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Posts Tagged ‘decentralization’

In the U.S., states have full authority over local government. Some states strictly centralize power and leave local government little to do. For instance, Hawaii has a single school district for the entire state, so that different localities cannot choose to spend different amounts on the government schools. Michigan effectively has a similar system, because it requires every school district to spend the same amount of money per student and redistributes tax funds across districts to make that possible. Vermont has also centralized school funding.

At the other end of the spectrum, states like New Hampshire let local governments pretty much decide their own level of funding for schools and other programs (about half of all local spending in the U.S. goes toward schools), and towns differ widely. If you want to live in a low-tax, low-spending town or a high-tax, high-spending town, it isn’t terribly difficult to find one. In the middle are states like Texas, where local governments are responsible for their own tax and spending decisions, but the most important level of local government is the county, much larger than the town, and it is therefore difficult to choose where to live based on local taxes and services.

Can we measure how decentralized each state is? I’ve tried to do so. The first measure of decentralization looks at how important local taxes are compared to state taxes. It divides local taxes by state and local taxes put together. This is a familiar variable to scholars of “fiscal federalism,” and it is typically called “tax decentralization.” Here is how the states rank on tax decentralization, as of fiscal year 2011-12, the most recent year for which data on local taxes are available from the U.S. Census Bureau:

New Hampshire 0.62475539
Alaska 0.584999114
Texas 0.555497037
Colorado 0.5420195
New York 0.540915308
Louisiana 0.520062304
South Dakota 0.514664958
Florida 0.508526077
New Jersey 0.503867865
Georgia 0.502739018
Missouri 0.490816162
Nebraska 0.486587041
Rhode Island 0.483462474
Ohio 0.47233672
Virginia 0.468452418
Illinois 0.466955731
Wyoming 0.465238453
South Carolina 0.459566438
Maryland 0.451067476
Pennsylvania 0.449406333
Arizona 0.440699694
Iowa 0.437082825
Oregon 0.434834984
Kansas 0.434319401
Washington 0.431347838
Wisconsin 0.423486277
Tennessee 0.421965652
Utah 0.420621904
Maine 0.411333699
Massachusetts 0.398031363
Connecticut 0.397670719
Montana 0.389680799
California 0.387518844
Nevada 0.383740954
Oklahoma 0.383081024
New Mexico 0.382245601
Alabama 0.382121115
North Carolina 0.366066432
Michigan 0.361458412
Indiana 0.352963108
Kentucky 0.33512693
Idaho 0.325219717
North Dakota 0.312465478
Mississippi 0.306727915
West Virginia 0.29895431
Minnesota 0.282530032
Hawaii 0.258739008
Arkansas 0.220173834
Delaware 0.215201394
Vermont 0.152464302

This isn’t the only way we can measure decentralization, though. After all, some states have more “competing jurisdictions” from which a prospective homeowner can choose than others do. To get at this concept was a little more complicated. I first counted the number of county, municipal, and township governments for each state from the U.S. Census Bureau. Then I looked at what proportion of local taxes came from each level of government and created a weighted average of number of local governments for each state. So if a state had 100 towns, 10 counties, 0 townships, and towns raised 20% of local taxes, while counties raised 80% of local taxes, the formula for the weighted average would be 10*0.8+100*0.2. The formula “rewards” states for letting lower-level, more numerous governments raise more taxes.

Then I thought about the decision of a homeowner in choosing a government to live under. Typically, your general location is set by where you have a job, say, a metropolitan area. But there may be several jurisdictions in that metro area to choose from. So I divided the “effective number of competing jurisdictions” described in the last paragraph by the state’s privately owned land area in square miles and multiplied by 100. So the resulting variable is the effective number of competing jurisdictions per 100 square miles of privately owned land. Higher values mean there is a lot of choice among governments.

Here is how the states come out on this variable measuring choice among governments:


New Jersey 5.619216533
Massachusetts 4.644661232
Pennsylvania 4.458726121
Rhode Island 4.016477858
Connecticut 3.634408602
Vermont 3.315789474
New York 2.934484963
New Hampshire 2.529344945
Wisconsin 2.189851779
Illinois 1.823655675
North Dakota 1.699505873
Delaware 1.586429725
Ohio 1.522032431
Maine 1.515194346
South Dakota 1.21988394
Missouri 1.105963152
Iowa 1.092652689
Indiana 0.972491305
Michigan 0.968708835
Kentucky 0.818674996
Minnesota 0.789141489
Arkansas 0.724807709
West Virginia 0.709066369
Oklahoma 0.693505752
Alabama 0.684705931
Georgia 0.551970462
North Carolina 0.535369811
Tennessee 0.506450581
Maryland 0.49052107
Kansas 0.479065166
Virginia 0.475682594
Florida 0.453352937
Nebraska 0.444783283
South Carolina 0.431428983
Louisiana 0.427531008
Utah 0.382243912
Mississippi 0.375744252
Washington 0.373979057
Texas 0.326573652
California 0.301273953
Colorado 0.284535146
Idaho 0.275746556
Oregon 0.273392409
Arizona 0.094351369
New Mexico 0.087975845
Montana 0.077669113
Hawaii 0.070909413
Wyoming 0.058851844
Alaska 0.042298043
Nevada 0.036335668

In general, the northeastern states score highly, largely because of a historical legacy of strong town government.

We can multiply both variables, tax decentralization and effective number of competing jurisdictions per 100 sq mi, together to get a single measure of how decentralized each state is.


New Jersey 2.831342639
Pennsylvania 2.003779755
Rhode Island 1.941816321
Massachusetts 1.848720839
New York 1.587307839
New Hampshire 1.580221888
Connecticut 1.44529788
Wisconsin 0.927372178
Illinois 0.851566468
Ohio 0.718911807
South Dakota 0.627831517
Maine 0.623250495
Missouri 0.54282459
North Dakota 0.531036915
Vermont 0.505539528
Iowa 0.477579724
Michigan 0.350147957
Indiana 0.343253553
Delaware 0.341401889
Georgia 0.277497088
Kentucky 0.274360038
Oklahoma 0.265668894
Alabama 0.261640594
Florida 0.23054179
Minnesota 0.22295617
Virginia 0.222834661
Louisiana 0.222342761
Maryland 0.221258101
Nebraska 0.216425781
Tennessee 0.21370475
West Virginia 0.211978447
Kansas 0.208067296
South Carolina 0.198270281
North Carolina 0.195980916
Texas 0.181410696
Washington 0.161315058
Utah 0.160780162
Arkansas 0.159583693
Colorado 0.154223598
Oregon 0.118880584
California 0.116749334
Mississippi 0.115251251
Idaho 0.089678217
Arizona 0.041580619
New Mexico 0.03362838
Montana 0.030266162
Wyoming 0.027380141
Alaska 0.024744317
Hawaii 0.018347031
Nevada 0.013943484

New Jersey is the state where the taxpayer has the most choice of government. While local property taxes are generally high there, that may simply reflect the preferences of local homeowners who want to spend money on services. It would be unsurprising if there are also some local jurisdictions in New Jersey where taxes are especially low.

In general, northeastern states, which are mostly left of center and high-tax, have a heretofore unseen advantage in their fiscal systems, letting competing local governments do much or even most of the taxation, making them responsive to local property owners. Perhaps it is precisely because of that responsiveness that overall tax burdens are allowed to be high in some of these states (New Hampshire aside): homeowner voters are more content with the way government uses their tax money there.

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The Cato Institute has conducted a new poll of Americans’ attitudes toward federalism. Apparently Americans have become much more favorable to federalism and decentralization over the past 40 years.

The Cato Institute commissioned YouGov for the poll. They asked respondents questions about which level of government should have primary control over each issue area, using the exact same wording from a Harris poll conducted in 1973. This method allowed them to see how Americans’ attitudes have evolved over the past 40 years. On 10 out of 11 issues, Americans were more favorable to state or local control in 2013 than they had been in 1973 (the bars in this graph represent the percentage of Americans favoring primarily federal control over that issue):

cato poll

A majority of Americans still want primarily federal decision-making over national defense, Social Security, and cancer research. Two of those three seem to make a great deal of sense: cancer research is a global collective good, and national defense, by definition, is a national collective good. “Prison reform” and “drug reform” are the two issues on which Americans’ attitudes have moved most significantly toward decentralization. A large majority of Americans now think housing, transportation, education, welfare, prison reform, health insurance, and drug reform, in that order, should be primarily state and local issues. Only on education have Americans become more centralist, and that change is so small as to lie within the margin of error.

Another compilation of surveys suggests that a majority of Americans also want primarily federal decision-making over immigration, stem-cell research legality, protecting the border, protecting civil rights, protecting civil liberties, abortion laws, creationism in public schools, and food safety, in descending order. Most Americans also think paving roads, providing job training, law enforcement, running courts, providing pre-K to low-income children, unemployment, gay marriage, and gun control should be primarily state and local issues.

These results are consistent with those of other surveys, which have tested Americans’ views on particular issues. A 2012 CBS News poll found that 69% of Americans preferred that the states handle marijuana policy, while only 27% preferred that the federal government handle it.

What’s interesting is that on all these issues on which the study reports a partisan breakdown, even drug laws, Democrats are more in favor of federal control than are Republicans. Decentralization has emerged as a very starkly partisan wedge issue.

Growing support for decentralization in the U.S. does not necessarily mean that decentralization is a good idea or that it will happen, of course. As my review of Daniel Treisman’s recent book acknowledges, decentralization can have its pitfalls. Yet within the American context of largely market-preserving federalism, greater decentralization on many of these issues will (more…)

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Since the Scottish independence referendum, the Scottish National Party has seen its membership treble and its poll ratings climb. This boost to pro-independence forces after their referendum failure departs from the script established in previous referendums on autonomy or independence. After the failed 1979 referendum on devolution (due to a turnout requirement – the measure got a majority of votes), the SNP fell back in the polls. After the successful 1997 referendum, the SNP gained in the polls, even though devolution was a Labour-implemented project. After the 1980 and 1995 failed referenda, the Parti Quebecois declined a bit in the polls.

So what’s going on? The biggest reason for the SNP’s gains may be that “Yes” and even some “No” voters in the referendum want to make sure that the Westminster parties follow through on their pledges for even greater devolution. Alex Salmond once said, “It’s only SNP votes that concentrate the minds of Labour.”

To a point, the logic makes sense. The British parties are contesting for power at the center, and party leaders are unlikely to devolve power away from themselves if they can at all help it. A credible secession threat is useful for eliciting concessions.

At the same time, though, there has to be some (more…)

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A few takeaways from the 55-45% victory for No in the Scottish independence referendum:

  1. The polls overestimated support for independence, just as in the 1995 Quebec referendum. Secession from a well-established democracy is extremely difficult due to voters’ risk-aversion and status quo bias.
  2. Scotland’s right to decide elicited salutary promises of decentralization from the British government. My book found that countries with legal secession saw more decentralization than countries without, and countries with legal secession never recentralized power in the post-World War 2 era, according to the measure of regional autonomy I used.
  3. While Westminster is likely to follow through on some additional powers for Scotland, they are not likely to approach anything like “devolution max.” For one thing, the Barnett formula will continue, suggesting the Scottish government’s budget will remain heavily dependent on transfers. For another, significant powers for Scotland will require wholesale constitutional reform, particularly to deal with the West Lothian Question, and there are many obstacles to a solution to that problem. Finally, the scale of No’s victory will reduce the urgency for British leaders to get something done. I will be very much surprised if a bill is produced to give Scotland autonomy equivalent to that enjoyed by, say, New Hampshire, let alone the Isle of Man.
  4. There’s going to be a lot of ignorant commentary about what this means for Catalonia. It means very little. Catalonia will proceed toward its own vote on independence. Secessionism isn’t contagious across borders, nor is declining secessionism. If anything, the No camp’s victory might persuade the Spanish government to allow a Catalan vote — but I wouldn’t count on it.

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As part of a new paper, I’ve been doing research on decentralization in Aceh, Indonesia. Bringing to a conclusion an approximately 20-year insurgency, the Free Aceh Movement (GAM) and Indonesian government came together in a spirit of comity following the devastating Indian Ocean Tsunami and signed a peace deal giving the region ample new autonomy. Or so the usual story goes.

Here’s the reality. GAM came to terms with the Indonesian government because a brutal military offensive, paired with the imposition of martial law, had reduced their numbers significantly. Still, giving up their dream of independence for Aceh was a bitter pill. In the end, they agreed to the Helsinki Memorandum of Understanding, which provided for the laying down of rebel weapons and new autonomy for Aceh.

That Memorandum of Understanding was never implemented in full. In particular, two provisions – the ability of Aceh to enact primary legislation without central government veto and the ability of Aceh to veto Indonesian treaties and other laws under certain circumstances, were not included in the final bill passed by the Indonesian legislature. In addition:

The Free Aceh Movement (GAM) and dozens of NGOs complain that the new law falls short of the autonomy provisions in the 2005 accord and allows considerable interference by the central government:

Central government powers: Article 11 stipulates that the central government sets the norms, standards and procedures and also monitors all affairs of the Aceh regional administration.

Control over natural resources: Aceh is to retain 70 percent of revenues from its natural resources. But Article 160 stipulates that the management of oil and gas resources in Aceh will be done jointly by the provincial administration and the central government. This is a departure from earlier pledges by Indonesian lawmakers that the Acehnese administration could manage its own resources.

Role of the Indonesian military: The peace accord stipulated that the Indonesian military would be stationed in Aceh only for national defense and would not participate in provincial affairs. But Article 193 of the law gives the army powers within the province.

Human rights: Perpetrators of human rights violations will likely escape justice. An ad-hoc tribunal (Article 215) will only hear cases that occur after its establishment, rather than having retroactive powers.

Aceh even lacks the ability to levy its own taxes, apart from a trivial “alms” tax for poor relief. Thus, Aceh’s autonomy is far less than that enjoyed by, say, Rhode Island. The only new autonomy Aceh received in the peace deal was the right to form local political parties. Otherwise, the main provision was to transfer significant hydrocarbon revenues to the province. With one hand, the Indonesian government double-crossed the former rebels and took away their ability to go their own way on economic policy, and with the other, they bought them off — but of course, that bribe comes with an implicit threat: behave or else we take it back.

How did the Indonesian government get away with the double-cross? Simple: (more…)

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Having finally turned the corner on a brutal, 11-day (and counting) cold, I feel up to getting back to my blogging routine. First up: a followup to last month’s post, “Why So Little Decentralization?”

To review, that post posed a puzzle (a problem for political scientists to ponder, you might say). The puzzle is this: developing countries are far more centralized than developed countries. That is so despite the fact that some developing countries are much larger and more diverse than developed countries, and many of them have now been democratic for quite some time. Furthermore, if decentralization were simply a relict of post-medieval state-building (some might venture that sort of claim about Switzerland, for instance), then the fact that developing countries have lower state capacity and a more recent independence than almost all developed countries deepens the puzzle.

I went through two explanations that do not actually explain the puzzle very well: shallow local talent pools and illiberalism. In particular, they cannot explain why developing countries are often very decentralized along some dimensions (allowing discrimination against goods and workers from other regions, linguistic and cultural rights, etc.), but not others (chiefly tax policy).

I think there are two explanations that actually work: secession prevention (in ethnic federations) and excessively personalist electoral systems (in nonethnic federations). In this post I’ll talk about secession prevention.

Some developing democracies are ethnoregionally diverse, that is, they contain minority ethnic homelands that could form the basis of independent states. Examples include (more…)

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Many scholars (for instance) have noted a trend around the world of greater decentralization, at least on certain dimensions. Many non-federal, unitary states have tried to devolve some spending and decision-making authority on local or regional governments. Virtually every democratic government nowadays at least feigns some interest in decentralization.

Yet what strikes me is how little decentralization there has been, especially in the developing world. Some developing democracies that are sometimes described (or describe themselves) as “federal” or “semi-federal” include Mexico, India, Indonesia, Brazil, Argentina, Venezuela (before it went authoritarian some time in the 2000s), South Africa, Malaysia, Pakistan, Iraq, Nepal, and Nigeria. Yet none of these countries, other than Mexico, affords its constituent state or regional governments autonomy commensurate with that found in federal and semi-federal “Western liberal democracies” like Spain, Canada, the U.S., Switzerland, Belgium, Germany, Austria, Australia, and Italy. For instance, in Brazil, states do not have exclusive powers, and the federal government may overrule any state law with its own legislation. In India, the federal government may suspend state governments from operating at all and impose “President’s Rule.” Of all developing democracies, only India, Mexico, and Brazil routinely allow subcentral governments to raise significant revenue through autonomous taxation policies. (I count 9 Western democracies with such fiscal autonomy.)

Some of these developing countries are both huge and ethnically and regionally diverse, India and Indonesia most notably. One might think that these governments would have even more reason to decentralize than would the governments of comparatively homogeneous Western democracies. Therefore, the relative lack of decentralization in developing countries remains a puzzle.

One explanation might be the smaller talent pool in developing countries. Decentralization might not be feasible because uneducated or politically unsophisticated local officials require close supervision from a small cadre of Western-educated central administrators. While this explanation might have some weight in very poor democracies like Mali (before the recent coup), it likely does not apply to the majority of the cases just mentioned. If the talent pool in developing democracies were desperately shallow, then small developing democracies should have little state capacity plus all the adverse sequelae political scientists typically attribute to state weakness. Yet many small democracies in the developing world have performed fairly well: Costa Rica, Jamaica, Trinidad, Botswana, Mauritius, and Namibia, not to mention Slovenia and the Baltic republics in central and eastern Europe. There is no obvious positive relationship between country size and economic or political performance in the developing world.

Furthermore, many of the cases just mentioned do boast significant decentralization along some dimensions. For instance, India and Indonesia lack a unified internal market, allowing local and state or provincial governments to impose trade barriers on products from other regions. This is an economically perverse form of decentralization and one that has been nearly stamped out in the West, apart from certain discriminatory government procurement regulations. In addition, many developing democracies feature significant decentralization of expenditures: local and regional governments control significant budgets, but those budgets are funded by central grants, and most policy authority lies with the center. This set of policy choices is also likely economically perverse, as “vertical fiscal imbalance,” whereby subcentral governments depend heavily on grants or mandatory revenues from the center, tends to encourage fiscal irresponsibility. In Argentina in the 1980s and 1990s, provincial governments established their own banks, which were forced to lend money to those governments, leading to repeated fiscal crisis.

Another explanation might be that there is something about the Western liberal tradition of political philosophy that encourages decentralization. Many developing democracies fit within the category of “illiberal democracies,” where majorities use their political power to trample the rights of minorities. Sri Lanka might be just such a country, where the Sinhalese majority has repeatedly refused to countenance significant autonomy for the Tamil minority, and the central government fought a brutal civil war against Tamil rebels, complete with vast numbers of civilian killings and other human rights violations.

There may well be something to this explanation, but there are also hazards. As Vito Tanzi noted (PDF), demand for decentralization rises with size of government. A nightwatchman state can afford to be centralized because no one really cares about who controls it. Developing countries have bigger governments than Western democracies, not in the government spending as a share of GDP sense, but in the sense that the distribution of resources in such societies is more elastic with respect to the distribution of political power. So demand for decentralization should be higher there. True, the constraint might instead be supply: the views of political leadership in such societies. But then why the “perverse” decentralization in some countries?

To examine the extent and form of decentralization in developing democracies, I have, with the help of University at Buffalo Ph.D. student Govinda Bhattarai, developed a new dataset of regional self-rule in consolidated democracies worldwide. The coding scheme extends that introduced by Liesbet Hooghe, Gary Marks, and Arjan Schakel for Western democracies and various postsocialist European countries. Without going into details here, I will simply note that we coded the scope of policy powers of subcentral governments, the scope of taxation powers of subcentral governments, the local electoral accountability of subcentral officials, and the ability of the central government to veto subcentral laws.

Using those indicators, I then construct two higher-level, multiplicative indices of economic self-rule and political self-rule. Economic self-rule takes into account political self-rule as well as the tax autonomy of subcentral governments. Economic self-rule ranges from 0 (none) to 48 (maximum). Political self-rule ranges from 0 (none) to 16 (maximum).

The scatter plot below shows regional self-rule on the economic (Y axis) and political (X axis) dimensions in 2006, the latest year for which data on regional self-rule in the Hooghe, Marks, and Schakel dataset are available (our data go to 2010, however). Each observation in this plot is a type of region: either a particular region with its own autonomy statute (like Aaland in Finland or Scotland in the UK), or a type of regional government with the same autonomy arrangement (like states in the U.S. or in India).

economic & political self-rule(You can click the image to get a better view.)

Look at how few (more…)

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