It is difficult to draw a man out of his own circle to interest him in the destiny of the state, because he does not clearly understand what influence the destiny of the state can have upon his own lot. But if it is proposed to make a road cross the end of his estate, he will see at a glance that there is a connection between this small public affair and his greatest private affairs.... Local Freedom ... perpetually brings men together and forces them to help one another in spite of the propensities that sever them.
--Alexis De Tocqueville
The last two decades have witnessed a change in the role of federal government. In the 1980s, the Reagan administration deregulated many industries, reduced corporate taxes, and generally supported free market reform. In the 1990s, welfare reform, new federalism, and the rejection of a national health system are all promoting a decentralized form of government. However, tension between centralized and decentralized planning is evident in the housing market. Traditionally, the United States government has encouraged individuals to move to new places, predominantly the western United States. After World War II, the focus turned to the promotion of homeownership. Private firms have built the vast majority of housing, but they have operated under government restrictions (building codes, zoning laws, and complicated building permits) and promotion (direct subsidies and tax breaks for home mortgages). Cities have seen strong out-migration over the last fifty years and a general deterioration of inner cities. Tension between all levels of government, the developers, and homeowners seems to be increasing.
This paper is an inquiry into a growing trend in the housing market to establish more comprehensive planning and an institution that will maintain the community. This paper will first illustrate the nature and utopian inspiration of community associations, then describe the role of size in the effectiveness of the community association, and finally explain the effect that community associations can have on correcting market failures even in a large-numbers case.
Ebenezer Howard and the Start of Comprehensive Community Planning in the United States
Master planning a city is not a new idea. In fact, as far back as ancient Egypt, King Akhenaten (1352-1336 B.C.) planned and started to build a city where every building, street, and boundary was arranged in a manner that would please the solar disk god Aton. However, the idea of a community organization that resembles a community association goes back to the feudal times (Stabile 2000, 28-31). The lord of the manor would have legal and traditional control over the activities and inhabitants of the manor. The connection to feudal times is found in the planning of services.
Although the feudal times are not seen as a pleasant model for civilization, their social structure held some amount of mutual benefit. The lord would extract surplus product from the peasants who lived and worked on the manor. In return, the peasants would receive protection from invaders, pillagers, and any other violent bands. The peasants would, in effect, pay dues to the lord who in turn would pay dues to other higher-ranking nobles or the king. The dues would partially fund public goods. In this respect, the feudal system has similarities to present-day community associations--the local provision of public goods. Certainly, many community associations' prime attraction is their protective services. However, in feudal times, the mutual relationship was not set out of choice so the peasants' economic freedoms were also spent. In contrast, community associations give the opportunity of choice through differentiation of the institution, some say into future changes of the community association, and finally the choice to join a community association by choosing to buy a house in its jurisdiction. The difference is, of course, stark. Without the element of choice, the villagers would have very little say in the size or type of public goods to be provided.
Ebenezer Howard was the first major developer of the community association. Howard was appalled by the sight of London's over-crowed streets, an issue he felt was not questionable (1965, 42). His main goal was to move people out of major cities and into the countryside, where a more prosperous life could be made. Howard was influenced by many authors including Edward Bellamy's Looking Backwards: 2000-1887 (Stabile 2000, 37-41). In Looking Backwards Bellamy used a fictitious Bostonian of the Victorian era to describe his ideas about social planning. The Bostonian, Julian West, arises after a mysterious sleep to find himself in Boston in the year 2000. West finds a world in which poverty, pollution, and strife have been removed from the cities. The story continues to explain how Bellamy felt the world will be and how it would happen.
Bellamy believed competition created two problems: anarchy in production and unnecessary consumption, both of which created an enormous cost to society. The numerous small stores and differentiated products forced consumers to waste time searching all over town in order to know all of their options and the subsequent prices. Furthermore, only those who had the time to acquire all of this information would be able to get the most and best for the least money. Others would be forced to pick almost at random and hope for the lower prices.
To solve this first problem, he felt that only one company should operate in each industry. For example, Bellamy called for only one retail company, which would have branches spread over the city. Each branch would display the same products and prices, thus eliminating this waste. If this formula were replicated to all other industries in the nation, then more efficiency and organized production could be realized and a greater standard of living would be created for all.
Guaranteeing income to every human being eliminated the second problem. All citizens were granted the same income. This meant that storeowners and other breadwinners would not be forced to sell their goods for survival. Salesmen would not need to push goods onto customers, and business would no longer try to create artificial needs so as to sell more goods. People would also not need to emulate (in Thorstein Veblen's terms) each other by purchasing expensive goods (conspicuous consumption), because everyone's income was the same. No person would need to pretend to be wealthier through more spending, because everyone knew income was equal. Still, people had the option to spend their income on what they wished. If a family purchased a large home, then they would need to spend less on other items. Therefore, Bellamy believed people's true needs would be reflected in their purchasing.
Bellamy's plan for social improvement would come about naturally. He felt that industries left in a capitalist society would become more concentrated until each industry was run by a monopolist. At this point, the people would realize that capitalism does not work and elect a national board to run the trusts. Nations would centrally plan all production by their popularly elected board. Bellamy called his answer nationalization. All stages of all production would be run by the government and owned by the people. This nationalization plan included labor; all citizens would be required to serve twenty-four years in the workers army, and all could retire at the age of forty-five. Bellamy was impressed by the discipline and coordination of military life (Stabile 2000, 40) and believed that patriotism and an opportunity to move up in industrial rank would motivate all workers. Those few who would not comply would receive a sentence of solitary confinement and rations of bread and water.
Howard shared Bellamy's desire for reform and saw an opportunity to start the reform on a small scale. Howard was unsure about a revolution on a national scale and did not want to wait until the state of nature was so distasteful that people would elect a national board. With national revolution out of reach, he turned to small, self-sufficient cities that were much more obtainable. His optimism came from a short stay in the United States, where he saw many small new cities being constructed on new land. The thought of a fresh start greatly appealed to Howard. With this new start, small cities could spring up across the landscape. With master planning from engineers (physical...