In the latest issue of The Independent Review, Stan Leibowitz reviewsUnchecked and Unbalanced. I suppose that the right response from me should be "Thank you for taking the time and trouble to review my book" rather than quibble with the review. But I cannot resist. He writes,
Kling avoids a discussion of the proper tasks of government and instead moves to a suggestion that what he calls functional governmental units compete to provide specialized services, such as picking up the trash, previously provided by the local government monopoly. He also suggests that groups such as neighborhood associations be allowed to form as if they were "charter" groups (analogous to charter schools) that would take on most of the activities currently associated with city or county governments. These arrangements would increase the number of decision makers, thereby decreasing the influence of the average political decision maker.
A more fundamental question he does not consider is why any form of governmental unit needs to pick up trash as opposed to having private companies do it. And why does everyone in a neighborhood need to choose the same provider, as he suggests? I spend the summer in a small mountain community where everyone in town transacts with one of several private firms to pick up his household's trash. This arrangement seems to work fine.
Surely, if we all lived in small mountain communities we would need less government. But imagine purely private trash collection in an urban area. If you pay for somebody to collect the trash in front of your house, then instead of paying for my trash to be removed, my strategy is to put my trash in front of your house and free ride on your trash collection.
Yes, there are Coasian bargains or rules that can prevent this. But the enforcement costs are a lot higher in an urban area than in a small mountain community.
There are two reasons why I wrote a book on competitive provision of government services rather than an argument against the very notion of government services. One is that other people can write and have written books claiming that we need no government services. The other reason is that in an urbanized society, doing away with government services comes across as implausible. Instead, my approach is to suggest experiments that reduce the monopoly power of existing governmental units.