The United Nation’s recent State of the Future concluded: “People around the world are becoming healthier, wealthier, better educated, more peaceful, more connected and they are living longer.” The report credits economic growth and the pro-market policies and institutions that facilitate growth. Adam Smith is back and it’s high time. For most of the post-WW II years, elite opinion had prescribed variants of state-guided policies to prompt economic growth. Those policies failed spectacularly and much of the world is now recovering. The lessons have even made their way into U.N. reports.

The bad news is that these lessons are not yet accepted by most of those who concern themselves with cities – most of whom still prescribe more controls and a smaller role for markets. They call it “smart growth” and “sustainable development.” But this is neither smart nor sustainable.

Cities have rightly been called the engines of growth. Indeed, economies grow when and if entrepreneurial discovery thrives. Cities fulfill their role as engines of growth (and they succeed) when they become congenial hosts to entrepreneurial discovery. But this requires that they evolve favorable spatial patterns. This includes arrangements that internalize positive externalities while avoiding negative ones. When potential locators prepare to bid for sites, they first evaluate alternate sites, processing a very large number of trade-offs. These include nearness to beneficial locators and separation from harmful locators. Using her own language, Jane Jacobs wrote about this many years ago.

The tricky part is reconciling all of the competing bids. This is immensely complex and requires functioning land markets. No group of planners can reasonably duplicate any of this. But the smart growth platform calls for more controls, more planning and a lesser role for land markets.

Planners and others now rationalize all manner of interventions using climate change concerns. But it is worth recalling that all the “doomsday” forecasts of the past have been spectacularly wrong. They all extrapolated the continued application of existing technologies. But this makes less sense now than ever. Anyone want to buy my 5-year old computer, camera, cell phone, TV, etc.?

If the climate change concern is credible, then the logical policy response is a carbon tax. Avoiding the carbon tax option but instead invoking a thousand “green” policies is not the way to go.

Development controls give us housing prices in many U.S. cities that were, until very recently, higher than ever. The recent downturn has hardly made a dent. Housing experts have pinned most of the increases to development controls that have pushed up the price of land.

Prices are supposed to adjust to reflect changing realities, but housing scarcities have been imposed by planners and regulators. The resulting affordability problems have hit young and aspiring homeowners the hardest. The dream of home ownership became a reality for most U.S. families in the post-WW II years, but in many cities (in California, Florida, and the northeast) it is now beyond most middle income families. This is a serious and nasty reversal.

Many “green” policies may make elites feel good about themselves, but these are usually people who own homes or who can afford pricey ones. The fact that their favorite policies have nasty consequences seems to get very little attention. The people who love to refer to themselves as “progressives” fall silent. For all of their concerns over “equity,” they are responsible for a new division between “have” and “have nots”, those who own and those who are kept from owning their own home.

The pathetic response from the regulators is to require that developers include a certain amount of “affordable housing” in new developments. But this only adds to the problem. Developers cannot be expected to be charities and the costs imposed on them come from somewhere. We only get more problems on the housing supply side. The cure is worse than the disease.

None of this is smart or sustainable. There are better adjectives and they are not pretty.