We all have to deal in some ways with the federal government, state government, county government, and often a city or town government. What if we could choose the government agencies we dealt with? It’s an idea Arnold Kling has been exploring in his recent work. An adjunct scholar at the Cato Institute, Kling is also author of the books From Poverty to Prosperity and Unchecked and Unbalanced. He discussed his ideas about government competition with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Kokai: I take it you start from the viewpoint that government has too much power now?
Kling: In fact, it’s an even stronger point of view than that. It’s saying that we really ought to subject government to market forces and allow people to select different forms of government and to not necessarily be trapped with one particular government just because they’re in a particular location. So it’s a kind of radical and, in some ways, almost science fiction point of view that I reach at the end, but that’s kind of at the very end.
Kokai: We already have a government. How would we go about choosing a different one?
Kling: You can imagine a situation where … different private agencies can compete for providing services. They could compete to provide schools. They could compete to provide garbage collection. They could even compete to provide regulation. You could have competing meat inspection services, and then it would be up to the consumer to say, “Well, I trust this meat inspection service, but this other one I don’t trust so much.” There are examples like that in private industry.
So people can have these kinds of choices, and I actually have this fantasy of actually — a lot of these functions in some sense are virtual functions. That is, they are not that location-dependent. So certain types of regulation are not location-dependent for things like regulating Internet content. You know, if you wanted to be subject to some regulation on content because you don’t want your family to be exposed to certain things, maybe you could — well, in fact, you can — subscribe to services that will regulate content for you. And the alternative to that is just to have one size fits all, with one monopoly government based on location. I’m suggesting that we could have others.
You can think of [it] in some ways as being like you select a hotel chain or you select a cell phone provider. Maybe the cell phone provider is the best analogy to go with. Wherever you go, you can use your cell phone with your cell phone provider. But if you want to switch cell phone providers, you can switch cell phone providers. Imagine if things were that flexible in terms of government.
Kokai: Would this apply to all government services?
Kling: There are those who think that just about any service could be subject to competing governments. I back away from things like national security. I don’t see that as a competitively supplied thing, although people have models of that. I also think that you need an overall court system because one of the things that would occur in this kind of — science fiction, if you will, environment — is that let’s say somebody, a neighborhood, wants to take jurisdiction over something and another institution says, “No, we really have jurisdiction over that.” And so you’re going to get jurisdictional disputes, and they need to be resolved peacefully, and so you need a court system that everyone agrees to adhere to. So I think you would need a generic court system, and you would need a generic national defense. But beyond that, you could have a lot more competition for services.
There used to be, for instance, the possibility of competing fire departments, where you would sign up with the fire department of your choice. So if your house caught fire, it would be the fire department that you signed up with that would come to put it out, rather than you sort of automatically being signed up with the fire department based on your jurisdiction.
Kokai: Why would we want to do this — subject more government services to competition?
Kling: The big advantage that markets have is something that I call adaptive efficiency. That is, they bring new ideas and better efficiencies and new products to market — to consumers — much faster than bureaucracies. Either large corporations or government are going to tend to resist change.
Change in the world comes from upstarts, from outsiders, from entrepreneurs. And so the more of the goods and services that you can subject to entrepreneurs and the discipline of the market, the more improvements you’ll see. And I think a classic example would be schools. You know, schools have remained very backward in terms of their use of technology, and they are dissatisfying to many parents, particularly parents of inner-city kids. And if they were more open to competition, I think eventually schools would learn better ways of teaching, and they would be more prone to satisfy their customers. But that can extend to other things beyond schools, to other things as well.
Kokai: You say in the book Unchecked and Unbalanced that knowledge is becoming more diffuse while power is becoming more concentrated. What kinds of problems does this create?
Kling: Well, let me go back to, let’s say, around the 1960s, when John Kenneth Galbraith was writing, and he noticed that large corporations liked to use the same type of planning apparatus that large governments do. And he said, “Well, that must be the wave of the future. We’re going to have a planned economy either way, whether we have a Soviet system or whether we’re being planned by Union Carbide and U.S. Steel.” Well, what he didn’t notice is that U.S. Steel and Union Carbide were about to disappear, and his view was that entrepreneurship was a myth.
But, in fact, entrepreneurship has made a big comeback, especially in the last 20 years. And basically that is because knowledge has become more dispersed. We’re no longer this mass industrial society. We’re a knowledge-based society, and knowledge isn’t concentrated in single factories the way the mass industrial society was.
So in this world of dispersed knowledge, concentration of power, rather than being a good thing and making it easier to plan, is actually a bad thing because with dispersed knowledge, trial and error [and] decentralized learning works better than central planning. So in the age of the Internet, when anyone can start a business with just a few thousand dollars to create a website, there are just many more opportunities to take advantage of decentralized knowledge, and central planning has become comparatively less effective.