Arnold Kling  

Resolution Authority for Governments

Government as Deus Ex Machina... My Vacation Plans...

Paul Romer is always interesting, and especially in this podcast with Paul Kedrosky. In the last quarter of the interview, the discussion turns to badly-performing cities, and Romer speculates that we need a workout procedure that would allow a city government to move into completely different hands. As with troubled banks, one could argue that we need a more effective resolution authority for troubled governments.

Possibly related: Tyler Cowen on privatizing local government.

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CATEGORIES: Political Economy

COMMENTS (3 to date)
david writes:
Romer: [...] I mean, you know, just hypothetically, imagine that the residents in some city had the option to vote through, say, a referendum process to place the entire city political structure under the control of some, you know, like reorganization authority. You know, it could be a state authority, it could even be national. And suppose that authority also had the ability to just rewrite every, you know, every contract, every obligation of the city. [...]

So, elected dictatorship?

John Jenkins writes:

We already have that authority. It's called the United States Bankruptcy Court. See 26 USC ยง 901, et seq.

MernaMoose writes:

one could argue that we need a more effective resolution authority for troubled governments.

People have argued that for thousands of years, and they've come up with at least several hundred different solutions:

1) Coup, assassination

2) Barbarian invasion

3) Civilized neighbor invasion

4) Nobel and/or intelligentsia revolt

5) Peasant revolt

6) Dynastic collapse

7) .....

Observe, few options on this list do not involve violence of some kind. Which of course is the antithesis libertarian philosophy.

It's like a ying-yang thing.

So, does this mean California will soon be open under new management?

Personally, I kind of like the idea of Legislatural Combat. For example Texas, which is financially much better off than California, cuts a deal to share some of the spoils with New Mexico and Arizona, thereby obtaining a path to the California border.

The Texas state legislature promptly conquers the California state legislature and annexes the territory. All California state employees, all up and down the ladder, are immediately sold into slavery (although the value that California state employees fetch on the open market is so low, that the entire auction amounts to a net loss for Texas). Then, any California residents who are found to not love America (as evidenced by their refusal to shout "Whoooo-eeeee!"), are forced to leave it.

Next thing you know, Texas figures out that they now have to pay California's debts and decides to abandon ship. California is left without a state government. California suffers two days of anarchy, after which Mexico reclaims it.

Nancy Pelosi then becomes president of Mexico. Mexico suddenly realizes it made a big mistake, but it's way too late.

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