Crisis in New Orleans: What Lesson to Learn? - Page 4

In her book, Jacobs writes how, in the midst of the dark ages which followed the collapse of the Roman empire, early medieval cities benefited from two basic practices, which she calls subsidarity and fiscal accountability. As she writes:

Subsidiarity is the principle that government works best - most responsibly and responsively - when it is closest to the people it serves and the needs it addresses. Fiscal accountability is the principle that institutions collecting and disbursing taxes work most resonsibly when they are transparent to those providing the money.

Today, both principles "have almost disappeared from the modern world." Major taxes are collected by sovereign governments or their provincial components (states, provinces, and the like). This is especially true of taxes which are based on the ability to pay (income taxes) or which reflect economic activity (sales or value-added taxes). In general, most municipalities in the U.S. are left with the option of property taxes and little else; they must then seek funding from either the state or the federal government. And Jacobs notes the very real challenge associated with that task:

Even when sovereignties and provinces or states give special grants to this or that locality, the special grants almost always reflect the priorities of the disbursing institutions, not those of the recipient settlements.

With the failure to fund the New Orleans levees and the subsequent inadequate reaction to the crisis, we have witnessed a number of things. Certainly there will be lessons to learn in crisis management. But we have also seen a glaring example of the problem of a lack of subsidiarity and fiscal accountability in the disbursement of tax revenue . That is a problem which transcends politcal party affiliation; the issue is whether it is possible to restructure the flow of revenues in such a way as to keep "governmental powers directy in touch with needs and possibilities." And ultimately, unless we learn to address this problem, we won't have learned the lessons of New Orleans.

Author's Note: This article was originally posted at Wallo World.

Article Author: W.E. Wallo

W.E. Wallo is a book and movie junkie whose writings have appeared in a variety of print and online publications.

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