Are Traffic Lights Necessary?

It’s pretty amazing how many unquestioned premises actually turn out to be false upon examination of them. I saw these videos a few months back, so day before yesterday when I was reading Buchholz’s New Ideas from Dead Economists and bumped into this passage about Adam Smith’s invisible hand, I had a good laugh:

But if everyone charges ahead in his own direction, why does society not resemble anarchy, something like a complex highway intersection with broken traffic lights? Shouldn’t we hear a frightening crash when self-interests clash? If roads cannot be safe without a traffic authority designating who shall move, can a community survive without a central planning authority to decide who produces and what is produced?

Yes. Not only will it survive, but the community will thrive far more than any community with central planning. More surprising, it will surpass both in output and social harmony any economic system based on altruism.

Just to clarify, the argument is not that we should get rid of all our traffic lights (as may seem implied by the libertarian’s stance of getting rid of all central planning or even my title). But what is apparent from the two cases above is that traffic lights aren’t required everywhere, and certainly in some situations it would be better to have no traffic lights at all. But a central planning agency is going to have a much harder time figuring out where is where, and as usual there will be a tendency to create uniform rules rather than going through the pain of distinguishing. Only a free market in roads can determine where traffic lights are efficient and where they are not and continue to innovate new ways to encourage the smooth flow of traffic while maintaining safety.