Striking A Balance Between Local And Central Responsibility For Infrastructure Construction And Maintainence

Erin Gloria Ryan writes about an unorthodox application of the Lysistrata strategy as residents of a remote Colombian village try to get a road fixed:

Women of Barbacoas, a small town in remote southern Colombia, are using access to their nether regions as a bargaining chip in trying to sex starve the men of town and, by extension, the government into doing something about the sorry state of the road that leads from their hamlet of 40,000 people to the rest of civilization. Mudslides as a result of heavy seasonal rainfall has left the road in such a sorry state that the 35 mile journey from Barbacoas to the nearest town takes nearly 10 hours. The government has promised to fix the road, but so far has not followed through.

The tactics aside, this is a perennial problem in governance. After all, from the point of view of the central authorities, why should they really care about Barbacoas? It seems pretty clear that this road, though nice for Barbacoans, will have little practical benefit to Colombians writ large or even residents of Nariño Department as a whole. It’s basically a club good for the residents of the town, so naturally it’s not a high priority.

The problem is that from a social point of view, it’s very inefficient to have local government units shouldering the financial responsibility for infrastructure construction. One reason has to do with balanced budget constraints. Ideally, infrastructure spending should go up during recessions and down during booms, so as to minimize crowding out of private investment, maximize countercyclical stabilization benefits, and get the best possible value for taxpayers who won’t need to bid against as many private sector construction contracts. But local governments can’t engage in countercyclical deficit spending, so when you task them with a responsibility they end up doing more of it during booms and less during busts. The other issue is simply that a decently sized sovereign state is going to have a much lower cost of funds than a small town, or even a large town. Bigger public entities are generally more creditworthy than smaller ones. The ideal solution probably involves some kind of federally financed pool of money from which local governments can borrow. But the dreaded “pork” for “pet projects” can also operate as a kind of workaround. Having the national government undertake projects that aren’t bona fide national priorities can be a better outcome than leaving fiscally constrained municipalities to do it. That said, for pork-based infrastructure program to really work out, you’d need much better regional planning and coordination than our actual members of congress seem able to muster.