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Currently the political economies of most urban areas are a complex pattern of overlapping jurisdictions between various types of local governments such as county, town and township, municipal, school district, special district such as a municipal utility district, and private quasi-governments such as residential community associations. In these political economies, the political units arrange for the production of public goods by a wide variety of public, private and joint arrangements.
In informational society, the provision , which is defined as the arrangement for the production, of local public goods would be consolidated into two levels of government for two reasons. First, as the voter has limited cognitive skills and resources to hold publicly elected officials accountable, a reduction in the number of governments would improve political performance. Second, as will be discussed economic incentives would be superior to political incentives for obtaining better local services. Nevertheless, the arrangements for the production of public goods would remain complex.
In urban areas, the metropolitan government would be responsible for arranging area-wide services such as water, electricity, and sewage. Under the jurisdiction of this metropolitan government, would be the towns which would be responsible for arranging local services. The metropolitan government would correspond to the standard metropolitan statistical area, SMSA, which, given regional redistricting, would generally lie within a single state. Creating this metropolitan government in most current urban areas would require consolidation of the area-wide responsibilities into the single metropolitan government. Once created, the criterion for the jurisdiction of the metropolitan government would be dynamic, like the present SMSA criteria, in order to cover the land area that was primarily integrated into the economic life of the city. This territory would be adjusted annually. Towns would be governments for much smaller groups of from several hundred to several ten thousand individuals with compatible lifestyles within the metropolitan jurisdiction. Creating this local government arrangement in most current urban areas would require partitioning the larger cities into smaller towns.
To further elaborate the division of functions between the metropolitan and town governments, let us review the previous discussion on the difference between their criteria for land use. At the metropolitan level, land use would be regulated by market considerations as modified by zoning. The metropolitan government could zone its various metropolitan regions into areas for specialized activities, such as the central business district, metro parks, and industrial parks but it would have to be able to demonstrate the rationale for this zoning. At the town level, however, the government would function to support the lifestyle of the community. Thus, the town would have the right to regulate land use outside the home according to the social criteria of the community, which in some cases would be market criteria and in some cases not. To promote its chosen lifestyle, for instance, the town could prohibit bars, massage parlors, or any other facilities for activities the town desired to prohibit. If a town zoning ordinance were challenged, the burden of demonstrating that the ordinance denied a basic right would rest with the challenger.
To make feasible such a division between zoning powers of the two levels of government, the metropolitan government would have to directly control land outside the jurisdiction of any town. Metropolitan land would thus be the mechanism for ensuring economic freedom in the traditional sense. If an activity were legal, the metropolitan government would have to allow an individual the right to pursue the activity on land purchased in the direct metropolitan jurisdiction. This right would extend even to controversial businesses such as massage parlors and porno shops. In the towns, however, the individual would not necessarily have this right.
A consequence of this division in land use would be that while most towns would have a small business district for local businesses and offices of people working through the social nervous system, almost all major business activities would be located on land directly controlled by either a metropolitan or a district government. On this land standard commercial practice would apply making the conditions for conducting business reasonably predictable. Businesses located in a town, however, would be subject to the zoning practice of the town, which could shift in accordance with a shift in local politics, thus making the conditions for conducting business less predictable. For example, a new town government could greatly change the conditions of access by outsiders to the town. For a business not focused on the local market, then, locating in a town would add a risk not found in locating on metropolitan land. Inasmuch as the professional review would prevent towns from offering new businesses services below cost, there would be no economic incentive for other than local businesses to locate on town land, since locating on town land would not free a business from metropolitan taxes.
Under the proposed division between town and the metropolitan governments, the metropolitan governments would be large enough to shoulder the responsibility for many governmental functions from the states. Indeed in the proposed design not only would many governmental tasks be decentralized from the federal government to the states, many current state governmental tasks would be decentralized to the metropolitan governments. For example, metropolitan governments would assume greater educational responsibilities such as providing four-year-teaching colleges and adult retraining for new jobs. And some states would decentralize medical care to the metropolitan governments.
However, many government activities such as education would continue to have components at all levels of government and a few activities would be moved up to the state level. Since each state would be responsible for determining risk policy towards the individual, states would control such matters as building and fire codes. This move would reflect the tenet that as technology transforms building techniques and materials, a larger pool of professionals is required to formulate policy governing building safety and a larger market area with uniform standards is needed to promote building automation.
Also, in keeping with the principle of decentralization, the organization of metropolitan government to perform its assigned governmental functions would be determined by a metropolitan constitution subject to the approval of the voters but not the respective state government. Because the metropolitan governments would be larger than current city governments and would be subject to a professional review, it is assumed that the best type of metropolitan government would be a checks-and-balances type government based on separation of powers with a strong mayor as executive, a council as a legislature, and a metropolitan judiciary. These government officials would be full-time officials with salaries compensatory with other opportunities in the political economy. In keeping with the bounded rational principle of a short ballot, judges and officers in the public service corporations would be appointed by the mayor and confirmed by council. Numerous variations in metropolitan government would exist. For example, one factor would be that the number of special districts which currently exist in urban areas would be retained to provide public services. Also, some metropolitan areas would maintain elected judges and elected special districts. In addition, the power of the mayor would vary widely among metropolitan governments.
Regardless of how the metropolitan governments were organized, they would be very concerned about the efficiency of their services. As individuals and firms experienced increasing freedom of location, metropolitan governments would have to compete more and more vigorously to attract new industry and to hold existing plants. To attract new industry the metropolitan government would have to simultaneously provide low-cost services and promote a quality lifestyle. And with the delegation of most lifestyle issues to the towns, metropolitan governments would focus on the efficiency of their services.
The search for efficiency at the metropolitan level will be primarily focused at how to create better services at lower cost and how to create a more efficient regulatory apparatus. Consider first the problem of regulation. Metropolitan regulation would cover metropolitan services such as restaurants. Like the states, the metropolitan governments would have a wide range of alternative arrangements for regulation involving various combinations of administrative control, incentives, and the search for efficient property rights for regulation. Like the states innovation in metropolitan government regulation would frequently involve using information policy to create better incentives. For example, the metropolitan governments could simple release inspection reports of the restaurants to the consumer services or provide the consumer services an information right for inspection. In the later case the consumer choice aided by consumer service analysis would regulate restaurant cleanliness.
Consider now the metropolitan governments' search for efficiency in the provision of public services. Some readers may have the misconception that there is a clear division between the public and private provision, production and consumption of goods. In actuality there are a large number combinations with varying degrees of public and private participation. For example, governments can arrange to have public goods produced by private production through a variety of arrangements such as contract, franchise, grant or voucher. Governments can also arrange to have public goods produced by other governments.
The best alternative method of production is a function of the attributes of the public good. Efficient private production of public goods requires that the good be clearly defined, that there exist numerous competing firms, and that government is effectively able to monitor the mechanism selected for private production. If the private firm producing a public good is to be paid directly by the customer, the private firm must have the ability to exclude nonpaying individuals from consumption. Selecting the best alternative is far from simple given the large number of alternatives and the possibility of mixed forms of production.
In addition, efficient provision of metropolitan services would necessitate that metropolitan governments rapidly adapt to advancing technology. Such advances would create opportunities for decentralization. For example, one metropolitan service likely to be either decentralized to the towns or even privatized completely is the library service. As laser disk capacity increases and costs decline, most households could maintain a small library, and an individual could obtain any reference material from private information utilities. Moreover, advancing technology such as the emerging social nervous system would provide metropolitan governments with numerous opportunities for innovation and create new problems. The social nervous system could be employed for monitoring utility meters, monitoring the environment, and coordinating police protection with private surveillance of private property, but the social nervous system would also create new opportunities for criminals to exploit this medium.
Technology would also enable metropolitan governments to experiment with new solutions to old problems. Consider, for instance, the provision of electricity. Because of the problem of natural monopoly cities generally provide electricity either through private utility companies under regulation or through city owned services. One approach to improve city owned utility services would be to experiment with management situations markets to achieve efficient service. As management becomes increasingly analytical and visual communication becomes inexpensive, the management of a facility can be achieved remotely with occasional onsite inspections. Management groups over a wide area could compete for any opening in the management situations market. The criterion for the competing management groups would be output-price minimization consistent with a fair rate of return on equity. An alternative approach to providing electric power is greater reliance on competition between power producing firms. A compete market approach would be to create a market for electric services by treating the electric grid as a common carrier. When, or perhaps if, superconductivity becomes economical, the number of potential suppliers in the electricity market would become very large.
Currently the rage among conservatives to improve governmental efficiency is privatization of governmental services. Creating a framework such that privatization of governmental services which form natural monopolies would promote efficiency is not always possible. In informational society the social nervous system and freedom of location would make the use of the management situations market an attractive alternative to regulate natural monopolies. Such use would lead to much greater efficiency than the creation of large numbers of politically elected special districts. Thus for reasons of both efficiency and accountability these special districts would be folded into the metropolitan governments of informational society.
Given the numerous opportunities for metropolitan innovation, a key factor in the rate of innovation would be the strategy for implementation. Because the number of metropolitan governments is likely to remain large and these governments would have similar problems, adoption of the separation strategy would improve innovation performance in most cases. According to this strategy the federal government is responsible for research that promotes discoveries leading to innovations and for funding pilot studies and other empirical tests of new alternatives. To provide a focal point for applied research and to train more competent professionals research in metropolitan services should be organized in selected professional schools at research universities. With increasing freedom of location for individuals and firms, the political philosophies and theories of the metropolitan regions would diverge even more than those of the states. This, coupled with federal subsidies for experimental trials of new alternatives, would lead to a very active environment for innovation. A fundamental split between conservative and liberal approaches to metropolitan problems would occur over how much the innovations would take the form of new ways to privatize public services.