Abstract
This chapter sets out a comprehensive theory of local government which clarifies the purpose of the institution as well as the structures required to ensure that its remit is achieved but not over-reached. To do so, I first explore the reason for local government and the danger that it poses to its citizens as well as the various theories proposed to counter this danger. Following this, I explore additional theories of local government with emphasis on the most economic design of the institution. I then propose a comprehensive theory of local government which borrows from the best of the extant work to explain both the purpose of local government and how this purpose might be safely realised. I conclude with some remarks on how the comprehensive theory of local government is an essential foundation for any local government reform aimed at ensuring the institution is truly closest to the people and serves the people best.
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Notes
- 1.
It is not a matriarchy though, because over the years Jonquil has lost the right to lead to a younger usurper (but somehow always manages to bounce back).
- 2.
This sort of example is what has prompted Hittinger (2003, p. 280) to correctly remark that ‘it is only when we identify goods of common activities [collaborative side-effects] that we can discover a principled limit to the power of the state as well as to the subcontracting (or ‘outsourcing’) mentality characteristic of markets’ and some local governments.
- 3.
‘Standards of behaviour that he (sic) may not have selected, including overt acquiescence in the confiscation through taxation of goods that he treats as his own’ (Buchanan, 1975, 186).
- 4.
In a taxation limitation environment based on unimproved land allocation of tax imposts, one person leaving would have no effect (the land still exists and is owned by someone).
- 5.
Pareto efficiency has been reached when any policy change cannot increase aggregate economic welfare without reducing the economic welfare of at least one person.
- 6.
Informed about the difference between ‘needs’ and ‘wants’, who pays for the goods (and how much), the cost of maintenance, and the prudent use of debt. In sum, informed citizens are those who are not labouring under the Santa Claus illusion.
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Appendix
Appendix
Buchanan and others have suggested that greater decentralisation of government can constrain Leviathan. In the following table I present some statistics that seem to suggest that greater decentralisation, may in fact, be associated with greater budgetary expansion. I follow the method employed by Oates (1985) and calculate the spearman correlation between various measures of size of government (revenue take, tax take, and debt) and the degree of decentralisation (share of expenditure by local government). Spearman correlations gauge the degree of association between ranks of pairs of data and is appropriate for non-linear monotonic data. Most of the results in Table 3.1 are positive and statistically significant, which suggests that as decentralisation of government grows, so does Leviathan. A reasonable conclusion from this data is that decentralisation may not be a solution to Leviathan and may instead replace a Leviathan central government with lots of local Leviathans.
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Drew, J. (2020). A Comprehensive Theory of Local Government. In: Reforming Local Government. Springer, Singapore. https://doi.org/10.1007/978-981-15-6503-8_3
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