The Seduction of Planning

(Page 2 of 3)

Planning is one popular option. In common political parlance, planning refers to the use of centralized, public decisionmaking to define goals and spell out measures to achieve them. As a decisionmaking process, it is necessarily formal. It is about rule making and rule enforcement. As a public process, its prescriptions must be specific and leave little discretion to authorities implementing the plan. This inflexibility provides, as Sowell notes, “insurance against the discriminatory use of the vast powers of government. 'Red tape' is an implicit premium paid for this 'insurance.' “

To spell out specific rules, planners need vast amounts of information. To make the AQMD plan work, for example, regulators must accurately predict demographic trends. They must have up-to-the-minute knowledge of the production processes of hundreds of businesses—and, ideally, be able to foresee what new technology might bring. They must be able to ascertain who is not complying with regulations—whether the violators are families enjoying their backyard barbecues or businesses surreptitiously emitting pollutants.

But public authorities, like the rest of us, are not omniscient. Moreover, the planning process is ill-suited to conveying information. In any centralized and relatively inflexible system, feedback about changing circumstances is slow to enter the decisionmaking loop. And acquiring knowledge about production processes and diverse community needs is expensive and time-consuming. In short, the process is inefficient—a point amply illustrated by the 20th-century performance of massive planning in the Soviet Union.

For seven decades the Soviet Union has tried to plan its economy. Now, Mikhail Gorbachev acknowledges the inefficiencies, persistent shortages, and corruption that once were reported mainly in underground East Bloc jokes. Even on quality-of-life issues, the Soviet experience is unimpressive: life expectancy has declined, mortality rates are up, pollution grays the horizon. So Soviet leaders have ushered in perestroika—a liberalization of the economy that includes more decentralized decisionmaking, some private ownership, more freedom. And the West, with some self-complacence, is cheering on these changes.

But what does the Soviet experience tell us? Forget the big debate—communism versus capitalism—and consider only the issue of planning. The Soviet system is a monumental demonstration of its pitfalls. Complex economic systems require the rapid conveyance of vast bits of information about the ever-changing supply of and demand for different resources.

The very complexity so often cited by city authorities to justify master plans in fact warrants just the opposite— decentralized decisionmaking coordinated by the actions of millions of individuals, each privy to information unavailable on a grand scale. Cities are but microcosms of the larger economy. What failed in the Soviet Union for its entire economy is bound to fail also in our cities—and for the same reasons.

SOME OF THE IMPETUS BEHIND planning stems from a very simple fallacy: that only governments plan grandly and only grand plans can bring order. In fact, of course, we all make plans and follow through on them. Many of us even achieve the goals we set out to accomplish. Food gets produced. Buildings get built. Cars get bought. No grand designer spells out a five-year plan for the millions of goods and services we produce and consume. Instead, we rely on that often-neglected process whereby prices reflect the demand for goods in relationship to their supply' informing myriad individual decisions.

Although the overall outcome subscribes to no one individual's particular vision of an ideal community, this is not for lack of planning. And this points up the real function of public plans. They do not establish plans where none exist; they instead replace the plans of individual citizens with those of government officials and the elite that curry their favor.

A telling demonstration of this is found in planners going so far as to instruct builders about the required appearance of their creations. Santa Barbara, California, for example, has decided that only red tile roofs, adobe-colored siding, and earth-colored signage will do for its commercial establishments. Baltimore's planners dictated that its transit facility must have “a cascade of steps,” a clock tower, a cafe with umbrella tables, brick walkways, structures of no more than three stories, and so on. Creativity on the part of the developer was, of course, certainly encouraged.

Even as Frank Lloyd Wright was creating his most magnificent buildings, planners had already begun gingerly to impose their visions of grandeur on city development. In New York, one of his buildings had to be constructed behind a wall so that its unconventional concrete-block walls would not mar the view from the street. Today, the structure no doubt couldn't be built at all.

Many planners and citizens deem this issue a spurious one. We cannot concern ourselves with a little loss of freedom of choice when the order and aesthetic appeal of our cities is at stake, they assert. We have to make sacrifices, perhaps even of our freedom, to attain the clean air, pure water, and uncongested roads we all desire.

In fact, however, this loss of freedom will not achieve the intended results. The reasons why are well summarized by Sowell: “The Godlike approach to social policy ignores both the diversity of values and the cost of agreement among human beings.” And, he adds, public planning “distorts the communication of knowledge.”

Planning involves prescriptions, and prescriptions inevitably raise costs. Developers haggle with city planners to come to some compromise; polluters litigate until they find a technology that will achieve a mandated reduction in emissions; employees demand higher wages in order to keep their employers in compliance with mandated “alternative work schedule” plans. These are all costs of reaching agreements among parties affected by public plans and their accompanying regulations.

Planning also distorts costs by obscuring some costs and increasing others. Banning multifamily dwellings, for example, cuts the supply of housing, and overall housing costs increase. Separating residential from commercial areas drives people into their cars as they commute outside their communities to work. Even as planners may resolve some particular perceived problem, their plans set in motion a series of unintended consequences and unacknowledged costs.

IF PUBLIC PLANNING WON'T WORK very well, are we destined to breathe foul air and creep along on congested highways? During the AQMD hearings, its proponents repeatedly charged that a vote against the plan was a vote for pollution. The contention is simplistic in its narrow presentation of the options.

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