City Journal Summer 2014

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Summer 2014
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Alberto Alesina
Regional Reckonings « Back to Story

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I would like to point out most countries have corruption of some sort. The real problem in Italy is tax evasion. The debt is a symptom of that. People want services;but then they evade taxes. I think you are aware of the tax evasion angle. There is finally some action on that score.
Southern Europe is particularly plagued by this ailment.
http://www.globalpost.com/dispatch/news/regions/europe/italy/120111/italy-tax-cheat-crackdown-mario-monti
Same things you points out can be found in US and it has to do with structure. And managing money is even bigger issue in US. Pensions are not as big an issue as other weaknesses. Proper management of local government debt is best managed by the state of North Carolina in the US. More and more states are heading in its direction. As a poor state, its local governments have avoided issues seen in richer states.

Duplication is a common problem in US. It is a result here of suburbanization. What is worse suburbanization is essentially a gigantic ponzi scheme. To understand why, I would suggest you visit the Strong Towns website. It also results in economic segregation, which will harm economy as minority majority era started in 2011 with new babies born that year (white babies minority for first time in history). How they will be educated will determine US future;but as the case stands they are educated on a standard that equates to developing countries (and that also not good quality developing country education).

I encourage you research the local government system of this country some more. And yes it has corruption here as well-expressed in different ways.
Delmonico, there are several aspects you forget.

1. In most loci, local politicians are derived from the populations they govern, continue to live in the areas they govern, continue to work in the areas they govern, and rub elbows every day with their constituents. They are less likely to adopt the priorities of lobbies or the nomenklatura. This is especially true in non-metropolitan zones where about 30% of the population lives, but even in the central city where I grew up (population 240,000), the mayor and the municipal court judges were the only full-time elected officials. The president of the city council was the head teller at a local bank.

2. It is very difficult for even an attentive voter to figure out, with all the strings attached to financing from above, just who is responsible for what policy. If you have a strict division of labor between levels of government, manual co-operation on matters of common interest, and simple and unrestricted revenue sharing from above to below, this would be less of a problem.

3. The electoral calendar compounds the problem. Every year you get a jumble of offices up on a confusing schedule and out of inertia quite a large number of specialized offices are elected. If we were on a strict quadrennial cycle (federal offices in year one, general county and municipal offices in year two, state offices in year three, and specialized local offices in year four), elected judicial offices in June rather than November, and quit electing clerks and treasurers and sheriffs, we might improve matters.

4. The electoral method compounds the problem further. A deficit of competition derives in part from liberal use of multi-candidate first-past the post and from strict party competition in areas where one or the other party (usually the Republicans) has no organization. Ordinal balloting and the alternate vote, single transferrable vote, and the selective use of jungle primaries would correct these problems.

5. I am sorry, I cannot think of a local pol where I've lived as scandalous as Charles Rangel or Barney Frank. And did you notice our state legislatures seem to be able to struggle successfully with fiscal problems, which our atrocious federal Congress cannot do?
It may seem to the theorist that local government is more responsive to "the people", but reality has shown this to be but wishful thinking, at least in America. As races become more local, they seem to become more susceptible to venality, corruption and special interests. Judging by the vote turnout, I've always though that part of this is a certain problem with those voters who feel local issues beneath them. At your next cocktail party, try this experiment; after you finish all giving your opinions on the sequester, Afghanistan and other items of great import, ask your guests about how they feel about the local sewer bond or the proposed state budget or such. All such issues that more directly affect such people (and which they probably have the most accurate perspective) are rarely felt as important, nor are peoples who can offer informed perspectives valued. Such is why the most local voters are usually limited to Realtors,home builders and the like.
1. Why not extend the mandate of an institution like the Pension Benefit Guaranty Corporation to cover the pensions of provincial and local governments? The beneficiaries of a bankrupt public pension system would be subject to cram-downs to restore the system to an actuarially sound footing. Also, why not fund such systems strictly from clips from employees' stated wages and salaries, to render compensation for public employees more transparent?

2. Why not discontinue all subvention of provincial and local governments bar two: small indemnity programs (e.g. disaster relief) and a single unrestricted subsidy the distribution of which would be determined by formulae (for which the arguments would be population and personal income per capita)? You cut the provincial government a check and prescribe a formula for any distributions the provincial government wishes to make to its county governments and any each county wishes to make to its municipalities. That way, you can assist impecunious regions with little moral hazard to profligate governments because the distribution would be impersonal and predictable.
This reads funny:

"First, localities should be required to run balanced budgets. Otherwise, their eligibility for bailouts from the national government will discourage them from spending within their means. "

I was expecting a comparison with California. But there a state-mandated system was what drove localities to get in over their heads with pensions. Same for the "arbitration" system governing public safety positions (mainly police and fire.)

Also, no mention of Silvio Berlusconi? No hint that self-centered, if not sociopathic leadership might be involved in Italy's problems?

Angels out of Heaven are needed to man aforementioned moral,considerate and knowlegable elected central government.
A moral,considerate and knowlegable elected central government is needed to set and enforce standards for work carried out at all lower levels of State and local government. Communication for all should be via a central computer,monitored and reported for correction as needed by well-qualified educated employees on each governmental level. This should save the expense and confusion of duplication of efforts and provide a forum for the people to address problems.
In urban planning circles, regionalism is used to do an end run around smaller, less intrusive local government ...

Fortunately regional government in my are of north Texas is mostly honest government (dfw airport authority, nttw authority, ntcog) .

In Spain decentralization has skyrocketed both corruption and overspending. It's been a terribly bad bussiness for us.
Professor, The real issue is this is far too utopian and doesn't add in the political i.e. human factor at all. "In theory" what you say sounds good; in practise, it fails, every time.
Decentralization is not passing government intervention to local levels; it is reducing or eliminating government presence in citizen's lifestyles.

Your arguments assume government should remain as intrusive in citizen lives as it is now.

All this that power politicians have now, which is the root of corruption, vanishes the smaller government gets.

Your ideas redistribute the power and corruption, not solve the negative effects of government power.