TAILIEUCHUNG - A Companion to Urban Economics - Arnott and McMillen - Chapter 22

C H A P T E R T W E N T Y - T W O A Theory of Municipal Corporate Governance with an Application to LandUse Regulation In the United States, neither the political left nor the political right have much use for the thousands of local governments that employ more than half of America’s government workforce. | A Companion to Urban Economics Edited by Richard J. Arnott Daniel P. McMillen Copyright 2006 by Blackwell Publishing Ltd CHAPTER TWENTY-TWO A Theory of Municipal Corporate Governance with an Application to LandUse Regulation William A. Fischel Introduction Political Schizophrenia In the United States neither the political left nor the political right have much use for the thousands of local governments that employ more than half of America s government workforce. The left does not like local government because it is local. Localism connotes parochialism a narrow view of the world and a shortsighted agenda one that precludes redistributive taxation. The right usually sees local government as just another layer of government one given to personal feuds among cigar-chomping political bosses. The paradigmatic failure of local governance is the so-called race to the bottom in which localities sell their environmental patrimony for a mess of pottage or worse engage in beggar thy neighbor policies by putting fiscally profitable but environmentally problematic land uses on their borders downwind and out of sight of their own residents. To be fair there is an element of the left that sees localism as the embodiment of communitarian values the place most likely to inculcate participatory democracy Frug 1980 . And an important element of the right sees local government as superior to national government in that residents can vote with their feet A Theory of Municipal Corporate Governance 373 Tiebout 1956 to avoid adverse consequences of inefficient government policies. But neither side has much admiration for local governance as it currently exists. The communitarians would cast off legal doctrines that inhibit local redistribution of wealth. Most vote with your feet theorists regard local governance structure as inherently uninteresting. Why care about voting at the ballot box if the important vote is selecting residence in one of the scores of municipalities than exist

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