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The Growth of Local Government and the Erosion of Liberty
By Clint Bolick
Hoover Institution PressCopyright © 2004 Board of Trustees of the Leland Stanford Junior University
All rights reserved.
CLOSE YOUR EYES and ponder for a moment the American ideal of local government. The image, no doubt, is a bucolic one. Invariably it revolves around a town hall, filled with informed, civic-minded citizens expressing their views and reaching consensus. Public-spirited officials manage the town's affairs. A sheriff, maybe named Andy, maintains order and provides a friendly jail cell where the local town drunk can sleep it off, while the fire department rescues wayward cats from trees. The townspeople turn out on holidays for parades down Main Street. The city is tidy, streets are cleaned, garbage is collected. Around election time the town has good-natured debates and spirited political rallies. The schools have strong parent/teacher associations and citizens serve on blue-ribbon committees to sort through problems. You can almost smell the apple pies cooling on the windowsills.
If television shows are any gauge, this was the common image that Americans held of their towns as late as the 1960s. Little wonder that many Americans, especially conservatives, harbor almost nostalgic views about local government, and hold the principle of "local autonomy" as a matter of fervent faith. This attachment to localism has grown over time. In 1936, when Americans were asked if they preferred a concentration of power in the national or the state governments, 56 percent favored the national government, with only 44 percent preferring the states. By 1995, only 26 percent favored the national government, while 64 percent preferred the states (and 10 percent were not sure).Americans like their government close to home, the old-fashioned way.
Now open your eyes and look at your city government. Andy and his pals have been replaced by an army of nameless, faceless bureaucrats. Government has proliferated to the point that you don't even know how many governments regulate you, much less their identities. Widespread corruption leads government officials to resign and march off to jail. Taxes are sky-high. Turnout in municipal elections is appallingly low; turnout in bond elections and school board races lower still. The city requires permits and charges fees for everything. Public employees are constantly demanding wage increases and going on strike. An inverse correlation exists between the local government functions you wish were efficiently administered (e.g., snow removal and schools) and those that are efficiently administered (e.g., parking meter enforcement).*
Welcome to America in the 21st century, in which the most significant (yet almost entirely unremarked-upon) phenomenon in our political system is the explosive growth of local government, both in absolute terms and relative to the national government. It proves the old adage "be careful what you wish for because you might just get it": Americans want government close to home, and boy, do they have it.
And not always benevolent governments, either. Local governments are often malign, if for no other reason than the propensity of people with power to abuse it. The effect can be dramatic, for local government touches our lives in direct and intimate ways. As historian James McGregor Burns puts it, "Local government is not only a very big deal; it is costly and overlapping, and it affects nearly every one of us every day." He explains, "State and local governments deal more directly with the average person than the national government does, because neighborhood, school, and housing problems are closely regulated by state and local governments." From schools to police protection to water to streets to trash collection to the houses we can build and the businesses we can operate, local government controls it all. Cities today not only provide basic services but are engaged in all manner of activities never contemplated by the framers, from providing welfare and government housing to constructing and operating sports arenas and water parks. Local government is not just big government, it is big business.
Local governments possess enormous power to redistribute wealth and opportunities, impacting in real and tangible ways the real lives of real people. Examples are legion (and fill much of this book). As one political scientist notes, for instance, "By means of their decisions regarding zoning and the use of land, suburbanites have often been able to keep racial minorities, poor people, and tenants penned up in the central city." Similarly (though political machines are often thought to have gone the way of the dinosaurs), patronage remains a way of life. A study of capital improvement allocations that were made by the administration of Denver mayor Federico Peña during the 1980s, for example, found that neighborhoods' receipt of outlays correlated closely with their ethnic makeups and the amount of political support they'd given the mayor in the most recent elections. Identifiably white neighborhoods that opposed Peña had 12 percent of the city's population but received 7 percent of capital outlays, Hispanic neighborhoods accounted for 5 percent of the population and 28 percent of the city's capital expenditures, and identifiably black neighborhoods accounted for 7 percent of the population but received only 2 percent of the outlays.
At the same time, corrupt or arbitrary public officials can punish opponents in subtle ways, such as by denying or delaying the myriad permits needed to develop property or to operate businesses. Local governments are particularly susceptible to the influence of special interests, for as Burns explains, "group interests can be concentrated in states and localities, whereas their strength tends to be diluted in the national government." It all amounts to a system in which the government that is closest to home can be very alien and hostile to average constituents who just want to be left alone.
We are all at the mercy of local governments. And they are everywhere.
Big Government: At a Location Near You
Revealing a penchant for understatement, political scientist Virginia Perrenod observes that "Americans have a propensity for multiple governments." The Chicago metropolitan area alone is regulated by more than 1,200 different governmental jurisdictions;* the Philadelphia metropolitan area by 864 governmental units; the Pittsburgh area by 744. Overall in 1997 there were 87,453 local governments in the United States, an increase from 78,218 in 1972, 25 years earlier. At that rate, an average of one new local government is created in America every single day.
State and local governments spend voraciously. As of 1999, state and local governments were expending 1.06 trillion dollars annually, accounting for 11.5 percent of the nation's gross domestic product. As figure 1 illustrates, state and local spending eclipsed combined federal government spending around 1970, and the trajectory continues as state and local governments make up an ever-increasing proportion of overall American government.
These figures likely understate the growing gap between federal spending and spending by state and local governments, as they don't reveal the massive amount of federal moneys distributed as aid to state and local governments. In 1970, federal aid to state and local governments totaled 24 billion dollars, accounting for 2.4 percent of the gross domestic product. By 2000, that amount had increased to 284 billion dollars, or a full 3 percent of the gross domestic product.
State spending has soared over the past five decades. As figure 2 demonstrates, state per capita spending, measured in constant 1996 dollars, has more than quadrupled since 1961, growing from $638 in 1961 to $2,983 in 2001. Viewed in terms of spending, the size of state government relative to population has increased by roughly one-third over each of the past two decades.
Although federal grants account for 31.4 percent of state and local revenues, state and local governments derive the vast majority of revenues from taxes and fees. Altogether, state and local governments collect more than $872 billion in taxes. On average, in 1996 states taxed at a rate of $1,759 per capita — with Connecticut collecting the highest taxes, at $2,870 per capita. Cities add hefty taxes, especially through property assessments. In 1996, New York City alone collected more than $18 billion in taxes. State and local debt also climbed during the 1990s, from $861 billion in 1990 to $1.17 trillion in 1996 — an increase from $3,459 to $4,412 in debt per capita.
Many states are facing huge budget deficits, necessitating increased taxes or reduced services. The disappearing act that transformed massive budget surpluses into deficits would make even the most talented magician shake his head in wonder. In 1998, the states had amassed budget surpluses totaling nearly $60 billion. By the first quarter of 2003, the surpluses had turned into a collective deficit of nearly $65 billion. California alone racked up $38 billion in debt. The states' deficits were so gaping that, by late 2003, they were exerting a serious drag on economic recovery. Many states were forced to cut spending, particularly among aid programs for the poor; this in turn reduced consumer spending. The situation is so dire that analyst Gregg Easterbrook concludes that "state deficits will be among the country's leading domestic political issues for the next several years."
Many states have turned to massive tax hikes, which also dampen jobs and economic growth. States raised taxes $6.9 billion in 2003, following even larger tax increases totaling $9.1 billion in 2002, the largest one-year hike in state taxes in more than a decade.
State officials blamed the recession for their budget problems, but the real culprit was their own voracious spending during days of economic plenty. An analysis by USA Today found that the fiscal woes of most states are the consequence not of a weakened economy but of fiscal irresponsibility by the states themselves, who continued to increase spending (up 6.3 percent in the fiscal year that ended on June 30, 2002) even as revenues declined. While the private sector registered a net loss of 2.6 million jobs between 2001 and 2003, state governments added 74,000 jobs. All states except Vermont have balanced-budget laws, but many use accounting gimmicks to skirt the requirements. The worst offender is California, which spends one billion dollars more each month than it takes in. The USA Today analysis found that Utah is the most fiscally responsible state, while California, Montana, Mississippi, West Virginia, Tennessee, Rhode Island, Oklahoma, Illinois, Colorado, and Arizona are the least responsible.
Another scapegoat the states attribute their maladies to is the federal government: Why doesn't it just send them more money? The trouble with that solution, says Gregg Easter-brook, is that it "presents a problem of its own: To bail out the states, the federal government would have to obtain money from taxpayers. Taxpayers who live in — states." It's a costly shell game. "Ever since World War II, the nation's governors ... have relied on a bookkeeping switcheroo in which Congress taxes Americans (that is, residents of states) at a higher rate than the federal budget actually requires and then sends some of the revenue back to the states," explains Easterbrook. "This arrangement allows governors to denounce the big spenders in Washington while simultaneously relying on the big spenders in Washington to keep state budgets in the black."
To be fair, a lot of the federal aid is earmarked to offset state spending for massive unfunded federal mandates. The better course would be to eliminate the unfunded mandates and put a halt to federal revenue sharing. The system is inherently inefficient, deploying the federal government as a middleman in the routing of funds from taxpayers to the states. That in turn lends itself to political manipulation, by which those states having more-powerful congressional delegations bring home the bacon while their neighbors go hungry. Moreover, "Voters should know what government costs," argues Easterbrook. But the current system "makes state and local governments seem cheaper than they really are."
Despite gaping budget deficits, state government continues to grow. Between 1997 and 2002, state spending grew by more than 6 percent annually — more than twice the average 2.25 percent rate of inflation. Although they often accuse Democrats of being big spenders, Republicans actually are more likely to increase state spending. State legislatures controlled by Republicans increased spending by 6.54 percent each year during that period, compared to 6.17 percent in legislatures controlled by Democrats. Worst of all were states whose governor and legislature were both Republican; these increased spending at a 6.85 percent annual clip.
State and local government is also larger than the national government when measured in terms of the number of people employed. Fully 86 percent of all civilian government employees now work for state and local governments. The number of federal civilian employees actually shrank from 2.9 million in 1980 to fewer than 2.7 million in 1999, while the number of state and local government employees during that same period grew from 13.3 million to nearly 17.5 million (see figure 3). Among those, roughly three-quarters work for local governments. State and local government employees account for roughly 13.6 percent of the nation's total workforce.
Taking the average household size of 2.62 persons, that means that 46 million Americans — 16 percent of the U.S. population — are either employed by state or local government or directly dependent on someone who is. That makes for a fairly potent special-interest group — about which I will have more to say at the end of this chapter.
One major difference between the private and public workforces is the degree of unionization. While labor unions have declined in the private sector, they flourish in the government sector (see figure 4). Fewer than 10 percent of private-sector workers are unionized, compared to more than 37 percent of government employees. In 1983, government workers constituted less than one-third of all unionized employees; by 1999, they accounted for 43 percent. The main public-sector union, the American Federation of State, County, and Municipal Employees (AFSCME), has 1.3 million members nationwide; additionally, more than half of the members of the similarly sized Service Employees International Union are employed in the public sector. That gives state and local government employees the best of all possible worlds: job security and collective bargaining.
Unionization translates into higher wages for government-sector employees, who average $641 per week versus $549 for all workers. Benefits often widen the gap even further. In New York City, the average city employee receives $58,660 per year in wages, and an additional $24,062 in benefits, nearly double the amount of benefits he or she received only four years earlier.
For the citizenry, by contrast, all of that is bad news. Heavy unionization of government workers not only means higher wage costs, but increased strikes and work stoppages affecting vital public services.
The explosive growth of state and local governments saps our nation's productive vitality and, as the coming chapters illustrate, threatens even greater grassroots tyranny. But as troublesome as this phenomenon appears on the surface, it becomes even worse when one discovers exactly which local governments are growing.
One of the most powerful officials in the history of New York — one of the largest cities on earth — was named neither LaGuardia nor Giuliani. He was neither governor nor mayor, though early in his career he campaigned for the first office and was nominated for the second. In fact, the most powerful man in New York gained his might largely as a political appointee. This man, heralded in his time and now largely forgotten, was Robert Moses. He presided over the city for 34 years (1934–68) variously as its parks commissioner, construction director, and as the head of the Triborough Bridge Authority, which through his machinations evolved into the Triborough Bridge and Tunnel Authority (referred to hereafter in this text simply as "Triborough").
In those capacities, Moses built much of what we know as New York, masterminding and implementing the construction of almost every single major road and bridge; 416 miles of parkways in the suburbs; massive public works project sincluding Lincoln Center, the New York Coliseum, the United Nations, and the Fordham, Pratt, and Long Island University campuses; 650 parks; and 148,000 apartments.
Moses was also the leading architect of the modern form of urban governance. In 1974, Robert Caro, before he began his epic multi-volume biography of Lyndon Johnson, published a 1,162-page biography titled The Power Broker: Robert Moses and the Fall of New York. In it, Caro chronicled how the brilliant and fiercely ambitious Moses transformed a form of urban government — the "public authority" — from humble origins into a source of enormous political power, patronage, wealth, and influence, all of it outside the grasp of democratic accountability.
Excerpted from Leviathan by Clint Bolick. Copyright © 2004 Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of Hoover Institution Press.
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