Back to the future?

It is no secret that many conventional city governments in the U.S. are in trouble.  Here is a report that cites $574 billion in unfunded city and county pensions.  Voters in various places got the message and some recent ballot measures to address the problem by trimming pension benefits won handily.

A more drastic approach would extend privatization and contracting to the max.  The example of Sandy Springs, Ga., is described in today's NY Times.  Here is last year's video coverage by ReasonTV (h/t Yin Xie).

The Times piece cites the workability of the Sandy Springs approach, but also cites some of the possible objections.  These include the threat of a "two Americas" scenario as well as a possible redefinition of what local governments are for.

HOVERING around the debate about privatization is a basic question: What is local government for? For years, one answer, at least implicitly, was “to provide steady jobs with good wages.” But that answer is losing its political tenability, says John D. Donahue of the John F. Kennedy School of Government at Harvard. “A lot of jobs in government are middle-class jobs that in the private sector are not middle-class jobs,” he says. “People aren’t willing to support conditions for public workers that they themselves no longer enjoy.”

In a way, what Sandy Springs and other newly incorporated towns have done harks back to a 19th-century notion of taxation, which was much less about cross-subsidies and much more about fee for service.

"Local government" is an inanimate object.  Better to consider the players. City and county politicians may want to be seen as "job creators", but I do not think that most city taxpayers see themselves as in the job creation business when they pay up.

In fact, the Times story goes on to evoke redistribution from Sandy Springs voters to surrounding Fulton County residents. But that approach has not been working so well.  "Widening divide" concerns have been growing steadily, alongside the steady expansion of redistribution in the U.S.  And that 19th-century notion does not look so bad in light of today's $574 billion of unfunded municipal liabilities.

The redistribution we have had is not all that progressive.  Cronies get rich and others get crumbs.  Much better to have the Sandy Springs folk be free to prosper and innovate.  That might do more for the rest of Fulton County than all of the conventional redistributions that we have gotten to know so well.