Efficiencies of Scale in Local Government

State and Local Government |
By David Stokes | Read Time 1 minute

There is a very interesting post in The American Scene today about a proposal in New Jersey to mandate the consolidation of smaller towns. You can find additional commentary in The Atlantic. Please review the first graph, which shows significantly higher per-capita costs in the smallest towns, which then quickly level out as the cities get just a little bigger. I have found a very similar curve in comparisons of the spending levels in third-class Missouri counties, but that info has to wait until the release of my paper next month. (That is what is known in the biz as a "tease.")

I would never support manadatory consolidations, but there is no doubt that at the very smallest population levels, economies of scale can be achieved quickly as counties or cities grow somewhat, and also little doubt that those same economies of scale are quickly leveled off. It’s neat to see the graphs of New Jersey towns and Missouri counties look almost the same. As H.I. McDonough’s boss says to him in Raising Arizona, "It’s a crazy world."

About the Author

David Stokes is a St. Louis native and a graduate of Saint Louis University High School and Fairfield (Conn.) University. He spent six years as a political aide at the St. Louis County Council before joining the Show-Me Institute in 2007. Stokes was a policy analyst at the Show-Me Institute from 2007 to 2016. From 2016 through 2020 he was Executive Director of Great Rivers Habitat Alliance, where he led efforts to oppose harmful floodplain developments done with abusive tax subsidies. Stokes rejoined the Institute in early 2021 as the Director of Municipal Policy. He is a past president of the University City Library Board. He served on the St. Louis County 2010 Council Redistricting Commission and was the 2012 representative to the Electoral College from Missouri’s First Congressional District. He lives in University City with his wife and their three children.

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