Defining the Polity

I recently criticised advocates of a National Health Service for being nationalistic, and alluded to my free-market tendencies. Although the distinction between capitalism and socialism remains valid, and those who promote centralised ownership must engage in that debate, I agree that it can be misleading to think in those polar terms.

I do think that government provisions that are serviced through taxation have a place in society, (and for the purposes of this article I am referring to government production, rather than redistribution). I am not advocating anarcho-capitalism. Where I differ from statists is that I object to "the nation" as being a starting point for such policies. The reason why the NHS applies to 60m people is not because that's the optimal user-level for the service, but because of wholly irrelevent population patterns that happen to occur within an arbitrary political boundary.

If government decisions are made at as local a level as possible, then we might hopefully see the benefit of Tiebout sorting. Local government, competing for the residency of a mobile population, will offer a mixture of local public goods and taxation, and the people are free to "vote with their feet". Those who are willing to pay a local tax for a clean beach will be able to do so, whilst those who'd rather the coastline were used for watersports will find a political entrepreneur willing to offer that service too.

The crucial point is that decisions are made locally, and benefits result from competing localities.

Tiebout's model doesn't deal with "national public goods", such as defense or law. For non-market provision, there would have to be a higher level of political power that has the right to decide how these things are financed and provided, but surely if we dispense nationalist thought, why would nations need different policies?

As we've become more interwined with our neighbours, and trading links have fostered friendships, we exist in a world characterised by global cooperation. Human rights are not nation-specific, and so entities like the United Nations can and should defend them. NATO demonstrates how national defense can be integrated with other nations, toward cooperative consensus. If we value freedom - free migration, free trade, free speach, Human rights, etc - then these values superscede national interest and imply global enforcement. National government only exists for trade policy to strengthen one's own countries special interest (e.g. the UK farmers) at the expense of worldwide consumers and competing (usually poorer), producers.

So governments are good for two things: the defense of universal freedom and law (which have nothing to do with location) and the provision of local services (which do). For the latter, there's no reason they should be produced at a national level with a top down authoritative approach, rather let's permit voluntary groups to emerge, allow people to opt out, and ensure that local politics is a fluid system that shrinks and grows based on the needs of it's users.

So in answer to Owen's question: What is Westminster Government For? my answer is simple: nothing.

Comments

[John Adams]

A mobile population? That must account for <10% of the normal population of any British city, therefore reflects only the priveleged elite who can move readily.

It does not cover the vast bulk of people, particularly those who are trapped in low-value housing stock, unable to sell up and move to a more attractive, and therefore more expensive area.

It certainly would not work in deprived areas like Glasgow or Liverpool.

[AJE]

I appreciate your point, but I think you misunderstand the way that a market operates. It is not essential for every consumer to vote with their feet to prevent the benefits of the system from being generated.

For example, I can't afford to buy a PowerBook, but the market for them is not irrelevent to me - some people can afford them, and as firms compete to supply them at every cheaper prices, and invest in the innovation to facilitate this, I see the gains from competition in an increasing standard/affordability in my iBook.

Even if the people of Liverpool and Glasgow are unable to move, they will still benefit from local competition.

But you're wrong about that.

Your claim that <10% of the population of a normal British city is mobile is plain wrong. People move all the time - yes, even poor people - and all this model rests on is the condition that if people move, then the mixture of tax/provision will be part of their decision. This doesn't seem to be a strong claim, but if you doubt it then please provide evidence.

Deprived parts of (not like - you're propagating an offensive myth in claiming that these cities are wholly deprived) Glasgow and Liverpool may indeed be less mobile than other areas of those cities, and other parts of the country. To me, that is the cruelest part of council tax - it's hard to escape.

But if local government is a system where taxes are linked to production then there is an incentive to move that didn't otherwise exist. As long as there's an incentive, we have the wheels in motion.

On first glance the claim of a mobile population may seem too strong, perhaps I should have said "potentially mobile" instead. I didn't mean to imply that people would move house every couple of days, but if you thought that I did then you're an idiot. As long as people have the option to move - and they do - then I don't think you've undermined the theory.

In this previous article I made a similar point, and suggest you read that too.

[John Adams]

Thanks for your response. I do agree that local tax/provision is indeed part of the appeal of a particular area (compare East Renfrewshire to Glasgow City).

I disagree with your claim that council tax means it is hard to escape deprivation. The housing market prices many people out of the option to move, as house prices spiral beyond their reach. House price differences vastly outweigh any potential difference in council tax, and is likely to be the primary reason people are unable to move. Surely this is a fundamental problem with a solely market-based solution?

P.S. I also take your point about deprived areas of. No offence intended.

[AJE]

Thanks for replying, and I apologise for the rude tone of my comment.

Regarding the relative importance of council tax and house prices generally...

You are quite right to imply that just because an effect exists, there's nothing to say that it's impact will be large, or even noticeable. All I wanted to do was raise the theoretical issue, since I do not possess enough knowledge to present an actual policy proposal.

Also, a market-based solution would indeed be hampered by high house prices, but that only begs the question of why prices are high. I don't think that they're high as a result of a free market, and point to loose monetary policy that is so scared of facilitating a bust it's fuelling it further. (Also on this point, see here.

[Owen Barder]

Thanks Anthony. I've commented briefly under your comment here

[JRWB]

I'm really intrigued by what you say here, Anthony: "People move all the time - yes, even poor people", and was just wondering what information this was based on. A genuine question, because what little knowledge I have in this area (research into the poorest parts of the Wirral for the Get Into Reading project) seemed to suggest the exact opposite. Almost without exception people were living in the same house their entire lives, and there was a massive trend for children to be housed in the same street as their parents. Are these areas of the Wirral unique, then?

[AJE]

As long as people are (potentially) mobile, my original point holds.

Ok, I accept that anecdotal evidence suggests that parts of Liverpool (typically poor parts) are especially unmobile. When I wrote the post I did have this phenomena in mind, but didn't think that it altered the purpose of what I was trying to say. Whether I was right or wrong (and this is a correction or extension), I'm happy to go into it.

Firstly, I believe that empirical evidence suggests that education, and not poverty is a larger determinant of mobility. The main reason people move from one region to another is job-related, and therefore more educated people tend to move more.

It appears in keeping with experience that the people who do move out of poorer parts of Liverpool are not realtively more wealthy than their neighbours, but are relatively more employable.

The issue now turns to job search, and the two possible reasons for observed perculiarities: institutions, and culture.

The cultural explanation is that "scouse birds never leave their mums", and that the unique Mersey sense of humour is just too much to leave behind. While common to hear, the implication is that people live where they're happiest. As I said in my reply to John Adams, just because people don't follow an incentive does not negate the role that incentives provide.

The institutional explanation is that there's an information problem in job search. We know that jobs are ubiquitous, and for anyone to be unemployed there's a problem of matching willing workers to willing employers. (Note, this is a theoretical statement). The finger now turns to Job Centers, and their localism. The fact that they actively tend to discourage the unemployed from looking for work outside of their region (i'm not sure why this is, but fits with experience) is a potential explanation as to why poor regions tend to become "stuck". Increasingly, however, people are realising that they can find better employment opportunities through agencies and private firms. As economic interdependence increases, mobility rises.

But all this is neglecting the point of my article. If we do like the sound of competing municipalities, then the observed lack of mobility is not theoretically damaging. Rather it invites the question: what stifles mobility, and what can we do to facilitate it?