Crisis and Local Leviathan
Do local crises ratchet up local government?
Work in progress · sole-authored
The question
Robert Higgs’s Crisis and Leviathan argues that emergencies permanently enlarge government: a crisis legitimates new spending, agencies, and powers; the crisis passes; the government stays. The evidence for the ratchet is federal (war, depression, the New Deal), and in each of those episodes the government doing the growing was one its citizens could not escape.
This paper asks whether the ratchet survives the removal of that condition. Local governments face real emergencies, but their residents can move across the county line, and much of their disaster money arrives from Washington and the state capital. If the ratchet is a general property of government under stress, it should appear here too. If it depends on insulation from exit, it should weaken or vanish.
The design
The current revision uses hurricane-force wind as the crisis. A metro is treated in the first year, 1988–2012, in which population-weighted sustained winds reach hurricane strength, and each struck metro is compared with unstruck metros in the same state. The outcomes are the annual budgets of county, municipal, and township governments (intergovernmental aid, operating spending, and taxes, alone and relative to local income) and the U.S. Metropolitan Area Economic Freedom Index. A broader sample of all large natural-disaster losses serves as a cross-check.
Status
Estimates are being finalized; a draft is available on request at jrs2ge@mtmail.mtsu.edu.
JEL codes: H11 · H72 · H77 · Q54 · R51
Keywords: ratchet effect, hurricanes, intergovernmental aid, local public finance, economic freedom