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 …