The review is a response to the article Ukraine Needs Decentralization to Develop Future Democratic Leaders written by Tymofiy Mylovanov (University of Pittsburgh), Roger Myerson (University of Chicago, Nobel Prize laureate 2007), Gerard Roland (University of California Berkeley)
The standard economic argument in favor of decentralization is that many public goods are location-specific, and will be provided most effectively by officials that are accountable to local voters rather than to a central government. The paper pushes, convincingly, a different argument: decentralization would eventually lead to a cohort of politicians with experience, political capital, and reputation to continue their careers on the national level. Not only people with these qualities are valuable per se, but also their availability makes presidents and ministers easier to replace, thus making their positions more vulnerable and incentivizing them to work harder for the voters’ benefit.
The authors recognize potential problems with decentralization, including risks of separatism and local capture. In my view, this is essentially the same problem. Why is that? Well, decentralization has two effects on the support of separatists. On the one hand, the support by local population should diminish: the people are in more control of policies already, and fewer of them would want a different government. (E.g., perhaps fewer people in the East would support separatists if they did not fear that their ability to school in Russian language would be taken away.) On the other hand, the local leaders would not be screened by the central government, which might occasionally bring supporters of separatism into power. Thus, decentralization can lead to more separatism only if local politicians will be more powerful than local people – that is, if the institutions are captured.
Is the threat of capture of local institutions by local politicians – perhaps crooks, perhaps separatists – real? It certainly is. And yes, decentralization limits the power of the central government to prevent this from happening. For example, an outsider, such as Mikheil Saakashvili, would never be elected – especially if local politics is captured. This means that problems with decentralization are mitigated only if decentralization is coupled with institutions that ensure the authority of the central government, but also prone to abuse.
One such institution is independent judiciary. Courts are also prone to local capture, of course; one way to combat this is to draw court district lines differently from province lines. As an example, in the USA the Courts of Appeal span several states; in this way, judges would not be accountable to a specific governor or elected from a single region, where elections may be rigged by local politicians. In extreme cases, the central government should have the authority to intervene with force. This is not something to be afraid of, and sometimes it happens even in countries with strong institutions (think enforcement of Civil Rights in the US South in the 1960s, or the use of the army by the UK in the Northern Ireland in 1970s-1990s.) With a lack of strong institutions, ability to intervene is obviously a power that the central government can abuse. One way to limit abuse is to require that the intervention be supported by a supermajority of other local governments or governors. In fact, putting a check on the central government is another benefit of decentralization!
Polish Experts Criticize Ukraine’s New Decentralization Law (graduate of the National University of Kyiv-Mohyla Academy and of the Autonomus University of Madrid)
Hlib Vyshlinsky: It is Important to Understand What Features of the Decentralization are the Key for Emergence of New Political Leaders (Hlib Vyshlinsky, Executive Director, Centre for Economic Strategy)
Decentralization vs. Anti-Centralization (Oleh Zahnitko, Gide Loyrette Nouel)
Sergei Guriev: Decentralisation will Not Work As Long As Large Companies Remain in Government Ownership (Sergei Guriev, Professor of Economics, Sciences Po, Paris)
Struggle For The Constitution Is Going On (Appeal of Vice Speaker Oksana Syroid about the proposed amendments to the Constitution of Ukraine)
Viktoria Sumar: Terms Require Greater Concentration of Power in President’s Hands(Viktoria Sumar, MP of Verkhovna Rada (8th convocation), fraction of political party “People’s Front”)
Yuriy Hanushchak: Naively to Expect a Breakneck (Rapid) Disappearance of Local Oligarchs Due to the Efforts of Law-Enforcement Agencies (Yuriy Hanushchak, a Director of the Institute of Territorial Development and expert in issues of decentralization of power)
Opinion on the Draft Law Amending the Constitution of Ukraine Submitted by Oksana Syroyid (Oksana Syroyid, deputy speaker of the Verkhovna Rada of Ukraine, member of the constitutional commission)
Paul Gregory: Ukraine Must be Concerned by the Sabotage of Elections by Russian Money and by Russian Special Operations (Paul Cregory, Hoover Institution, Stanford and University of Houston)
Andrei Kirilenko: There is a 500-Year-Old History of Formal Self-Governance in Ukraine (Andrei Kirilenko, MIT Sloan)
Smart Decentralization: a Bottom-up Path Toward Functioning Institutions and Economic Prosperity (Mark Bernard, Assistant Professor of Economics, Goethe University Frankfurt, Germany)
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