A Regional Race to the Top
Last week’s lecture revealed that regional policy challenges cannot be meaningfully addressed by one municipal government alone. Earlier today, news broke out about an auto theft ring that led to more than 300 charges and $11 million worth of cars recovered. Interestingly, the investigation was a joint effort between Peel Regional Police, York Regional Police, Halton Regional Police, and the Ontario Provincial Police.
We also learned about the approaches to regional governance. One of the methods being hyper-fragmentation, which entails breaking up jurisdictions to incentivize competition for tax dollars by offering the best services. This reminded me of the theory of “racing to the top”, where healthy competition between jurisdictions leads to positive outcomes for all and the socially optimal policy diffuses to neighbouring jurisdictions, although this theory is usually applied in environmental policies. Funny enough Sarah Cola and I co-authored an essay last semester regarding the implementation of congestion pricing policy in Ontario and the potential that it could lead to a “race to the bottom”. Congestion pricing is believed to discourage driving, especially at peak hours, therefore reducing congestion, wasted time, and greenhouse gas emissions. Additionally, the revenue generated from those who choose to pay for the toll would go towards financing other public goods. However, we argued there is a possibility that an introduction of a tax such as a congestion toll, would force some commuters to either take alternative routes or move to other jurisdictions. This would cause jurisdictions to compete with each other by lowering regulations and standards, especially when capital movement and mobility of individuals are unconstrained.
Authors like Kathryn Harrison have written about this theory in the context of federalism and Canadian provinces. For example, in the mid-1990s, the tax and benefit cuts by neoconservative governments in Ontario and Alberta provoked the possibility of matching cuts in other provinces and territories. According to Harrison, “individual jurisdictions are interdependent by virtue of the permeability of borders, especially within a federation”. There are two forms of interdependence, one that involves competition and the other involving emulation. While competition can be detrimental to the welfare of the citizenry, emulation can be regarded to enhance democratic accountability. As demonstrated by the regional context, many policies only work when there is mutual coordination in the common interest.
