The evidence from a new study confirms what most of us already know: smaller and decentralized government is more responsive to people’s pressing needs, more efficient in satisfying them, and much, much less wasteful than big leftist government.
From International Liberty, in a piece called “Small Government Is Efficient, and Decentralized Government Is even Better”:
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In early November of last year, I shared some remarkable data from a groundbreaking study published by the European Central Bank (ECB).
The study looking at public sector efficiency (PSE) in developed nations and found that “big governments spend a lot more and deliver considerably less.”
Later in the month, I wrote about a second ECB study that looked at a broader set of nations and further confirmed that smaller government produces better results:
The first ECB study clearly concluded that “small” government is more efficient and productive than either “medium” government or “big” government. Based on the second ECB study, we can conclude that it’s even better if government is…well, I guess we’ll have to use the term “smaller than small.”
Today, we can augment this research by looking at a new study from the International Monetary Fund.
The IMF’s new working paper on “Fiscal Decentralization and the Efficiency of Public Service Delivery” shows that it’s not only good to have small government, but that it’s also good to have decentralized government. Here are the main findings.
This paper analyzes the impacts of fiscal decentralization on the efficiency of public service delivery. …The paper’s findings suggest that fiscal decentralization can serve as a policy tool to improve performance… an adequate institutional environment is needed for decentralization to improve public service delivery. Such conditions include effective autonomy of local governments, strong accountability at various levels of institutions, good governance, and strong capacity at the local level. Moreover, a sufficient degree of expenditure decentralization seems necessary to obtain a positive outcome. And finally, decentralization of expenditure needs to be accompanied by sufficient decentralization of revenue to obtain favorable outcomes. …
The study also noted that genuine federalism leads to spending competition…
For what it’s worth (and based on previous academic research), I agree that decentralization makes it harder for government to be profligate.
But that’s a good thing. I want to “obstruct” economically destructive redistribution. …
I’ve already argued that federalism is good politics and good policy.
Now we have evidence that it’s good government.
What do you think of this?