Bigger is not better: the virtues of decentralized local government

OLD-LINE manufacturing cities have taken it on the chin in recent years. Just ask officials in Dayton, Ohio. As its metropolitan area grew to almost 1,000,000 people, the central city's share of the regional population declined from more than one-third in 1960 to 18% in 1990. The decline is likely to continue as the city struggles to maintain its economic tax base.

Just ask the employees at the General Motors plant in downtown Dayton. GM is moving 1,000 jobs to a more modem facility in suburban Moraine. Faced with billion-dollar losses, the company plans to close four other manufacturing plants in the city and move the jobs north to suburban Vandalia or Canada.

Those occurrences, like plant closings in countless other metropolitan areas throughout the Northeast and Midwest, severely have challenged a city that has experienced blow after blow to its economy during the past two decades. In 1991 alone, a major marketing firm announced it would move 800 white-collar jobs from Dayton to its headquarters in Minneapolis; a national airline announced the closing of its hub at the Dayton International Airport; and a major regional retailer severely scaled down its downtown anchor. Those changes add to the ominous uncertainties attached to the hostile takeover of Fortune 500 company NCR (founded and headquartered in Dayton) by AT&T and declining defense contracts at Wright Patterson Air Force Base (which employs more than 25,000 civilians, largely in white-collar and technical jobs).

Dayton's economic decline is not unusual--similar events have been standard fare in most manufacturing towns since the 1960s. To preserve Dayton's position as the "heart" of the sprawling metropolitan area, more and more public officials are advocating a city-county merger. "Dayton deserves to survive as a nice place to live," Max Jennings, editor of the Dayton Daily News, maintains, "and its citizens deserve as much." Since the leadership days of the city are over, merging it with the county is seen as the way to revitalize the core of the region by tapping county-wide resources (money) and reaping economies of scale by providing public services through a larger, more encompassing government.

Dayton and its satellite communities are riding the wave of a new era of regionalism in local government. Unable to revitalize their once-vibrant central business districts, cities across the nation are turning to an old standby as the new panacea for their development woes: regional governance.

Under the banners of "regional cooperation" and "regional development," local governments are banding together to plan the future of their metropolitan areas. Fragmentation and decentralization there, regionalists argue, are compromising the ability of cities to compete successfully in an increasingly competitive global environment. Only by pulling together through cooperative arrangements and, in some cases, consolidating local governments can metropolitan areas solve pressing urban problems such as poverty, affordable housing, education, and job creation.

The new proposals move far beyond the more limited special districts designed to provide a specific public service--such as parks and recreation--over a wide geographic area. The governance proposals that form the core of the new wave of regionalism are comprehensive. Most involve consolidating economic development functions under a unified government whose authority supersedes that of independent municipalities and the private sector. Proponents of consolidation argue that providing public services and coordinating programs through a government monopoly will be efficient than allowing dozens, sometimes hundreds, of smaller governments to compete against each other. The trend toward regional government, however, is likely to exacerbate the problems it is intended to solve. Although there are legitimate concerns about lack of cooperation among local governments, particularly on large public projects such as road and sewer systems, a more consolidated structure probably would decrease the ability of local governments to provide public goods efficiently and cost-effectively. Attempts to consolidate governmental authority imply that public goods and services are handled best by a single comprehensive organization. Experiences with regional attempts to solve local problems have confirmed the worst fears of opponents about the excesses of monopoly government. Moreover, the private sector, with its more innovative and flexible alternatives, often has been more efficient than larger, bureaucratically controlled local governments.

The solution is more likely to be found in a competitive, decentralized governmental system. Instead of undermining the diverse interests that make up metropolitan America, urban policy should free political markets to ensure that the desires of local residents are expressed fully in the policy-making process and the private sector is given the widest possible latitude to provide needed goods and services. Public services often are provided more effectively and efficiently through privatization, which allows outside companies to develop innovative new services and products that reflect the changing needs and wants of local consumers. That goal can be reached only by avoiding a consolidated, monopoly regional government system that depends on one organization to provide all public goods. A decentralized, fragmented political system that is competitive and responsive can achieve that goal.