First off, as an empirical matter, many homeowners’ associations are associated with whole new subidivions from the word go, and are not formed by the individual choices of homeowners over time. But even if not, arrangements which were economically efficient at one point may not be decades down the line; time was that the major business in what’s now Silicon Valley was orchards.
I thought I tried to account for this, but I’ll specify what I had in mind a bit further. Let’s say there is just one owner at the get-go, a developer selling units in a complex, or something. (My father lives in a development of just this sort.) When setting up the initial contract, the price they’re able to fetch (their ability to fill all the units) will be a function of both the pervasiveness and intensity of different levels of desire for control. So maybe 51 percent of prospective owners have a mild preference for more control. Under a zoning regime, they get their way. But those who want more latitude may care more about it, with the result that the effect on the price at which the housing market clears is nevertheless lower at higher levels of initial control. And when the initial allocation is inefficient, it’s at least easier for people to buy their way out, either wholesale or piecemeal. The horizons of control over each piece of property can at least be clearly specified and altered. That is, there’s greater potential for escape within the same geographic location, even if there are significant transaction cost obstacles here, as well. Under a zoning regime, there’s no lasting way out. I don’t know how significant the practical difference is here, but I think the advantage, though perhaps small, still cuts in favor of the private option.
If Julian actually means to express a moral preference for private contracts over government accountable to voters… well, I just have to disagree; I tend to favor “one person, one vote” over “one dollar, one vote” when individual rights are at issue, and those are the choices on the menu.
Actually, I prefer not to have any “votes” when it’s at all avoidable, not where rights are concerned. The characterization of a preference for private contracts as “one dollar, one vote” is grossly misleading. It’s still, after all, one person deciding to enter into the contract or not to. But leave that to one side for the moment. What we’re talking about, after all, is property rights on both sides. One person’s property right over his lawn, as opposed to the property in the same lawn of the other homeowners, created by contract. The two-item menu Charles sets up is a red herring designed to make this look like an “individual rights versus economic power” question, when, again, it’s a conflict between two sets of individuals, each adducing a property claim of a sort. The individual’s right to display the flag, after all, is dependent on the very same contract that establishes the restriction.
There’s a further reason to prefer private contracts to democracy, in zoning just as in sex. Just as the prospective partners in my original example have a special role in deciding whether I get to sleep with them, one the sherriff doesn’t have, the original (or previous) owners have a special legitimacy when it comes to imposing restrictions on that property. At least prima facie, anyway, it seems pretty intuitive that someone who cleared the land and built the house (or the person to whom that person subsequently assigned it) is entitled to stipulate the terms on which she’ll transfer it to me, in a way that some stranger living three blocks away isn’t.
So ownership of property — even simple, tangible property, never mind more obviously artifactual things like stock in a company, or, heaven forfend, mutual funds — is actually a fairly complex concept, granting certain rights to the property and limiting others to balance the rights of the owners against other people in society at large. And that balance is resolved by different societies in different ways. How? There are only two possibilities — by main force, in a continual Hobbesian struggle of all against all — or by some sort of political process.
This is along the lines of an argument my erstwhile thesis mentor Liam Murphy makes in his book (with Tom Nagel) The Myth of Ownership… and Liam makes the same mistake. Just about all of our rights are underdetermined at the edges by pure moral theory. From speech to privacy, it’s probably necessary to have the edges drawn either legislatively or by common law evolution, or some other such process. But this “constructed” nature doesn’t vitiate the core of the right. The fact that we need politics to deliniate the borders of libel law or fair use under copyright doesn’t entail that all of free speech is up for grabs, that a majority may therefore decide to “draw the boundaries” in a way that excludes all speech promoting a disfavored religion. When politics is needed to specify boundaries, best to do it far in advance, and as neutrally as possible: Use politics to establish a framework that makes further politics unnecessary.
The difference, in short, is that when a homeowners’ association goes bad, the people affected have less recourse against it than they would against government. For someone who values individual liberties, that doesn’t strike me personally as a good deal.
Whose individual liberties? Once a binding contract is in place, after all, each individual neighbor has her own right to demand compliance with the terms. Most exercises of freedom require the ability to make binding contracts with others, to be able to count on other parties fulfilling their ends. If “recourse” here means allowing people to opt out when you don’t like the parties on the other side (they’re too rich, I guess), I don’t see that as particularly conducive to liberty.