> Allow people to build the cities they actually want, so long as they don't hurt or endanger anyone else.
Keep following this thought experiment. There is plenty of vacant unincorporated land that a group of people could get together and build whatever city they might want. That scale of investment could even get some legal leeway from state government. The type of blank-slate freedom that you're idyllically invoking ("build the cities they actually want") actually exists right now.
The intrinsic problem is still that of social scaling. Cities need people, and those people will inevitably have conflicts (and these conflicts become more intense with residents' capital buy in - cf a building full of owned condominiums versus rented apartments). Cue you've just reinvented laws but are perhaps calling them by another name (eg "policies" "user agreement" etc).
And so sorry, there is no blanket "striking the root" answer here, just a lot of messy tradeoffs. If you think eliminating some type of regulation (eg minimum lot sizes, height restrictions, etc) might change consumer preferences to make neighborhood grocery stores viable again, you can argue for that! But recognize that you're arguing tradeoffs (eg denser buildings now mean more traffic, taller buildings mean the fire department needs higher ladders, existing properties lose access to sunlight, etc) rather than some imaginary null hypothesis of a blank slate where everything will be correct by construction.