I understand the broad point being made and I see how it could work. My concern would be though that non-local taxes will step in because of influence/'too-big-too-fail'. Unless some form contract is signed or an state/federal insurance policy, I feel that this is bound to be 'abused' (state and federal government will, and should, step-in to aid once disaster strikes.)
I agree with you. In my 2010 Climatopolis book, I posed the hypothetical asking how Milton Friedman would run FEMA. The time consistency issue of no spatial bailouts is an important issue. As the U.S federal deficit rises, I predict that we will see fewer federal bailouts of localities. Do you know Gary Becker's work on this general point?
Becker, Gary S. "Public policies, pressure groups, and dead weight costs." Journal of public economics 28, no. 3 (1985): 329-347.
This is a Coasian hypothesis that as the inefficiency of status quo policies rises, political reforms take place.
I understand the broad point being made and I see how it could work. My concern would be though that non-local taxes will step in because of influence/'too-big-too-fail'. Unless some form contract is signed or an state/federal insurance policy, I feel that this is bound to be 'abused' (state and federal government will, and should, step-in to aid once disaster strikes.)
I agree with you. In my 2010 Climatopolis book, I posed the hypothetical asking how Milton Friedman would run FEMA. The time consistency issue of no spatial bailouts is an important issue. As the U.S federal deficit rises, I predict that we will see fewer federal bailouts of localities. Do you know Gary Becker's work on this general point?
Becker, Gary S. "Public policies, pressure groups, and dead weight costs." Journal of public economics 28, no. 3 (1985): 329-347.
This is a Coasian hypothesis that as the inefficiency of status quo policies rises, political reforms take place.