My colleague Bob Nelson has an article in Reason that’s derived from his book, Private Neighborhoods and the Transformation of Local Government. Nelson makes proposals that will appeal to Reason‘s core audience of libertarians; but they could also attract some lefties.
Today, local governments are creatures of the states, assigned exclusive duties and powers over a defined geographical area. Originally, Nelson argues, municipalities were corporations that formed as voluntary associations and held many of the rights we now associate with businesses: the rights to merge or divide, to purchase other entities, to contract out particular services, and to buy or sell property rights.
Nelson thinks that governmental entities should be granted similar flexibility. Then neighborhoods could secede to satisfy their residents better, or governments could unite to gain economies of scale. The two things could happen simultaneously. For example, neighboring governments could sell their transportation functions (including eminent domain) to a regional entity that would provide economies of scale, but turn their schools over to small nonprofit corporations at the neighborhood level.
