarian paradise some HNers dream of creating, and it wasn't really all it was cracked up to be.
Absolutely. I remember way back when there was discussion of what to do with the huge plot of land north of us. Corner store, maybe? The local paper quoted someone in the neighborhood, "who's going to walk to the store in the rain (which a suburban of Seattle gets a bit of)?" Umm, maybe all of the people I see out walking when I'm walking the dogs in the dead of December in the dark and the pouring rain? Back to California with you Mr. NIMBY, the rest of us deal with walking in the rain just fine.
But that's probably the guy that shows up to zoning meetings and I'm...not. Yes, I'm lazy and yes, I should fix that.
Markets are a great way of finding 'the best' solution to problems like this, but they aren't allowed to function any more in most cities in the US because of the amount of rules and regulations about what can be built where.