"Before snowfalls, a parking space belongs to the one who occupies it: you leave it, you lose it. In wintertime Chicago, however, excavating one's car changes the system of property rights."
The most important concept in all of economics is property rights. Most of what people do can be explained in terms of establishing, protecting and maximizing the value of personal property. The property may be real estate, or it may be intellectual property like a copyright or trademark (or, these days, even a patentable "business process.").
Or it might be a parking space. Observing how parking spaces are allocated in Chicago provides a fundamental lesson in property rights economics.
Chicago is not New York: people here drive—a lot. So people need to park. That ordinarily is not a problem, as Chicago has many in-town neighborhoods off its main streets where parking usually can be found with just a little looking.
But things change when it snows. Plows hit the streets early and hard. A mayor who cannot get the streets cleared fast cannot be re-elected here. Most snow falls overnight, meaning that plowing a big snow entombs all cars parked on the street by the time their owners awake. With our own cars snug in our garage, my sons and I love to measure how high the plows pile snow against our neighbors' cars parked on the street. Snow up to the top of the windows is not uncommon. Sometime just a radio aerial marks a car's location.
The city's job ends once the snow is plowed from the driving lanes, leaving car owners to their best devices in extricating their vehicles. Digging out creates a natural parking space, a rectangular black patch squeezed fore and aft by white mountains tossed up by plowing. These clear spots are valuable, for the mountains between the cars reduce considerably the overall amount of parking space at the curb.
Before snowfalls, a parking space belongs to the one who occupies it: you leave it, you lose it. In wintertime Chicago, however, excavating one's car changes the system of property rights. Once car owners dig themselves out of their snow cocoon (Chicagoans carry snow shovels in their trunks for this), they claim the place they cleared as their own. How? Diggers routinely place lawn furniture, buckets, two-by-fours, bar stools, orange highway construction cones and other markers in the space they have just dug out. That means the space now belongs to the excavator. When he leaves, the markers dictate that the space must sit empty until the owner returns. "People do look at these spaces as their own property," a local law professor comments.
The space belongs to the original snow-mining engineer until the snow melts along the curb. Woe betide anyone who would take that space while its owner is away. Others in the neighborhood—who have undertaken similar excavations and staked out their own spaces—will protect the space for its absent owner. Broken windows, scratched paint, deflated tires and other punishments often follow parking in a space designated by whatever debris marks the excavator's property.
Perhaps surprisingly, this vigilante justice is of no concern to the forces of law and order. Mayor Richard Daley said last winter, "If someone spends all their time digging their car out, do not drive into that spot. This is Chicago. Fair warning." Chicago writers, though, decry the "dibs system" regularly in the papers: Studs Terkel calls the system "a commentary on the growing oafishness in our lives." Local columnist Eric Zorn gets national coverage in the Wall Street Journal for his repeated excoriation of those claiming dibs on spaces they excavated. In the Chicago Tribune, Zorn calls for "a bold leader, backed by a frustrated silent majority," who can "toss this tradition onto the parkway of history."
The Chicago snow system is an interesting story in its own right, but better, it teems with economic lessons about property rights. First, there must always be some mechanism to allocate scarce goods. But sometimes, private property (either a formal legal claim or an informal right respected by others) is not necessarily required, nor necessarily desirable. Property is costly to define and enforce. In good weather, open access to street parking requires no definition or enforcement of property, and allocation on a first come, first served basis works well enough. However, open access as a property-rights system works less well when scarcity increases. No one claims parking spaces on the street except in winter, when conditions reduce the number of parking spaces.
Second, government is not necessary for the definition and enforcement of personal property rights. The Chicago system operates totally privately. Other than columnists, the main complainers are newcomers who don't know the system until they get a broken mirror. Admittedly, this is a cost of operating the system (although, naturally, just a one-time cost).
In addition to car damage, the Chicago system is costly in keeping spaces from being used while their owner are away. But that is true of any private property, by definition. A Northwestern fraternity could, in principal, use my house while I am away for the weekend and don't need my bedroom, but the costs of my allowing that are obvious. Private rights are not free lunches, except in nirvana.
The tough issue is whether the Chicago system is better than any real-world alternative. Writers who condemn the practice treat the situation as one of mere distribution of a given amount of parking space. But an economist would predict that permitting private property would incite others to expand the amount of space. And so it does. Not only do those who dug out their cars the first morning have a space thereafter, but neighbors whose cars were not on the street begin to hack away the snow masses created by city plows to make a space for themselves. As black patches increase, the snow melts fast along the cubs. In both respects, the result is not just distribution of a given quantity of space, but creation of more space.
Critics might respond that the government could come a second time and move the mountains it made. But again, at what cost? It is hard to disagree with Mayor Daley that individuals will do a better job of freeing up curb parking than the city could do. Would you prefer to dig out your own car, or have city workers do it? How many aerials would the city break? (Many Chicago stories report how you can hire somebody to dig out a spot for $20, meaning there are gains from specialization at work here, but that's another topic altogether.)
The nirvana fallacy works much mischief here. While neighbors applaud neighbors' work, outsiders treat rewarding that work as "oafish." If ad hominem attacks must be made, why are those who do not dig more entitled to spots than those who dig? Zorn defends letting those who didn't dig take spaces from those who did this way: "Sometimes we lives with a little unfairness in the name of building a stronger, more livable communities."
In the end, then, the Chicago snow fracas is a re-run of so many other disputes involving property. Some find it unfair to exclude others from using a resource. But the ability to exclude provides the incentives to create more resources, reducing scarcity over time. Popular writers focus on perceived unfairness. But economists observing the controversy will see the wealth-increasing invisible hand at work again—this time hoisting a snow shovel.