January 3, 2012

Big Finance Likes Totalitarianism, but Democracy Requires Hard Lessons

Justin Katz

I'll admit that I don't have much new to say about the continuing activities of the state-appointed budget commission now ruling East Providence:

The state-appointed budget commission overseeing the city's finances convened for the first time Wednesday, chose Michael O'Keefe, a former state budget director, as its president, and established its first priority: improving the city’s cash flow.

Essentially, that means debt; the city needs $10 million in tax anticipation notes, and the lowering of its rating to "junk" will make that "more difficult and expensive," as O'Keefe puts it. It all comes back to government debt and charming investors. We've discussed previously that the municipal takeovers are meant as "a statement to Wall Street," and the point merits continued emphasis. What Wall Street likes about state-imposed budget commissions is that they open the door to options that might benefit civic units as economic entities, but not necessarily as self-determinant civil societies. The state can take money from other parts of the state to hand to struggling cities and towns; it can impose taxes on local residents without fearing democratic reaction; it can change policies and, ultimately, contracts to address shortfalls.

At bottom, the problem is that the way in which the state determines a preferred mix of these solutions will depend on the influences on it. That means not only special interests, like organized labor, but also the general priorities of the class of people who occupy the state's bureaucracy and elected positions. The people who actually live in a city or town are not likely to rate very highly, and voters in other cities and towns are not likely to pay all that much attention.

I'd suggest that a healthier solution — in the long term, and with an eye toward effective democracy — would be to let a city or town run out of money. Let it reach the point at which it cannot provide services or pay employees. Or, alternately, that it must raise taxes and impose fees almost immediately. If we're to be a self-governing people, we have to experience, together, the consequences of incompetent leaders and bad decisions.

Of course, if people start learning such lessons on the small, local scale, they might begin applying them at the state and national levels. And we couldn't have that, now could we?

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If the states are truly laboratories, then municipalities are experiments that are performed in them. When you don't allow experiments to fail and simply redo them until you get the answers you want, you don't have science anymore, you have progressivism.

Posted by: Dan at January 3, 2012 7:59 AM

I'd be all for that with one problem, the schools. Yeah, it's easy to sit back and watch a whole town fail and crumble and say "told you so" but the ones that get hurt when the schools shut down are the 6, 12, 15 year olds in town who don't have much of an option for an education. If when the town crumbles, that means I don't have to pay as much in taxes anymore, ok then fine. Let's do it. Then I might be able to afford to send my child to a private school. But there's no way I could still pay the same tax level, have no school system and afford private schools. So unfortunately, that's why we do keep "redoing the experiment" as there are no other options.

Posted by: Patrick at January 3, 2012 9:11 AM

"the lowering of its rating to "junk" will make that "more difficult and expensive," as O'Keefe puts it."

This makes it sound as if it were some evil trick by the rating agencies. Hey guys, you did it to yourselves.

Patrick's concern about the children is a favorite political strongarm, right up there with "we'll have to cut police and fire protection".

Posted by: Warrington Faust at January 3, 2012 9:20 AM

If all politics were to made local, how does a cost conscious (or extremely poor) communtiy deal with the competition for personnel while there remains a standard of services mandated by state and federal statutes and regulations?

The competition does exist. It is either for the lesser challenge of suburban demographics or the higher pay offered by those willing to pay more.

Posted by: John at January 3, 2012 9:46 AM

At the risk of hijacking this thread, have there been any significant lay-offs in East Providence? It's a serious question. Other than the teacher firings in Providence and they don't count or the threatened lay-offs of the Providence Police (they too don't count), I don't recall any news about any significant lay-offs in any community around this state.

Posted by: Max D at January 3, 2012 12:13 PM

I don't recall any news about any significant lay-offs in any community around this state.
Posted by Max D at January 3, 2012 12:13 PM

In my 50 years in this progressive sewer I don't recall one "real" layoff. Just fake ones that are rescinded shortly after for minimal "concessions".

Posted by: Tommy Cranston at January 3, 2012 1:06 PM
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