March 30, 2015 Print

When political power is concentrated with a relatively small and centralized group, the politicians are both less able to understand the varied social conditions that the political process seeks to address and have less of a vested interest in truly making things better for their widely dispersed constituents. A new paper from Atlas Network partner Institute of Economic Affairs (IEA) argues that current parliamentary proposals to “balance” national power don’t approach the problem correctly, and instead details a strong case for a radical devolution of political authority and fiscal decentralization.

The authors, historian Tom Packer and economist Matthew Sinclair, point out that empirical studies show a correlation between fiscal decentralization, limited government, and economic growth. They suggest that local jurisdictions are better able to manage particular categories of regulation, such as environmental policy, health and welfare, housing, and labor markets, and caution that as national powers are ceded to local governments, corresponding powers to tax should be ceded as well.

“[T]he principles we have set out would encourage fiscal responsibility; align the incentives of local government with the broader public interest in development and prosperity; and encourage experimentation with reforms that could deliver better governance,” the authors conclude. “Economic circumstances will change over time and we will learn more about what works. The framework we propose can evolve as circumstances change.”

Read the full paper, “Slicing up the public sector: A radical proposal for devolution.”

Read “It’s high time Britain faced up to the risks of radical devolution of power,” by Tom Packer.