Financialization and Local Statecraft

On average, cities and towns account for over 20 percent of public spending in developed countries. In most places, much of the ordinary person’s quality of life depends on investments in schools, police, fire departments, health care, and other services, as well as roads, public spaces, and other local infrastructure. In recent years, many countries have decentralized further, and studies generally show that the more decentralized countries are, the more satisfied their citizens are. Yet the United Kingdom seems an anomaly. Traditionally a very centralized country, it radically slashed subsidies in the wake of the 2008 financial crisis, leaving localities to fund themselves through spending cuts, tax increases, privatization, or financial manipulation. The results of British decentralization have been at best uneven, and at worst harmful. Funding gaps widened, services declined, and speculative financial schemes rushed to fill the breach. Inequality, both within and across jurisdictions, has grown markedly. Today, the British government faces a difficult dilemma: allow urban bankruptcies or reverse policy once again.