Arnold Kling  

Competitive Government

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Ilya Somin writes,

Because California is extremely large and controls most of the warm-weather coastal territory on the West Coast, people have been willing to put up with a lot of bad policies for the opportunity to live there. Competitive pressure on the state government would be much greater if there were three or four states occupying California's present territory instead of one.

The theory and some of the practical issues involved in this are discussed in the widely-unread Unchecked and Unbalanced. There, I argue against the notion that there are scale economies at work in large governmental units. If that were true, then places like Denmark would be failed states. And Switzerland would be a hopelessly failed state. Each Swiss canton is about the size of a county in the state of Maryland, and yet the cantons have more autonomy than U.S. states. Below the canton level, there is local government.

Basically, governmental units in Switzerland, including the central government, serve populations that are an order of magnitude smaller than governmental units in the United States. We could carve a state like California into a hundred statelets and the result could still function as well as Switzerland.

I think it would be even better if location and government were separated to the maximum extent possible. I would like to see governments operate as franchises. I want to be able to select a different franchise from my neighbor. But that model does not have a working example like Switzerland that you can point to.

The problem with competitive government, or radical federalism, is not that it would suffer from diseconomies of scale. The main problem is that the incumbent governments will fight tooth and nail to stop it from happening.

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CATEGORIES: Political Economy

COMMENTS (12 to date)
Steve Sailer writes:

It definitely works with school districts, where smaller is better. The most obvious natural experiment are Southern California's San Fernando Valley (dominated by giant LAUSD and by LA City government) versus San Gabriel Valley (broken up into many competing school districts and municipalities).

I was at a 4th of July Party in the San Gabriel Valley and when it came up that I was from the SFV, the guests (mostly middle class blacks from Altadena and Pasadena) all talked about how featureless the SFV was and how they never had any reason to go there.

They have a point. For example, despite a population of 2 million, the SFV didn't get it's first performing arts center until the spring.

jsalvatier writes:

They probably don't have to fight too hard if there's no pressure *for* increased federalism.

PrometheeFeu writes:

I overall like this idea but I think there are obstacles:

There would be a high incentive for a government to borrow a lot and then when the taxes must be raised to pay for all that borrowing the citizens of that government all jump ship. Not very good for creditworthiness.

I also see some problems with jurisdictions: If we contract, we can agree as to the jurisdiction in the contract. But what if you claim I harmed you in some way. Whose government resolves the dispute? What if our governments disagree as to whether I harmed you or not? (Let's say my government abolished copyrights and yours didn't and I copy your work.) What about if a government setup a judiciary that is purposefully biased in favor of its citizens?

R Richard Schweitzer writes:

Isn't the real issue one of how the functions of governments are determined, rather than territorial (and geographic) factors (except as those are determinants)?

mike shupp writes:

Uhhh... if California were split into ten smaller states, they would probably send 20 Democrats to the US Senate, rather than 2.

Are you guys quite sure the main objection to this sort of subdivision comes from local incumbents?

... or Maryland versus California for that matter. However, see, also, Vermont versus New Hampshire, or North Dakota versus South Dakota, or New Mexico versus Arizona. There is more to this than any one dimension.

I do accept the major premise: economies of scale do not (necessarily) apply to government.

"In Switzerland, everyone is a president." Civic engagement begins at the commune level; and within the communes, citizens committees plan annual festivals and similar events. Participatory responsibility is the better name for "democracy."

Martigny is the name of a village, but also the name of the larger district, the “commune” or a “municipality” in which are ten other villages. The commune of Martigny is one of thirteen that comprise the canton of Valais. Valais is one 25 cantons in the Confœderatio Helvetica. As a commune may encompass one or two dozen villages, leaders (political or social) have commonly referred to “our little republic” meaning the municipality. Swiss national citizenship actually begins with the commune, not the canton or the confederation. Article 37 of the national constitution is explict: “Every person who has the citizenship of a Municipality and of the Canton to which it belongs, has Swiss citizenship.”

In other words, Switzerland, as a nation grew organically from the unions of villages into communes and communes into cantons, which then formed the Confederation.

That is not the same thing as chopping up California, intriguing as that is to contemplate.

Steve Sailer writes:

Right, there's nothing organic or localistic about the political origins of California in contrast to Switzerland. It was always settled from long distance by imperials powers: Spain and then America.

Lars P writes:

mike shupp has a good point in that breaking up California would have to be done in a way that the power balance in the senate doesn't change.

Fortunately, it could easily be broken into 2 blue + 1 red, and probably also 3 blue + 2 red. Like most of the country, California is mostly red by land area.

Hasdrubal writes:

I've been noticing a lot of appeals to economies of scale lately: Single payer health care would be more efficient to economies of scale, a single national police force the same, larger governments would be more efficient than smaller.

The economies of scale argument generally seems like a red herring attempt to justify the person's preferred policy.

It's true that below the efficient scale you can get more efficient by increasing your size, but I don't know of anything that says beyond that minimum _all_ productive activities _always_ benefit from increasing scale economies. It seems more like an empirical question of whether a specific organization can benefit from economies of scale by growing beyond its current size.

Guy in the veal calf office writes:
I would like to see governments operate as franchises.

Like in the science fiction work Snow Crash.

Jean Parmesann writes:

U&U: Reasonably priced at $23.78. Brilliant move by the publisher. Helps answer the question of why it is so widely unread.

steve writes:

I loved Snow Crash. No idea how to get there from here though.

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