By Chandrashekar (Chandra) Tamirisa, (On Twitter) @c_tamirisa
With unemployment hovering around 10% and growth sputtering to a restart in the aftermath of the worst housing crisis since the Great Depression, naturally neighborhoods are worried about local issues. Property values fell, tax intake of local governments has fallen as people lost their homes unable to sustain the inflated property values of the housing boom and so local public services which are dependent on the tax revenue share of city and county governments are suffering.
Among the important local services, education and local policing are usually at the top. Both of these are necessary to regain respectability as neighborhoods. Governments at every level in the United States can raise funds issuing debt but constrained by budget rules. During deep recessions, the budget rules do not work. The Federal government usually comes to the aid of the states and localities with federal debt.
So, during economic downturns the issue becomes one of providing funds to state and local governments. Nobody really thinks about the structure of state and local governance itself. The policy wonks work within the constraint of the existing structure of governance without really questioning it. However, moments such as grave crises are precisely the times when all of it should be on the table to understand what went wrong to fix government.
The hurdle faced by policymakers in Washington is constitutional freedoms at the local level. The sacred cow of local governance is not touched for fear of the expansion of federal powers under law over the states and their localities. It is a cow that has ceased to be sacred by the vicissitudes of American history, particularly since the Civil War.
The United States is one country and united and indivisible it stands, integrated in everything it does, from sea to shining sea. The constitution was accordingly interpreted whenever localities overzealously challenged federal powers, because fragmentation in a country that is integrated politically and economically can be highly inefficient. Freedoms at the local levels almost always translate into higher net taxes, and those seeking local freedoms cannot have both local liberty and low, total tax burdens. The arithmetic will not add up.
The opportunity cost of local liberty is the standardization of taxation and of those expenditures for which those taxes are levied across the country. The localities have to give up their own governments and tax collection to pay for them to keep their local liberty and perhaps even to enhance it by implementing national standards at the local levels, instead of making a hodge-podge of “standards” across the country. People will then flock to where they are implemented best. The performance of localities will then determine what economists call “Tiebout sorting”, and not the efficiency of the widely varying local tax rates across the country in providing local services–meaning, lower taxes and better public services. The government will then be more citizen-centric, focused on delivering higher quality services at any given tax rate, than on itself. So, what should be the definition of a “locality”?
Government in the United States is accountable through representation. The elected representatives represent the people in their electoral districts both in the states and at the federal level, and also at the local level in the cities and counties. There simply are too many lines dividing the states within, often overlapping complicating the business of running local governments. It is best, because we cannot do away with the states, we can do away with the city and country lines and hence those governments.
The states can be run from their state capitols by the delegates and senators in their respective districts. Local citizens through their state representatives can influence the national dialog of creating and improving national standards. The states can receive their appropriations from a single tax, levied on the tax-paying citizens without the need for paying multiple taxes to multiple governments. Consolidating and streamlining the basic framework of governance itself can substantially add to efficiency increase and the effectiveness of government, while still being constitutional. Reforming the political structure of governance will pave the way for overhauling education and health care among other things.
The locality of American government can then be returned to where it really resides: the individual, no matter where the individual resides.
