One of the conversations that is taking place here in Minnesota, and likely across the country, is whether or not we have too many governments. There are many - on both sides of the aisle - that are considering ways to consolidate the 40,000+ local governments we have in the United States into something more efficient.

The example of the snow plow truck is a good one. It is a little ridiculous to have the township plow truck following the city plow truck following the county plow truck following the state plow truck, each lowering and raising their blade based on their jurisdictional boundaries. Couldn't we save lots of money if this service were centralized and we had fewer plows with less redundancy?

This is the logic that many states used for education years ago, promoting the consolidation of school districts into bigger, more efficient, (better?) districts. Unlike education, however, most local government services are neither constitutionally mandated nor have such equal-opportunity implications. So should we be looking to consolidate governments?

I am a big fan of Thomas Jefferson and his vision of America, quaint as it may be. That is probably not surprising coming from someone who attends over one hundred local government meetings each year, all in small towns that would potentially be "consolidated". The Jefferson vision - a patchwork quilt of different local governments, each responding to the unique concerns of their residents and all tied together by a larger, governmental framework - is not one of efficiency.

Unless you take the long-term vision.

The strength of the current system, at least in theory, is America's historic embrace of innovation. With 40,000 governments, there will be 40,000 experiments taking place simultaneously. Some of these will be wildly successful, spawning innovations that - especially in an age of instant communication - will find their way to other governments. Messy as it may be at times, what is lost in brute efficiency in this system is more than made up for in innovation. In the long run, so goes the theory, this system will create more efficiencies than a system of fewer governments that allowed for less innovation.

There is a major obstacle to implementing this approach in America today and that is the other side of the experimenting process. With 40,000+ simultaneous experiments in government taking place, some will be wildly successful - indeed - but some will be absolute disasters. Some will be so bad that they should fail.

Can we let a failing government actually fail?

Recent history says we can't. In fact, not only do we sustain these governments with massive amounts of intergovernmental transfer payments, we actually "reward" the worst performing among them with even more subsidy. Doubt this? While there are many, many examples of this, one that quickly comes to mind is Minnesota's system of scoring for subsidy on wastewater improvement projects. The closer a city has allowed its system to get to an environmental catastrophe, the higher the system scores. In competitive government funding schemes, it pays to be a failure.

Our inability to let governments fail - right or wrong - has the same effect that many fear our "too big to fail" approach with Wall Street will have. By insulating companies (governments) from failure, we encourage them to make reckless decisions. Since they will not be ultimately accountable for the full cost of their bad decisions, society does not learn from their mistakes.

Only in government, unlike business, the dynamics of this actually stifles innovation, the very advantage of our system. In government we apply a near universal set of standards for roads, zoning, finance, infrastructure systems, etc... We subsidize standard approaches. We enable one model - the "American" model - over any other. Cars. Highways. Strip malls. Single-family homes.  Etc, etc, etc... We do this because, if we are going to invest public dollars, the projects need to be "done right" (where "right" means the accepted standard). Today there is little upside or encouragement for government innovation.

Building Strong Towns requires a new approach to development. This can happen from the top-down, in a command and control sense, if we replace the current system of subsidies, incentives and standards with a different set of subsidies, incentives and standards. Of course, if we don't do that correctly (and really, why would we?), there are fewer "experiments" out there to raise red flags and put us on the right path.

Innovation can also happen in a bottom-up system, where we harness the power of our national experiment of 40,000+ towns to create innovation that benefits us all. While we could still apply subsidies, incentives and regulation to such a system (we wouldn't necessarily have to), the approach would allow different models and then see what emerges as most successful. In such a system, Strong Towns would certainly be one of the models that would be applied.

But success of the entire approach rests on one question: can we let a failing government fail? We don't have the answer to this question, but without a system that embraces innovation in local government, it seems inevitable that we will continue to drift to national mediocrity. A system too big to fail, too inefficient to afford and too centralized to create the innovation we need.

 

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