If Localism Is the Future, What’s Holding It Up?

thampapon1_Localism© CAN STOCK PHOTO / THAMPAPON1

Localism — the decentralization of authority and decision-making — is a powerful “back to the future” trend. Localism is built into the US Constitution, of course, and has always been an integral part of American culture and society — its heart and soul, really — even in the face of 100 years of strong centralizing forces.

In fact, when the Great Recession started in 2007-2008, it seemed to indicate that centralization and nationalization of all things had reached an apex, and that a return to localism could be a beneficial and necessary part of the nation’s response. And it has been. (See “Restoring Localism: An Agenda for 21st-century America,” by Kotkin and Cox.)

But the localism trend has not moved as far or as fast as one might have expected or hoped. Why is that?

Because of another powerful, countervailing trend: regulations, particularly land-use regulations — conceived and instituted in and for earlier times — have inhibited the localism trend from working. I have written about this previously, for example, here.

Also consider this excerpt from Edward Glaeser…:

Land use controls have a more widespread impact on the lives of ordinary Americans than any other regulation. These controls, typically imposed by localities, make housing more expensive and restrict the growth of America’s most successful metropolitan areas.

These regulations have accreted over time with virtually no cost-benefit analysis. Restricting growth is often locally popular.  Promoting affordability is hardly a financially attractive aim for someone who owns a home.  Yet the maze of local land use controls imposes costs on outsiders, and on the American economy as a whole.

…or this one from Theodore Kupfer:

Something seems wrong with the American economy, despite strong headline numbers. Nine years into the expansion, GDP and productivity growth remain below their long-term trends. According to a working paper published by the National Bureau of Economic Research, restrictive land-use regulations in California and New York are a major reason why. The paper, by Kyle F. Herkenhoff, Lee E. Ohanian, and Edward C. Prescott, argues that “these restrictions have depressed macroeconomic activity since 2000.” The basic idea is that land-use regulations artificially constrain the supply of land, driving up prices for housing and commercial rent — and that these regulations are the most restrictive in places where productive opportunities are plentiful. Take the Golden and Empire States, where, compared with the rest of the country, jobs abound and productivity is high. These states have extraordinarily restrictive zoning and development laws that drive up the price of land.

Someone considering a move to San Francisco or Manhattan might find the cost of moving to be prohibitive and decide to continue living in a place with comparatively fewer job opportunities. Hence, the authors say, land-use regulations “raise land prices, slow interstate migration, and depress output and productivity relative to historical trends.”

For a more “granular” look at this subject, I recommend the work of John Sanphillippo; another example is here.

I also recommend the work of Randall O’Toole, the Antiplanner.

Neither of them is very optimistic about the prospect of our current systems allowing the localism trend to bloom as it truly would otherwise. And if they’re not optimistic, it’s hard for me to be. But Ryan Steeter sees the need:

America needs two forms of localism to counteract the politics of abstraction. The first is more local governance over issues we have ceded to Washington, DC. We need to give more flexibility to local agencies and institutions so they can better help low-income families get training and better jobs, create more educational options for families, create environments that entrepreneurs like, experiment with new types of infrastructure, make innovation easier, and more. This would be a large-scale project granting exceptions to federal and state requirements in favor of local innovation.

The second, and perhaps more important, form of localism concerns economic and social innovation. Smaller, local businesses generate revenue for other local firms and are reliable employers during economic downturns. Local entrepreneurs have a positive effect on income and employment and employ workers who are committed to their communities. We should make it easier for local entrepreneurs to launch new businesses through licensing and banking reform. We should make it easier to match enterprising firms with talented workers through modernized workforce development policies. But most importantly, we need what no government policy can achieve: local business and civic leaders committed to cultivating new business and social entrepreneurs no matter what political leaders do. This is an opportunity for a new generation of philanthropists and civic innovators.

Local action is the arena in which people are needed by others. It is the arena in which national problems become local. It is the arena in which you and I create solutions instead of waiting for distant bureaucrats to do it for us. It is the arena in which the politics of abstraction no longer makes sense and social isolation dissolves amidst true community.