Ben wrote (his professors argument): >>Markets do very well at allocating goods like coffee or gasoline or clothes in the short term because of their flexibility in response to short term preferences. They don't do well in things like supplying housing in proper configurations and locations because housing is a durable good that once sold is relatively permanent (30-100 years or more). He had some statistics to argue that only a very small number of people purchase new homes and apartments. These people have strong preference for living in only *new* residences. Since they won't be living in the places more than 5 or 10 years they don't care if the place is ugly to most people or shoddily constructed. This leaves the rest of the population with only ugly and shoddy houses to choose from when they eventually need to move. Thus planners are needed to insure pretty neighborhoods, adequate transportation resources, etc. <<
Apart from what others have already said, I will add this: But what is it for formidable power that makes these planners realize these things better than the rest of us, i.e. the market?? If what your professor says is true, then it is a wonderful opportunity for an entrepreneurial enterprise (and a good business). The knowledge that there is a market imperfection [sic!] is a wonderful opportunity to make money from solving that imperfection - WITHIN the market. (the tragedy of the common is a wonderful example of something that is presented as a market problem, but was in fact a government problem: private ownership of the common was forbidden) There is nothing that the government can do, which private people cannot - save one thing: use coercion. There is no knowledge, that is available to government planners that would not be available to private planners also. Governments do not (in most western countries) command more resources than are available in the market - especially not when the international market is included. Neither intellectually, nor financially can the government thus be considered as having some kind of advantage over the market in this case (nor in any other), so that IF it is really a good idea: if the value of living in nice non-shoddy buildings for most of us is greater than the extra costs of building them so (and letting the people with preferences for new residences, you mention, stay without paying extra for the improvements) then there is no economic case for arguing that governments should be able to facilitate this better than the market - UNLESS IT USES COERCION (the only advantage it has over the market). So unless one thinks that having nice un-shoddy houses is enough justification to force and coerce otherwise sane people to do something that they would rather not, then there is no justification for ANY government intervention in the housing market, including urban planning. From my knowledge of urban planning, it is all about solving problems stemming from government planning - not market imperfections. sincerely Jacob Wimpffen Bræstrup Esthersvej 22, 2tv. DK-2900 Hellerup DENMARK Tel: (+45) 39 400 600 / 2020 3232 E-mail: [EMAIL PROTECTED] "Power threatens; wealth rewards: one eludes power by deceiving it; to obtain the favours of wealth one must serve it: the latter is therefore bound to win" - Constant's speech given at the Athénée Royal, 1819
