The best way to stop special-interest boondoggles is to find a countervailing special interest, I argued in my latest column. The fertilizer industry opposed subsidies for natural-gas cars. The soap industry opposed subsidies for chicken-fat diesel. The mutual fund industry opposed subsidies for checking accounts.

But what about when there are no countervailing special interests?

I’m talking about state and local government, where the government-employee unions don’t have much in the way of powerful lobbying opponents. Steve Eide at Public Sector Inc. discusses the problem:

Not that self-government is always good government. States, cities and towns often behave badly. They dole out $80 billion annually in business subsidies, most of which are incomparably more absurd than anything found in the federal tax expenditure budgetThey have shamelessly misallocated funds from the mortgage and tobacco settlements. And, oh yeah, they have allowed their pension deficits to swell to epic proportions.

Want to weaken public employee unions? A surefire way would be to nationalize everything. Unlike in many strong union states, there is a viable Republican party at the federal level. Also, voting percentages in federal elections are higher than in state and local elections. Because of widespread public apathy towards state and local politics, federalism now works to the advantage of the public employee unions, which no one could accuse of being apathetic. Republican pushback plus relatively elevated voter turnout levels now severely restrict union influence over national politics. Were school, police and fire departments simply administrative units of the federal government, unions would not wield nearly as much power as they now do.
On net, I’m still a federalism backer — and I gather Eide is, too. But this is one strike against local control.