The great urban journalist Jane Jacobs probably had New York City in mind when she wrote about the potentially devastating effects of government-sponsored “redevelopment” on the inner city, but her lesson applies in many cities across the world. San Francisco’s Fillmore District is a prime example of an “urban renewal” disaster.

“The agency’s time there has not been a happy story,” Fred Blackwell, the new executive director of the San Francisco Redevelopment Agency, recently told the San Francisco Chronicle. “There is no way to make up for clearing large swaths of land and displacing thousands of people.”

In 1948, city officials declared the Fillmore, an ethnically diverse but largely African American neighborhood, to be “blighted” under the California Redevelopment Act of 1945. Over the next few decades, and with the help of eminent domain and federal funding, 4,729 businesses were forced to close, 2,500 households were pushed out of the neighborhood, and 883 Victorian houses were demolished. What the Fillmore got in return for its troubles—a high-rise residential project, some fast-food restaurants, and, late last year, a posh jazz nightclub—was too little, too late.

What went wrong? Several things. First, the urban planners of the day got it wrong: Rather than being “blighted,” the Fillmore was the center of the city’s vibrant, black commercial district, providing goods and services, gainful employment, and upward mobility for thousands. If it wasn’t broken (and in the eyes of many of the Fillmore’s residents and shopkeepers at the time, it wasn’t), it didn’t need fixing. Second, the economic opportunities and complex social networks that fostered economic empowerment and community spirit were fragile things: Hoping that they would boldly spring forth years after they had been dramatically disrupted was no more realistic than trying to unscramble an omelet. Third, the powerful politicians, bureaucrats, and contractors who profited from “redevelopment” had different short-term interests than those displaced by program.

What can be done to prevent future “urban planning” disasters? Several things. First, eminent domain must be drastically curtailed. (That’s no real loss: Bruce Benson argues forcefully that the “holdout problem” is a bogus rationale for eminent domain.) Second, rent control, which, as Paul Krugman notes, inhibits the creation of new rental property and contributes to the deterioration of existing rental properties, must be dismantled. Similarly, below-market housing mandates, which curtail the creation of new housing and therefore drive up housing prices, should also be scrapped. Third, the power of politicians to dole out favors to special-interest groups should be greatly restricted. (The harms of interest-group politics and other sources of “government failure” are ably explained in Beyond Politics, by William Mitchell and Randy Simmons.) Fourth, urban planners and residents themselves must better learn the nature and positive potential of the voluntary institutions, networks, and patterns that arise without government planning. (For details, see the Independent Institute book The Voluntary City, edited by David Beito, Peter Gordon, and Alex Tabarrok.)

San Franciscans better learn these lessons fast: Last June, the city’s voters passed a redevelopment initiative for the Bayview/Hunters Point area.