Author Topic: Are Central Governments dumping their problems on Local Governments?  (Read 181 times)

FitzFord

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Local Governments in Europe and the US are bearing, or are being proposed to bear, significant portions of the fiscal pains of what have largely been problems in the central Governments' management of their economies and budgets. Without picking on specific governments (most readers will recognize them immediately) their failures and misjudgements are well known. Excessive borrowing in violation of prudent rules to which they signed on; facilitation of excessive private sector investment in housing; promising benefits at costs that actuarial analyses clearly indicate to be imprudent; poor oversight of critical agencies; unbalanced revenue sources and collection in favor of some sectors of the economy; are all well known examples. Add to this, reluctance to address the implications of shifts in the world economy that their internal discussions in international fora such as Group of 8 and Group of 20 are now revealing were on the agenda, are among the more eggregious failings now being acknowledged. Clearly, failings of these sizes and importance cannot avoid repercussions for everyone, but there are questions about sharing of the burdens of adjustment in comparision to the past sharing of the benefits of the past excesses. Should those who had the least say over past decisions and who have reaped the least benefits from the failed systems, be asked to bear a disproportionate share of the costs?

This is a question that we have commonly asked in the past about public sector management in developing countries. Is it a fair question to ask the EU and the US governments?

Note that despite the title of this posting (I took it from a newspaper column) this is not to be read as a polemic against these governments; it is, and should be treated in your responses as the legitimate PFM issue that it is. The situation cannot be "un-made", our job as practioners is to think analytically about how to respond to the situation as we find it.

Fitz.

 

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