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State and Local Government Law
University of Texas Law School
Baker, Lynn A.

Introduction: Local Government and Institutional Competence             1-8
I.          Theoretical Perspectives on the Functions of Local Government
The Perspective from Politics                                                             9-22
·         John Stuart Mill, Considerations on rep gov
o   Leave policy to fed, details/implementation to local. Pay attention to externalities
·         Tocqueville, Democracy in America
o   Lack of administrative centralization protects freedom
·         Arendt, Revolution
o   Jefferson – strength of republic comes from the collection of small republics
·         Rosenblum, Membership and morals
o   Prevailing view – prevailing view is get to decide how town develops (concern about race to bottom when making attractive to poors).
·         Madison, Federalist 10
·         Notes
The Perspective from Economics – and a Response                           22-46
·         Tiebout, Theory of local expenditures
·         Logan & Molotch, Urban fortunes
·         Notrd
·         Local Gvt as a provider – collective action problem
·         Notes
The Forms and Structures of Local Government                               46-50
·         County
·         Municipal
·         Town
·         School Dist
·         Other special dist
(the page numbers are from Baker’s book and are to help match the reading with each portion of the outline. This is a compilation of several outlines and my own notes. Make sure to check her old exams…the same questions come up over and over)
Gov’t provides:
(1) goods and services, and
(2) a forum for participation and discourse
o Which level of gov’t should be providing goods and services?
(1) obtaining economies of scale – whats better local of central- you have the resources. Example: FDA- one instead of 50
(2) finding median voter (Madison factions)
(3) finding better qualified representatives (Mill)
(4) need for uniformity of laws in certain areas – environmental laws?
(5)the need for one voice (e.g. foreign affairs)
Two theories of gov’t:
(1)   civic republican/communitarian-. Local govt should be focal point for democracy. Central and unique, participatory government. Focus attention on idea of public participation on govt. and would ask ? about what is right amount, and what sort of issues should decide. Civic republican to say focus should be people in locality and having them behave as platonic citizens, have them take responsibility.
a.       Problem – interest becomes defined too narrowly and oppresses minorities b/c they feel pressure to conform
(2) public choice-
 Public choice perspective- gives us certain assumptions
government officials are people motivated by the same rational self- interests- elected official, would like to be reelected, in order to do that they need to be responsive to constituents wants. Alternative is platonic conception of elected official, that they are doing what is good for America, public interest. Problem is that
on almost any issue even a small number of people are going to disagree.
Majoritarian —Public good- whatever a majority of voters tell us, the outcome of democratic procedures. There are groups that always lose more often than other. Public good may not be what the majority wants.
Different options at the local level: movement, Succession- ex. Long Island.
Process that again look at output and declare public good, but we are going to impose certain requirements on that process, because only if that process has certain characterisitics, then will it be public good. Meant to be an informed, deliberative process. How do we know deliberated or got enough to swap votes. All alternatives should be considered. Everyone affected should have access to decision making process.
Platonic conception of public good- have us focus on decision makers. You should vote for person that is most wise, best experience. Not wise enough to make decisions but wise enough Delegate/pick wise people. Focused on elitist view. At the end of the day though rational self interest motivates them. 
Problems the gov’t is uniquely capable of solving:
 (1) Coordination problems – i.e. overcoming collective action, prisoner’s dilemma- uncertainty as to what the other party will do. Government can place certain standards, no uncertainties, Provide solution to occurrence of games, Avoid holdouts
(2) Free rider problem (chicken game)- because you don’t know what the other will do , no dominant strategy rider Government can organize so that no body is a free rider
public goods- are non rival- consumption by one person does not affect the ability og other s to similarly consume. And they are non excludable- public goods are underprovided, positive externalities are enormous. There are few times, where one will fit bill. Ex. Light house- all boaters need it, but who would pay.
(3) overprovision of negative externalities – e.g. tragedy of the commons ex: pollution. Government can come in and regulate and force the internalization. “tragedy of commons”- many situations where benefits are very concentrated and the costs are diffuse
(4) information problems. Sometimes we may not make best possible desicions either because not complete info. Government can safe us from ourselves- under certain situations where we may be unable to process info rationally. …cognitive bias.
Selecting level of government
1. coordination and info problems- any level although with different levels of efficiency.
2. Internalizing externalities/free rider- require great govt attention. Mismatch between who is bearing cost and benefit. Govt helps improve match.
3. Governmental boundaries-
4. localities we should assume will be unlikely to take interest of outside into account. So we handle at state level. Ex: School finance.
·         Grade schools – usually provided by state. Covered by some state funding, some federal funding
o   School curriculum – one of the areas where people are most suspicious of federal govt
o   Too much local tailoring of school curriculum to certain outcomes can end up causing those outcomes
o   Should have larger role in funding/curriculum from feds. Won’t have uniform view on “ought”
o   Head start has been successful b/c it has helped kindergarders
o   State redistribution has been touchy, especially in TX when over half of funds were leaving wealthy communities
·         Licensing of drivers
o   Handled by the state
o   Commercial license standards handled by fed. More need for consistency because there are more dangerous vehi

s of consumer-voters. Rather, the consumer-voter may be viewed as picking that community which best satisfies his preference pattern for public goods and services (i.e. picking a bundle of services).
ii)      Competition for consumer services transfers market efficiency to local governments
iii)    Critique- assumes perfect information, perfect mobility, no externalities etc… Lots of people, however have no mobility to leave a city and therefore there are always externalities that either lead people to leave an area or move to an area; the offered package of services is relatively the same in all areas
(a)    Do people have sufficient variety of choices?
(b)   Are choices made for other reasons? (job?)
iv)    Usefulness – economic based approach; governments do provide services (especially schools) that affect where people move; explains urban flight to suburbia, explains how certain areas exclude or encourage portions of the population (e.g. zoning, taxes, agreements w/realtors etc)
Exchange values – marketplace
Use values – current use (article describes use values like ethnicity, security, local support network, etc)
Tiebout doesn’t think of inefficient markets, things like ties to local place
Local govt as provider
Allocative – which goods produced. Market should handle this but:
Initial distribution of resources might not let people make bids for things they value
Externalities – transaction fails to reflect all costs/benefits it generates
Tragedy of commons
Free rider problem
Public goods go underproduced.
Marginal cost = 0 so doesn’t signal
Often nonexcludable
Strategic behavior – conceal preference
Game theory
Prisoner’s dilemma
Counter – repeat players
Collective action – cost of assembling coalition is greater than benefits for any one person
Information – isn’t perfect
Coordination – even if people want to coordinate it can be difficult with large numbers
Distributive – redistributing resources
Better to centralize
People try to escape, poors gravitate
Govt solutions to coll action
Solve freerider problems by collecting fees, solve coordination by publishing etc
Criticisms of govt
Is itself a public good
Don’t always need intervention to solve collective actions
Officials might misunderstand/ignore prefs
Preferences might not be appropriate
Special interests – when cost dispersed but benefits conferred on small #, they will lobby to get things not in public good passed
What govt should solve
The one with boundaries that most closely match misallocation
Different Types of Local Units p.46