Don’t let the recent Supreme Court decision on the New London, Conn., eminent domain case fool you — the powers of local governments aren’t expanding, they’re actually receding.

Just check the rapid rise of homeowners associations for single-family communities as well as condominiums and cooperatives. These varieties of association-governed communities — the recent years’ crop of gated communities among them — are exercising an increasing number of land use and other powers that municipalities once considered their exclusive domain, or didn’t exercise at all.

From a base of 10,000 association-governed communities in 1970, the number ballooned to an estimated 260,000 last year. Since 1970, a third of all U.S. housing units have been built with rules (generally set by a developer) for a private association that a homeowner is obliged to join if he wants to live there.

Today such private neighborhood associations outnumber America’s general-purpose municipalities by 10-1. A stunning 52 million Americans live in them. They represent what’s been called “a large-scale privatization of local government.”

Despite Americans’ love of individual liberties, they seem quite willing to submit to the tight controls of “socialism, American-style,” writes Robert Nelson in his new book, “Private Neighborhoods and the Transformation of Local Government” (Urban Institute Press).

Some neighborhood association rules seem highly intrusive — dictating, for example, the shape and color of new roofs, fences or shrubbery, grass height, the hosting of late-night parties, and pet ownership. In the master-planned community of Green Valley near Las Vegas, clotheslines and Winnebagos are forbidden, no fowl or reptile or fish may be raised, the color of homes, material used and trims are regulated, and rules dictate permissible placement of birdbaths and the size of house numbers.

Why would Americans accept all this? Simple enough, says Mr. Nelson: To live close to people like themselves, to gain protection against unruly neighbors, and to get what they expect will be a high rate of return on their property investment.

Mr. Nelson believes private neighborhoods are so promising, so emblematic of a modern America based on diversity and choice, that he’d give a super-majority of residents in any neighborhood the legal right to secede from their municipality. Privatized neighborhoods would then have the power to run basic services and schools. And they’d be able to discriminate overtly, not just by age (like today’s thousands of “seniors only” developments) but presumably to admit only gays, only males or females, only ex-military or members of ethnic groups or a given religion. In a fundamentalist Muslim neighborhood, Mr. Nelson suggests, all women might be required to wear veils.

Predictably, such ideas spark controversy. The rise of privatized local governments, laments law professor Sheryll Cashin, “puts the nation on a course toward civic secession,” with “reduced empathy” toward outsiders and “polarization” within metropolitan areas.

My journalist colleague Richard Louv suggests the movement is symptomatic of “America fragmenting into subsocieties… instead of defining what we want — security, economic stability, community, home — and then trying to get it for all people.”

But let’s face it: secessionist impulses are hardly new. Starting a century ago, de facto privatization flourished with court-condoned zoning. Affluent Americans, moving to suburbs where they could form or control local governments, used state-granted zoning powers, initially intended to bar nuisances such as slaughtering plants, to require large (and very expensive) lots. In reality, they used the power of law to exclude people of less wealth (and, until the courts finally forbade them, people of color).

Mr. Nelson’s “solution” is to let even poor neighborhoods form their own private local governments, seize control of schools from union bureaucracies, and discriminate at will as the wealthy do. And in one sense he’s on track: localized democracy engages residents and reinforces civil society.

But could urban regions of wall-to-wall, privatized governments even dream of fiscal equity? Or form the shared public spaces vital to a healthy society of incredibly varied income and religious, ethnic and racial groups? Or support metropolitan-wide solutions in an era when all the challenges, from waste disposal to transportation, job training to environmental protection, are essentially regional?

There likely could be a smart middle ground: expanding rights of self-government to all neighborhoods, even tapping local government treasuries to help them. But even then, we’d continue to need municipalities to assure and provide such basic services as roadways, libraries, schools and public safety. And we’d need strengthened laws to prevent racial or ethnic exclusion, perhaps enactment of strict inclusionary zoning requirements so we can move toward communities that represent all of America, not just a privileged few.

Just ask yourself: As the young veterans of the Iraq conflict return home, most devoid of much personal wealth, will all these privatized neighborhoods welcome them? I fear not.

Neighborhood self-determination and self-governance are valuable. But the rules, goals — and open doors — of our society are just as vital, and neglected at our peril.

Neal Peirce’s writes for Stateline.org. His e-mail address is nrp@citistates.com.

Stateline.org gathers and posts news on state government and public policy. It is an independent element of the Pew Research Center and is based in Washington, DC.