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We hope that the spending review will become an opportunity to address the various aspects of public spending. In particular, this is an opportunity to provide a practical examination of the principle of subsidiarity in horizontal variation.
To this end, a spending review process should aim to respond to the needs of our long-term debt (while also enabling economic growth) and must be part of a renewed debate on the revision of both federal and subsidiary public administration. We favor, in this regard, the creation of true “local integrated systems” able to seek efficiencies and cost effectiveness of administrative action at the local level, while also boosting the effectiveness of such action to the benefit of local communities.
The premise of our analysis is the finding that the Italian State, in fact, was made weak because of its regulatory function. This is a weakness that makes the State prey to and hostage of special and corporate interests. In this sense, the State, by reexamining its vocation as a regulator and arbiter (Ordnungspolitik), would become characterized as more than an agent of expenditure: a subject capable of facilitating growth by ensuring the smooth operation of an institutional framework within which to individuals and intermediary bodies are empowered to freely express (Soziale Marktwirtschaft).
The overcoming of such weaknesses begins by looking past the role of the state as a provider of public services; instead, focus should be placed on examining the state as the source and manufacturer of regulation-and the controller of its proper application. Under such a scenario of renewed authority, the state regulator becomes able to pursue action by drawing inspiration from the principles of subsidiarity and polyarchy.
The paradigm of subsidiarity, in the relationship between public authorities and civil society, is the belief that the state should encourage the action of intermediate bodies, trying to remedy oppressive bureaucracy and the proliferation of rules that suppress the spirit of individual initiative.
To achieve these ambitious goals, one might start with a reform of local government that includes overcoming the organizational structure through the creation of supra-administrative entities, which, placed in service of more local political entities, are able to perform all administrative functions now performed by the individual municipalities in addition to those previously undertaken by the provinces.
In such an organizational model, municipalities, removed from their expensive bureaucratic apparatus, retain only the tasks of administration, performance monitoring and regulation. As a result, the performance of administrative duties and / or the provision of local public services would shift focus: the task would be to “buy” performance – based on standard rates – directly from the new administrative-municipal entities , or, if more convenient, through the market or third sector.
In this way it may become possible to start a reform process that can change the framework of local public authorities and, at the same time, induce a structural reform of public spending by ensuring the full application of the principle of horizontal subsidiarity in a world that is stratified.
Flavio Felice is president of the Acton-Tocqueville Research Center and Adjunct Fellow at the American Enterprise Institute in Washington DC
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