The Case for Competitive Government
By Arnold Kling
The recent election of Scott Brown is just one more opportunity to ruminate over the excessive size of the US government. In earlier posts I have argued that there are big diseconomies of scale in governance. Small countries like Singapore, Denmark and Switzerland seem to be more effectively governed that bigger countries like Germany, Britain and Italy.
Switzerland is about the size of Maryland, but it is much more democratic. There are about as many cantons in Switzerland as there are counties in Maryland, but each canton has a legislature consisting of dozens of legislators, while our counties are run by small cabals. My county, which is the size of one of the largest Swiss Cantons, is run by a 9-person council, which in turn is totally dominated by the teacher’s union. Switzerland has units of government below the canton level. For me, there is no unit of government below the county level. Switzerland has referenda that allow citizens to nullify legislation.
The fact that Switzerland works at all is a powerful argument that we do not need such a strong central government. With the exception of national defense and a national currency, I think we could devolve every power currently exercised by the Federal government to the states. Each state could then be like Switzerland. Note that in Switzerland, health insurance works differently in each canton, which would be equivalent to having different health insurance systems in different counties in Maryland.
The national government would have no power to bail out banks. State governments could bail out banks, but I suspect that they would not want to.
This issue of government’s excessive scale is one of themes in Unchecked and Unbalanced. But there I do not advocate a Swiss solution. Instead, I advocate something more flexible, where people can choose whatever governmental unit suits their needs for various functions. The idea is that providers of government services would end up competing, as in a market. I could choose to live under a policy regime to my liking, rather than have to depend on, for example, the whims of voters in Massachusetts.