Doubtless the MTA vote yesterday to accept the Jets’ $720 million bid to build a new stadium on its 26-acre rail yard on Manhattan’s far West Side and to develop housing adjacent to it will not be the last word on the subject. But what’s clear is that the interest from private developers in the site shows that the stadium is not an essential catalyst for turning those 60 forlorn blocks into a flourishing new Manhattan neighborhood. It may even end up retarding the rebuilding.

Though Mayor Bloomberg proclaimed development of the far West Side crucial to New York’s economic future, he has sought to derail any development of the MTA site that competes with his plan to build a stadium there to lure the 2012 Olympics. In pushing his centrally planned vision, the mayor seems to have succumbed to New York’s political culture, which reflexively favors its idea of how the city’s economy should work over the more inventive visions of entrepreneurs.

New York’s political class has been trying unsuccessfully for 30 years to spark the redevelopment of the far West Side, beginning with its first plans for the Javits Convention Center. In 1975, when officials were making a mess of trying to replace the city’s existing convention facility, the dilapidated New York Coliseum, a young Donald Trump proposed building a privately financed, for-profit $110 million convention center on the far West Side.

After first dismissing Mr. Trump’s plan, the Port Authority then decided essentially to buy him out and do its own project on his site, upsizing Mr. Trump’s plans by $270 million. Meanwhile, New York state squeezed the Port Authority out and named the Urban Development Corporation, or UDC, previously a developer of subsidized housing, as the builder and operator of the new center.

What happened next demonstrates why government likes to elbow aside the private sector: to keep patronage power. The reborn UDC handed out Javits contracts to politically connected businesses and powerful mobbed-up unions. In the end, Trump’s original $110 million project cost $430 million, with a $10 million overcharge on the concrete alone, from mafia chieftain “Fat Tony” Salerno. For more than a decade, the Javits Center had the reputation as the most expensive, corrupt facility in the country.

Meanwhile, across America, other cities rushed to build or expand convention centers, completing more than 200 projects in the 1980s and 1990s despite a growing glut of space. Since the late 1990s, the American convention business has declined 40%. Cities that spent massively on their convention centers are getting little or no payback.

Just when industry growth was halting, New York was finally kicking the mob out of the Javits Center. Quickly, local hoteliers and state pols sought to expand Javits to cash in on all that convention business that they imagined New York could win – but that didn’t actually exist. Mr. Bloomberg subsequently made expanding Javits a centerpiece of his far West Side/Olympics plan.

But convention centers aren’t even the most unproductive publicly financed urban mega projects. That honor goes to stadiums and arenas, with their big subsidies to rich team owners and players. Starting in the late 1960s, municipalities began churning out these facilities, thinking that they would prompt new economic activity. They’ve failed. As economist Andrew Zimbalist notes: “[I]ndependent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facilities construction and economic development.” The far West Side plan’s centerpiece: a stadium/convention-center complex, joining together two of the worst economic-development engines imaginable.

Advocates of the far West Side stadium acknowledge that stadiums don’t spur development, but they argue that what the city wants is different. Their models are new projects like one in Pittsburgh that encompasses two new stadiums on abandoned land along the Allegheny River. How is Pittsburgh trying to overcome the deficiencies of stadiums as economic-development tools? Officials are building a new light rail line to reconnect the area to downtown. The local development authority has rezoned the land to create new sites for office and residential building and has provided new access to the waterfront through a riverfront promenade. In short, government is doing everything that sensible urban planners would urge to unlock an underused waterfront’s potential. But when a city does such things, it doesn’t need to make a stadium the centerpiece of its plan; it isn’t what propels redevelopment.

Nonetheless, Mr. Bloomberg argues that New York needs a stadium to attract the Olympics, and it needs the Olympics to impel new projects that otherwise wouldn’t get built. These days, however, the real impediment to development in New York is government itself. It warehouses vast tracts of valuable land and uses outdated zoning laws to bar developers from constructing projects there without getting zoning variances, giving the pols a big say in almost any significant building in the city, with a pay-to-play overtone.

Even worse, just look at New York’s waste of valuable waterfront. The city boasts more of it than any other American city, but much of it can’t be recycled for new uses without government approval because it’s still zoned for manufacturing. Having sat unused for years because there is little demand for manufacturing space in New York, large swathes of this land have been turned into parkland by the state. Government is thus transforming formerly productive land into land that must be forever supported by taxes, even while interest in waterfront development skyrockets. For example, a bidding war is currently raging over one of the few sites – a pier near 15th Street – that the state is making available for commercial development. The winning group may invest $150 million – an indication of the kind of investment that New York could spark if it made more waterfront available.

Ironically coming full circle, the organizers of the city’s Olympics bid plan to use government controlled land on or near the waterfront for everything from their stadium to a beach-volleyball site. On many of these beautiful sites, what began as an economic-development plan will leave the city with nothing but unproductive leisure facilities.

Given the growing interest in the far West Side, why is the city pushing its plan? One reason: Too many politicians, including the mayor, have little confidence that the freewheeling free market really works. The mayor simply can’t believe that privately financed proposals for the far West Side, such as Cablevision’s $600-plus million one, were for real. But Cablevision’s proposal stirred up private-sector interest in the site, forced the MTA to extract maximum value from the deal, and prompted the Jets to extend their bid by adding partners to develop residential and office towers around their proposed stadium. No stadium was needed to spur far West Side development, just government’s willingness to let the market operate.

Of course, politicians love big projects because they make them seem like visionaries. Then there’s the financiers who’ll benefit from the giant bond offerings, the hotel industry that hopes to see even a marginal increase in business – no matter what the cost to the city – and the construction unions that see gigantic public projects as more desirable than market-driven ones because they’re usually subject to union-friendly regulations. With all these special interests to feed, government will gladly crowd out the private market.

If state-sponsored megaprojects aren’t right for the far West Side, what is? For an answer, consider Midtown, SoHo, and Greenwich Village. None is the product of a centrally planned vision; each has evolved over years, with diverse uses not only sharing and feeding off one another, but also competing in ways that ensure that the neighborhood will get maximum value out of the land. Around the country, cities are discovering that this is how districts grow.

So the city’s first task should be to create the conditions for the marketplace to build on those 60 blocks of parking lots and ramshackle structures only as and if demand requires it. Government should continue rezoning the area for denser residential and commercial uses, and it should extend the Number 7 subway line into the district, since better transportation will spur its development (that kind of infrastructure improvement is government’s proper sphere).

I’m optimistic enough to think that someday – though certainly not next year – Gotham’s economy may regain the vibrancy of the late 1990s.If that happens, and the city adopts a plan that does more good than harm, the area will develop in a variety of uses that aren’t part of some grand government vision. It won’t happen at once; it may even take more than one economic cycle; and no one politician will be able to take credit for it. But the choice is clear. New York can remember what built a great metropolis, or it can head down the path that other cities are rejecting after years of failure.

Mr. Malanga is a contributing editor of City Journal, from whose forthcoming issue this is adapted.