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VI. THE HAYEKIAN PROPOSAL: PROPRIETARY GOVERNANCE

Imagine visiting a place that is just like Disneyland except for one thing: interloping food vendors were perfectly free to enter and roam the grounds. In this case we might imagine some problems of "free competition" similar to those for urban transit. If a legitimate entrepreneur were to lease space on the grounds and set up a large-scale restaurant selling barbecue ribs, the cascade of interlopers would strategically position their carts and wagons, perhaps also offering barbecue ribs, along the walkways leading to the entrepreneur's restaurant. In the face of the uncertainty about being able to appropriate the value of his investment, the entrepreneur might shrink from investing altogether. At the real Disneyland, we know, such "free competition" is not tolerated. Only a limited number of authorized concessionaires are permitted to operate, and according to contractual terms. These restrictions on competition are not, however, an example of intervention or socialism. They are practices of the free private-enterprise system itself. As in the case of a shopping mall or proprietary community, the entire arrangement exists within the ambit of private property and private contract. (3)

Just as we do not observe interloping problems at Disneyland, we do not find interloping problems at warehouses or private distribution centers. If thieves -- interlopers! -- were to descend on the distribution center and steal stereo equipment from the containers or warehouses, the private parties involved would be anxious to find a remedy. The distribution center employs security guards and the like, because it recognizes that otherwise shippers will take their business elsewhere. Like the concept of litter, the concept of interloping seems to be predicated on the existence of a public commons.

In American cities today the sidewalks, passenger shelters, curbs, streets, roads, and highways are a public commons. Access is free and husbandry is fragmentary, clumsy, and lackluster. There is no one with both the flexibility and authority to manage the resource and motivation to do so. There is no private owner. The authority to take action would depend on the concerted action of several inflexible and inert public offices.

The Hayekian proposal for urban transit would be to bring the problem fully within the ambit of private property and freedom of contract. That means privatization of the sidewalks, shelters, streets, and highways. Private ownership of the streets would mean the existence of a party that has the ability and motivation to deal with information problems, passenger facilities, network effects, disjointed pieces, destructive competition, interlopers, and curb-side conflicts. (4)

Hayek’s message has often been misunderstood by economists -- especially ones steeped in model building. Christopher Nash, a supporter of transit planning, says: "Thus the argument over public transport integration really is the traditional one of central planning versus the market" (p. 99). Yet Nash’s examination of these two regimes in transit is confined to equilibrium conditions within a rarified model. He compares (benevolent) central planning and atomistic private operators who pursue profits. Both regimes enjoy omniscience! The atomistic regime is characterized as "the market." Yet the private competition examined still takes place on socialized sidewalks, busstops, curb zones, and streets. Nash misconceives the traditional debate over central planning versus the market. He associates "the market" with rarified economic concepts that leave no scope for private, voluntary planning. Yet one ought to read "the market" to mean a set of legal rules (namely, a set giving much weight to private property and freedom of contract), and one should recognize that men and women acting within this legal framework organize competing pockets of conscious planning.

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