Monday, August 18

Tragedy of the Anticommons?

I remember studying the "tragedy of the commons" in a college decision theory class. It all fit together so precisely. A group of self-interested individuals would each exploit any limited resource that was held in common ownership. If a medieval town held an open pasture in its center, inevitably the various farmers would scramble to cultivate as large a piece of it for themselves as possible. Since no one individual had any incentive to preserve the land for future cultivation, eventually the commons would be overused and destroyed. One of the ways to avoid this outcome is through privatization. Ensure that each of the farmers will have to be responsible for their own piece of land, and they will have more of an incentive to care for it responsibly.

But what happens if the tragedy of the commons is reversed? What if excessive privatization leads to a level of fragmentation that prevents the land from being used to its fullest potential?

The New Yorker just published a review of a new book by Micheal Heller that explores just this possibility. It's entitled The Gridlock Economy, how too much ownership wrecks markets, stops innovation, and costs lives. He makes the case that if ownership is fragmented into a number of smaller pieces, each individual owner becomes a "gatekeeper." Any initiative that involves the use of many properties at once must seek and obtain permission from all of the gatekeepers before moving forward. Sometimes that requires an absolute consensus which endows each of the gatekeepers with significant amount of leverage - and the power to stop everything completely. From the review:

"When something you own is necessary to the success of a venture, even if its contribution is small, you’ll tend to ask for an amount close to the full value of the venture. And since everyone in your position also thinks he deserves a huge sum, the venture quickly becomes unviable. So the next time we start handing out new ownership rights—whether via patents or copyright or privatization schemes—we’d better try to weigh all the good things that won’t happen as a result. Otherwise, we won’t know what we’ve been missing."

Voilá, gridlock. And this has everything to do with urban placemaking. The urban form is extremely complex, an organism with overlapping uses from thousands of different interests. With so many people inhabiting such a small space, even the simplest project requires a high level of collaboration. Developers facing these costs may just eschew the whole mess and spread outward further where there are less interests to please. Ultimately, a fragmented system of ownership will tend toward a fragmented and inefficient system of land use, that is suburban sprawl with individual plots each spatially set off from each other in discrete chunks.

Eric Freyfogle attempts to tack between the two "tragedies" in his book On Private Property,

"These two tragedies, of the commons and of fragmentation, provide good background for looking at the pluses and minuses of allocating power over land to particular individuals. How much power should individual owners have, and how stable should their power be? How much managerial freedom should they possess? On the other side, what power should the community as such retain so it can constrain disruptive land uses and otherwise coordinate activities for the good of all?"

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