Funding Schemes for Local Authorities and Regional Governments

by Serban V.C. Enache

Observation: many of the following proposals, if not all, require medium to long term economic planning and are incompatible with the laissez-faire approach. In order to appease capitalist libertarians, I will begin the article by quoting Carl Menger, the founder of the Austrian School of Economics in his lectures to Crown Prince Rudolf of Austria.

Government thus has to intervene in economic life for the benefit of all not only to redress grievances, but also to establish enterprises that promote economic efforts but, because of their size, are beyond the means of individuals and even private corporations. These are not paternalistic measures to restrain the citizens’ activities; on the contrary, they furnish the means for promoting such activities; furthermore, they are of some importance for those great ends of the whole state that make it appear civilized and cultured.

Important roads, railways and canals that improve the general well-being by improving traffic and communication are special examples of this kind of enterprise and lasting evidence of the concern of the state for the well-being of its parts and thereby its own power; at the same time, they constitute major prerequisites for the prosperity of a modern state. 

The building of schools, too, is a suitable field for government to prove its concern with the success of its citizens’ economic efforts.”

The simplest solution allowing the government maximum space for fiscal and monetary policy is for that government to spend and tax in its own free floating fiat currency. Since Local Authorities and Regional Governments are not sovereign, they are forbidden to tax citizens in any other currency except the national currency. Continue reading “Funding Schemes for Local Authorities and Regional Governments”