Resist the Urge to Merge | Eastern North Carolina Now

   Publisher's note: The article below appeared in John Hood's daily column in his publication, the Carolina Journal, which, because of Author / Publisher Hood, is inextricably linked to the John Locke Foundation.

    RALEIGH     I recently ran across a research finding that runs counter to the prevailing view of professional progressives. Naturally, I found it fascinating.

    Dean Stansel, an economist at Florida Gulf Coast University, decided to explore the question of how the structure of local governments might affect local economic growth. Across the country, there are wide variations in how many governmental units there are relative to the population. In some states, history and law have conspired to create many competing jurisdictions, such as municipalities and school districts, within a given metropolitan area. In other states, including North Carolina, a different history and laws more accommodating to involuntary annexation have led to a greater degree of local-government consolidation.

    Stansel tested the
John Hood
proposition that consolidated governments enhance the economic health of communities. His study, published in The Journal of Urban Economics, found the proposition wanting. "The results indicate a negative relationship between the central-city share of metro area population and economic growth and a positive relationship between both the number of municipalities per 100,000 residents and the number of counties per 100,000 residents and economic growth," Stansel wrote. "Those findings provide support for the hypothesis that decentralization enhances economic growth."

    On paper, the consolidation of local governments often seems attractive. By eliminating duplicative services and spreading administrative expenses over a larger number of public employees and residents, consolidation offers the prospect of reducing the cost of public services while maintaining or improving their quality.

    But in the real world, these benefits often prove illusory. When you consolidate school districts or other governments, you reduce the extent to which local residents can move with their feet to jurisdictions that best reflect their preferred mix of government costs and services. Only by moving far away, perhaps even to another metro area altogether, can they escape the jurisdiction of poorly run governments. Unless their employment prospects or lack of family ties permit it, this radical alternative is too costly for many residents. So the consolidated governments can afford to grow more bureaucratic, more costly, and less worried about the quality of services they provide.

    None of which is to say that consolidation is always a bad idea. For particular government functions such as water utilities, large-scale operations can be the best fit. But in general, the available research does not support the notion that local-government consolidation is inherently in the public interest.

    The case of public education is perhaps the most familiar one in North Carolina. As I wrote a few years ago:

    The results of school-district mergers are often strikingly different than their supporters promise. Administrative spending and costs per student tend to rise, not fall, as you go up the scale in district enrollment. Massive districts the size of Charlotte-Mecklenburg, Wake, and Guilford are way, way too large to manage effectively. Parents feel overwhelmed, powerless, and angered by frequent assignments and social-engineering schemes. Politicians battle incessantly over regional priorities. Those dissatisfied with current policies or leadership - be they families or teachers - can't just move across town into another district. They have to leave the county. And as for racial balance, merged districts don't necessarily translate into merged schools, much less merged classrooms. Using magnet programs and innovation are preferable to compulsion in pursuing such goals, and more politically sustainable in the long run.

    This is not the way things work in many states with better-performing public schools than North Carolina. They have a larger number of districts per county. The available research seems to suggest that, everything else being equal, smaller districts tend to produce at least modestly better academic results.

    Thanks to research by Stansel and others, there are also compelling reasons to believe that consolidation is bad for local economic growth. I don't expect such findings to change the minds of those who lobby for bigger governments. Progressives have been pursuing governmental consolidation for more than a century. They tend not to let practical realities get in the way of implementing their theories.
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