Jeffrey Miron
At the core of many public policy decisions is the question of centralization. Libertarians prefer leaving policy to local governments while acknowledging that local control can have downsides.
A recent study addresses this issue by examining a wide swath of China’s local policy initiatives from 2004 to 2020, a period of increased centralization. The study finds that
policy making in China is highly decentralized … [but that from 2013 to 2020] … decentralized policymaking has declined dramatically.
In terms of policy success, the analysis indicates that
locally initiated policies that spread between local governments tended to be associated with higher local suitability and better economic outcomes …. In contrast, top-down industrial policies initiated by the central government showed weaker alignment with local conditions.
On the other hand, local
bureaucratic rivalry stifles the spread of local policy innovations—especially those most suitable for a given locality—and dampens economic performance …. Centralization alleviates these problems, since local bureaucrats no longer worry about political competitors receiving credit for implementing top-down policies.
Overall, the study concludes that decentralized governance structures enable more effective local policies. This is consistent with the libertarian perspective.
Cross-posted from Substack.
