Maximizing the economic return of place at the expense of non-economic benefits (or at least economic benefits not realized by the property owner)

David Sucher, the author of the great book City Comforts, has a companion website and blog. I ended up commenting on a recent entry, "And who says that right-wing intellectuals can't be dreamers, too?" which discusses privatization of public spaces.

He wrote:

It's not only Left-wing intellectuals who are out there at the edge. The libertarian Right offers up its own imagination, Public and Private Spaces:. ...most public spaces (streets, sidewalks, etc.) should actually be private (owned, e.g., by homeowners' association)...

I've seen such a concept discussed in many places, particularly the much-missed Transport Blog, where it was raised extensively in relation to highway/railroad corridors (which ultimately offers the most persuasive example for eminent domain.)

The idea of privatizing the entire world is quite intriguing and not a bit scary and I have thought about it quite a bit. And since it is simply not going to happen, I can be pretty calm about discussing it. It's entirely impractical, thank goodness, putting aside any issues of social equity etc etc. because of the issue of transactions costs; it's just too much hassle for business. But it's good to discuss things, even far-out and remote ideas.

My response was to apply a little thinking involving the concept of exchange value vs. use value of place (discussed at length in Logan and Molotch Urban Fortunes: Toward a Political Economy of Place). David's right that it's good to discuss things, because it helped me see something that I hadn't thought through fully.

I wrote (the last sentence has been edited):

In some respects, through Business Improvement Districts, it's already happening.

I don't agree with the Volokhs etc. The rentiers will always focus on the exchange value of place at the expense of the use value of place.

At the point where the use value no longer provides marginal returns to the exchange value, privateers will no longer focus on improving the use value of place because such investments no longer [contribute positively to profits].

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A good example of this is the Hines proposal for redeveloping the Old Convention Center site. It maximizes the use of the space for office buildings and condominiums. Minimizes retail, because it's harder to lease, and make work without some creativity. Limits "unprofitable" public spaces and plazas to the bare minimum that they think they can get away with, despite the requirements laid out in the original RFP for the site...

Index Keywords: privatization