“It is always costly to ensure that agents [government officials] act on behalf of the citizens and that they do not use their power to extract rents from their constituents…
The costs of monitoring agents increase not only with the geographic size of the collective but also with the number of people in the collective. This is because in a larger collective each member captures a smaller share of the rents created by collective enforcement and therefore has less incentive to monitor the agent…With the stake in the collective inversely related to group size, we can expect less monitoring and more rent seeking and rent extraction as group size increases.” — Terry L. Anderson and Peter J. Hill, The not so Wild, Wild West, p. 30
Terry Anderson and Peter Hill make an argument that suggests that democracy does not scale well. As the size of the constituency group gets large, the politician becomes less accountable. Politicians find it easier to extract rents and abuse powers.
The end-of-session legislative victories for President Bush and the GOP illustrate the problem. CAFTA passed, but with large concessions to special interests that threaten to undermine the trade benefits. The energy bill was an exercise in pork, as was the transportation bill. To anyone outside of the political/lobbyist complex, it was an all-too-typically dismal legislative performance.
Lack of accountability is one political characteristic that is clearly bipartisan. For example, take my government in Montgomery County, Maryland, which has been controlled by Democrats for decades. The nine-member County Council answers only to special-interest constituencies, primarily public sector unions. I see little hope of changing that. My county is a poster child for what Steven Malanga described as The Real Engine of Blue America.
“What makes these cities so Blue is a multifaceted liberal coalition that ranges from old-style industrial unionists and culturally liberal intellectuals, journalists, and entertainers to tort lawyers, feminists, and even politically correct financiers. But within this coalition, one group stands out as increasingly powerful and not quite in step with the old politics of the Left: those who benefit from an expanding government, including public-sector employees, workers at organizations that survive off government money, and those who receive government benefits. In cities, especially, this group has seized power from the taxpayers, as the vast expansion of the public sector that has taken place since the beginning of the War on Poverty has finally reached a tipping point.”
Thanks to these interest groups, we enjoy a high bureaucrat-to-student ratio in our schools, a “living wage” law to protect public-sector workers, and anti-Walmart zoning to protect other union members. The County Council even wants to provide public workers with imported low-cost pharmaceuticals from Canada, notwithstanding the fact that one of the most important private-sector industries in the County is biotech research.
I would like a government that is modest in its exercise of power, and in which special interests are not excessively powerful. Instead, at all levels of government, I see the opposite. What can be done?
I think that Anderson and Hill offer a clue. The sheer size of modern electoral constituencies makes politics a matter of financial muscle and mass marketing. Only with smaller electoral constituencies would the incentive structure change to reduce the arrogance and rent-seeking of elected officials and powerful interest groups.
We Need 250 States
In 1790, the largest state in the union, Virginia, had a population of under 700,000. Today, Montgomery County has a population of over 900,000. Our nine-member County Council answers to about the same number of registered voters as the entire House of Representatives of the United States at the time of the founding of the Republic.
We cannot have an accountable democracy with such large political units. We need to break the political entities in the United States down to a manageable size.
Instead of the present 50 states, the largest of which have more than 30 million people each, we should break the country into 250 states, with 1.2 million people each. Some rural states would increase in geographic area. At the other end of the population density scale, the largest metropolitan areas would be divided into multiple states.
Each of the 250 states should have two Representatives and one Senator. However, the Representatives and Senators should not be elected directly by the people. The Constitution originally called for Senators to be elected by state legislatures. We should go back to that, and, because of the growth in the population at large, we should adopt such a system for Representatives, also. Representatives and Senators should be elected by state legislatures, so that the accountability of Congressional legislators is not diluted. The state legislators who elect Representatives and Senators will have an incentive to monitor them.
Each of the 250 states should be divided into 400 towns of 3,000 people each. Overall, there will be 100,000 such towns in the United States. Each town should elect a town council of 5 people, as well as one representative to the state legislature.
Limits to Arrogance
In a town of 3,000 people, there is not much scope for political arrogance. You cannot redistribute resources to one group while muting political opposition from others.
Even at a state level, with 1.2 million people, it will be much harder for a small interest group to extract rents without having a noticeable impact on others. Moreover, with each town represented in the legislature, towns will be wary of giving benefits that are enjoyed primarily by small subsets of towns.
Town councils will handle zoning issues, schools, parking enforcement, and public safety. Councils may find it helpful to negotiate with neighboring councils in order to resolve common issues and share resources.
States will handle courts, roads, water, and other public infrastructure. In densely-populated areas, some states may have to negotiate with one another to do this effectively.
My conjecture is that small state and local government units will tend to use private contractors to supply services. Perhaps a regime of vigorous competitive bidding would evolve, and suppliers that failed to perform might be dropped. How different that would be for most government services, where incompetent workers are almost impossible to fire.
At the Federal level, incumbency and name recognition will not be nearly as helpful in election campaigns. Congressional seats should be more competitive. Pork barrel politics may be less effective, because it may be easier for state legislators (who elect Congresspersons in this scheme) to punish excessive spenders.
There are two components to this reform proposal. One component is to reduce the size of the local units of government. My thinking is that this would increase the power of ordinary voters and reduce the power of special interests.
The other idea is to “layer” the electoral process for Congressmen and Senators. The problem with direct democracy is that each legislator represents too many voters, so that accountability does not take place. Instead, I am proposing that we “elect the electors.” That is, we would vote for state legislators, who in turn would vote for Congressmen and Senators. The number of state legislators would be sufficiently small that mass-market, money-driven politics would be less important. Direct persuasion would be more important.
I believe that at all levels of government, both the use and abuse of power would be lessened. The private sector would enjoy greater freedom.
I realize that this reform stands no chance of passing, and even if it did there is the potential for adverse unintended consequences. Consider it instead as a thought experiment, designed to draw attention to the challenge of maintaining individual rights and limited government in a mass democracy.