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Comment by __derek__ | Hacker News Reader

The opposition of those two choices underscores how bizarre American regional divisions are. The Boston area covers parts of Massachusetts, Connecticut, and New Hampshire and all of Rhode Island. Rather than attempting to improve the entire region, the available options are zero-sum: RI would cannibalize the business or income tax base of other parts of the Boston area. This, in turn, encourages the MA and CT governments to do what they can to recover that loss. If there were one regional government, that could be avoided by focusing decisions about infrastructure, housing, services, and taxation on the actual region's health.

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Who says that consolidation will lead to a better result or that it is zero-sum?

There is a reason that the world isn't run by a single person, why separate countries succeed, why most countries share authority with smaller sub-governments (state and local in the US. There's a reason why each species isn't a single superorganism, but individuals within species tend to cooperate.

"Life", evolution, or survival of the fittest -- clearly isn't a zero sum game. Over billions of years it's clear that it's positive sum. Blindingly obvious.

Adjacent governments too may well fit the bill. Too much competition can suck all the excess value out of the situation, but so can too little. The ideal form of government might be an angelic dictator, but you don't see the world full of them, do you? Healthy competition can find the optimum much better than singular good intentions. Partially because it allows experiment with real world results. With n=1 you can enact policy but you can only guess what effects it might have had because you have no control, no basis for comparison.

It's all about _healthy_ competition, and it's the basic idea that our republic was built on which can be seen everywhere in the constitution.

It's a big leap to go from proposing more regionally-appropriate subdivisions of government to a single global government. I understand what you're trying to say, but there is no meaningful competition here. Boston is the region's center of gravity, and neither Providence nor Manchester threaten that. Meaningful competition comes in at the inter-regional level (e.g., Boston vs. New York).

Bostion is not a single entity, it's an interconnected network of many types of entity's and local governments etc. Each of those local governments both compete with and help each other.

Yes, the point was that the status quo is strange. See the GP.

Why can't meaningful competition happen at every level from between nations to between neighbors?

Sure, you can propose I merge my family with the family next door as a more "regionally-appropriate subdivision", but how can you justify it (or justify against it)?

It can make a lot of sense for different sections of the same metropolis to compete for residents, businesses, etc. The dynamics of which competition is healthy and constructive and which competition is unhealthy and destructive is an interesting problem, and it isn't settled by personal opinions of "common sense".

Oh, absolutely. I don't mean to suggest that that sort of local experimentation* isn't valuable: as you say, removing the ability for variation reduces policy to guesswork. It seems to me that that's more possible in a situation with a clearer idea of success (i.e. a stronger regional economy) than is possible with states that have competing priorities.

* In re-reading, I think my bias is to call that local variation experimentation rather than competition. I'm a technocrat at heart.

You're not wrong, but this doesn't just happen in America, and it doesn't just happen at the city, county, or state level.

There are entire countries or overseas departments of countries that cannibalize tax bases of others, some in corporate taxes, some in personal taxes. There are countries that, due to low wages, low cost of living, and low worker protections, can manufacture certain goods really cheap. There are countries that can ruin their countryside extracting resources like copper, rare earth metals, or oil and sell it internationally.

Ultimately regardless of what the territorial unit, each unit looks out for their self-interest, because a 'Unified Greater Boston' may result in more growth, but it will likely come with a different allocation on wealth to the particular area that each fiefdom covers. It's really just capitalism where each entity competes with another, and some win really big, while most don't.

As an example of a better situation, London covers the cities and many smaller towns and suburbs, which each have their own local government. The local areas are responsible for schools, waste, most planning etc.

But it's all unified under the Greater London Authority, which controls transport and policing. This is what the Mayor of London controls, as head of the elected London Assembly.

Except the City Of London, which refuses to cede some 1000 year old power it extorted from some king or other.

No, it's not a uniquely American phenomenon, but that's the example at hand and the one that I'm most familiar with.

It's not "cannibalization", it's competition. We don't say that firm A "cannibalizes" the sales of firm B, they compete for customers just like states and regions compete for residents and their tax dollars.

If you can appropriate benefits whilst imposing costs on others, it's absolutely cannibalisation. It's a parasitic process which benefits one part of the whole at an overall cost to the whole. It is not wealth creation, it is liquidity extraction.

And this absolutely can apply to businesses operating in markets, as it can governments operating in regions.

> It's a parasitic process which benefits one part of the whole at an overall cost to the whole.

Surely when government compete for citizens, people benefit by living under governments more to their liking?

When business competition goes awry, government steps in to correct the market failure. Who steps in when government competition goes awry?

Governments are not perfect substitutes for each other. Packing up and moving to another city is harder than changing almost any other consumer choice.

Government officials don't compete to make their citizens as happy as possible, they compete to make their voter base as happy as possible. If they can improve the lives of the majority of their voters by hurting non-voters or those who vote for someone else, they have every incentive to do so.

>Government officials don't compete to make their citizens as happy as possible, they compete to make their voter base as happy as possible.

No, government officials compete to make their donors and patrons as happy as possible. A government functionary that stands to land a cushy 6 figure job in the private sector if he does what he is told while he is in government service usually does what he is told.

You're shifting goalposts.

It's one thing to have different systems of government. It's quite another to have arbitrarily-constructed political boundaries (and very nearly all boundaries in the US are highly arbitrary), in which the design intent is quite often to execute precisely the benefits-inclusion / cost-exclusion dynamic I've described.

Even where that's not the design intent, it's often the practical result, and systems have a strong tendency, though path dependencies, compunding factors, emergence, etc., to evolve in certain ways.

Or do we allow every political unit sited, physically or metaphorically, upriver and up-wind from its neighbors to dump raw sewage in its waters and foul the air. After all, the source community doesn't bear those burdens.

It's that analogue which, extended, is at play here.

Now: you want to find a way to improve the general state of Your Fine City and make an appeal to others elsewhere on that basis? That's quite a different discussion. It's actually what the many-and-sovereign state system of the US was meant to provide -- a laboratory, if you will for governance experiments.

But even there, I believe there's a line to be drawn on principles which, once established, cannot be continuously relitigated, or at least not without exceptionally good reason.

Maybe. It depends on the kind of competition. Having been a resident of Michigan (which has a film tax credit like nearly every state) and Washington (which generously supports Boeing in return for annual not-far-from-extortion attempts), I have seen bad competition up close and personal. On the other hand, a state offering a great school system (the UC system of yore, anyone?) is pretty hard to argue with as good competition.

That's a fairly large and optimistic assumption.

If we're going to throw around bad words, we need to get them right, and your definition isn't it. "Cannibalising" is used pretty narrowly in business to refer to when a new development in one area hurts sales in another, and the new product fails to increase the market size enough to make up for it.

What you're describing is a zero (or negative) sum game. Liquidity extraction isn't on its own a wealth generating action (although what you do with the liquidity will very often be, that's typically the motivation for extracting the liquidity), but otherwise it has no relation to what you're describing.

Interactions (whether accurately described as competition or not) between separate units (such as two different governments) can't be "cannibalisation", since neither is "eating their own". However, it certainly can be zero (or negative!) sum. I suppose you could describe certain actions of a single government as cannibalising one part of its population's well-being for the benefit of another, but that's really out of scope here.

Don't we call this 'rent-seeking'?

Not necessarily, though I'd have to think about that.

Economic rent is essentially payment for time-based access to some capability which isn't (generally) consumed in use. Agricultural rents are the nominal case, though others apply.

One characteristic of rents, as opposed to raw material inputs, is that while high material costs lead to high general price levels, that is, a supply-shock inflation, high price levels lead to high rents.

(If you're living in the San Francisco Bay Area, that check you're cutting every month is due, at least in significant part, to the high local labour pay rate. Though yes, a constrained housing supply has a great deal to do with this.)

The landlord (or rentier) can successfully extract liquidity, but she isn't imposing costs elsewhere.

There's a difference if you, say, have one part of a region which offers employment, and another which offers housing, but they're unconnected. The externalities of employment (congestion, traffic, pollution, crime, infrastructure provision) aren't borne by the housing provider. Though the employment region may also be spared other expenses, e.g., residential sewerage and education costs, though those are often much lower.

Here you've got a situation where arbitrary division lines of cost burden vs. profits accrual. This is distinct from the typical case of rent-seeking, in which a landlord's privileged position allows them to extract the benefits of increased demand.

Your question goes deep into the questions of cost, value, and price theory, and it's a very common element of much economic theory, which treats the behaviors of prices for wages, stocks, capital, rents, and goods fairly distinctly. Particularly in the 18th and 19th century discussion, but also in much 20th century literature.

Interesting definition of economic rents. Much more constrained than the generalised rents == unearned profits. It's definitely given me something to think about. However, I have to disagree with a number of your points. The assertion that rentiers and more generally, the existence of private economic rents, do not impose costs elsewhere is not correct. In a direct sense, they reduce the general wealth level around them because that is precisely what they are extracting from others.

In addition, privatised rents distort the allocation of capital and labour towards the direction of wherever that rent exists. This is bad for a number of reasons: productive inputs are not being put to their most productive use, often large proportions of a community's or country's productive capacity is being employed to enrich a relatively small rentier class, other non-rentier businesses are either hobbled or destroyed by higher input prices and if the rent is attached to an exportable commodity (e.g. iron ore, coal, oil), export facing businesses suffer due to relative appreciations of their domestic currency.

It's interesting you bring up raw materials: I assume you mean natural commodities like iron, coal, gas, oil etc. These are the classic example of rent-generating commodities that make a small number of people very rich, while severely distorting the capital structure of an economy. For example, take a look at: https://en.wikipedia.org/wiki/Dutch_disease. Ironically the Netherlands has probably some of the world's best policy in this regard, mainly focussed on their successful oil export industry. They ameliorate the effect by a combination of high rent-recovery taxes ~%60, a significant degree of nationalised production and a very well-funded sovereign wealth fund.

And it may be true that retiers may, in some circumstances, be the main beneficiaries of increased demand. However, this could be said of many businesses. I don't think this is the primary issue. Although it sounds a bit trite, the primary issue is that rentiers enjoy unearned private profits. So when a local council builds a nice park somewhere (with public money), nearby private landholders get to privatise a significant share of the benefit economic via increased land-rents (capitalised as higher private land prices).

Although it doesn't sound 'so bad', this kind of system can fuel very damaging economic behaviours: notably it can encourage speculative investment, lead to inter-generational wealth concentration, and it can severely distort the political economy. For instance, a land developer, fortunate to inherit the lucrative family business, can suggest to one of his long-time family friends, an influential member of government, where the government should locate that new train station they're planning to build (co-incidentally near some land he has been 'banking').

He might also provide his views that the government should tighten up on zoning laws (you know, to ensure family friendly suburbs), and that the government should slow the pace of its land-release programme (you know, because there's a glut at the moment and we need to combat urban sprawl). And he'll be listened to, thanks to his family connections and inherited wealth (a portion of which he donates to various political parties).

Wow this turned in to a bit of an essay. Just one last thing: I found your last paragraph very interesting. It's an area I'd love to see given more focus by academic economists, given the mainstream view appears to have whittled things down to just two factors of production: capital and labour. Perhaps we're trying to push a number of square pegs through a number of round holes here...

As another case in point, from another HN comment and article, look at the case of plea-bargaining:

https://news.ycombinator.com/item?id=12282830

One party (the prosecutor) has the option to threaten a severe penalty (high cost) to the defendant, whilst the defendant (often indigent) has little means to mount a defense. The DA's benefit is not only offsetting court costs (an interest in which the Court is complicit), but in racking up a conviction.

That is, the costs (overbearing convictions, often false convictions) are externalised, the benefits (trial costs, political advantage) are internalised.

I don't see how this can be considered "rent seeking". It's simply a strongly asymmetric power relationship and cost/benefit allocation.

That's not really relevant here. What I'm talking about is how moving residents from a Massachusetts suburb to a Rhode Island suburb will not by itself create any net-gain for the region's economy. Perhaps there are knock-on effects if living in Rhode Island makes people more productive in some way, though.

Anyway, the competition angle makes more sense when you're looking at different regions (e.g., Boston vs. New York).

When someone moves from A to B, it's usually because they can get a better deal on the tradeoff between better/cheaper housing and quality of life. In the larger picture, expanding the available mass of viable residential space for a given urban area means (on the margin) lower costs, allowing more people in a wider range of jobs to consider moving to that urban area. That's a net positive, not "cannibalising" or even competing anything.

Anecdote time: I live in London, about 40 minutes from work, in a pleasant but fairly boring area (not many big city things to do around here, a few pubs and decent but medium-low end restaurants - pretty much anything else beings and ends with a 30-40 minute journey). My wife got a new job, so we have a bit more cash between us, and have decided to move closer to the city (I'll be about 10 minutes from work, she will be 15-20), and we'd be in a very nice urban area with tons of amenities just around the corner. We will be paying a fair bit more in rent, but expect a substantial bump in quality of life. When looking at a flat, we met the outgoing couple -- they are moving to an extra-urban place (in another country, even) to get more space, be closer to family and nature (and, presumably, pay less rent). Someone else yet will move into our current flat, which has served us very well for five years, and is excellent value for money in London.

In another five years, we'll probably be ready to leave the city behind, and the shuffle will repeat.

Because of the difference in preferences (which changes over time), everyone are better off than before. This is obviously not facilitated by commuter rail, but the dynamics are the same (or, commuter rail would allow the dynamic to act across a larger spectrum of people and houses).

It's competition over lowest price. Which results in cannibalization and lower profit for all players.

And gain for the people paying these now-low prices?

>And gain for the people paying these now-low prices?

Indeed, the OP is committing the broken window fallacy, seeing only company profits, not savings on behalf of the consumer.

A move from one region to another is zero-sum? It might be, but that depends on many factors. Does the person move closer to work? That's fewer miles driven, one less car on the road, less pollution, more happiness, higher productivity. Is one local government more efficiently run than another? That's better use of tax dollars. And on and on. Competition drives these factors.

> Does the person move closer to work? > Is one local government more efficiently run than another?

These two are features, not pricing.

No, because when you compete on only prices there is no brand loyalty, no customer relationship, and no r&d spent on feature development.

For a community; businesses might move for tax breaks, which benefits them greatly, but there might be more traffic / no high quality living that increases commutes. The employees might have to pay all relocation costs, and then the business that has no loyalty moves when the next tax break becomes available.

Rhode Island will have to get in line behind New Hampshire then. A significant portion of the population there work in Massachusetts but live in New Hampshire because it has the lowest tax burden out of any state in the union. Also there is no personal income tax or sales tax. Rhode Island has its work cut out for it. For those not familiar with that part of the US, Massachusetts can be heard referred to as Taxachusetts.

I think R.I. is better trying to cultivate its own economy, Providence is home to two great schools - RISD and Brown(Ivy League.)

This has some actual numbers:

http://blog.mecep.org/2014/05/much-of-new-hampshire-is-a-bed...

That's true. A similar situation plays out in Portland (OR, with no sales tax) and Vancouver (WA, with no income tax). I recognize that moving to a regional government would likely eliminate the low-tax living/working options. At the same time, I wonder if the net-effect wouldn't be a smoothing of tax burdens, as this sort of tax-optimization effectively forces Massachusetts to tax more heavily to make up for a smaller base. After all, those New Hampshire commuters still use Massachusetts infrastructure to get to work.

Those commuters pay a toll though each way of their commute to use that infrastructure. In the morning they would pay it in New Hampshire and in the evening they would pay it to Massachusetts.

I think the net effect of a regional government would be all the current problems of local governments - pork barrel politics, inefficient bureaucracy and corruption on a larger scale. The corruption in local governments always seem to dwarf that at the federal Level, but this is maybe because more get caught.

Overall the whole local tax benefit regime is something of a shell game. There may be no local income tax but you end up paying it property tax. States make up for it in other ways. A similar phenomenon exists for business tax incentives. As soon as those provisions sunset the businesses will just pick up and move somewhere else. An example is the film industry, New Orleans offered Hollywood huge tax incentives to use New Orleans for film production. Once those ended Hollywood went elsewhere - Georgia and the cycle begins again. It does little for the local economy.

NYC is an example of why that doesn't work. 120 years of city planning have mostly boiled down to: "Not Manhattan? Screw off"

The Rhode Island situation is a good example of how postwar sprawl leads to bad governance and outcomes. The Boston region is a shitshow... Hundreds of little municipalities with duplicative services, priorities, regulations, etc.

The other problem Rhode Island has is that they are on the wane in general. Regional industrial activity has been vaporized, and remaining industries like banking are consolidating. So if you live there, and need a job, Boston's it.

>If there were one regional government, that could be avoided by focusing decisions about infrastructure, housing, services, and taxation on the actual region's health.

The problem is that the bigger an organization gets the more it is prone to waste, inefficiency, and fraud. Another problem is that accountability is inversely proportional to concentration of power. This opinion is obviously at odds with that of the pointy heads in Washington DC and Brussels, but unlike their opinion, is congruent with reality.

The states are quite wasteful, innefficient, and corrupt. Moving to a hub model would devolve power from them to smaller, more focused units.

This problem isn't unique to am America, and the problem will never really go away. Regions change and they grow. What happens when your Boston region starts to conflict with the NYC region?

There are models of urban influence based on analogues of gravitational attraction (they're actually called that, see: http://geography.about.com/library/weekly/aa031601a.htm).

For any two given urban areas, their relationship is likely to be eitheras peers, that is, one competes with another (for labour, capital, and foreign trade), or as distinct members of a regional hierarchy (e.g., commuter suburb and commercial hub). And yes, depending on how you scope out regions, they may have different comparable roles. Note too that two suburbs within a given hierarchical region, say, Silver Spring, MD, and Arlington, VA, compete amongst one another within that region (Washington MSA).

In the case of Boston and NYC, you'd almost certainly see most transport and commute patterns within either city, with the inter-city transport being considered non-commute, for the most part.

More generally, this is why transportation networks almost always have to be designed, scoped, planned, and financed at least one level above the nodes they connect. Rome centrally managed highway construction throughout the Roman Empire, rather than leaving the decisions to local colonies and cities. In France and England, the first constructed transport systems, canals, were largely overseen as matters of national policy (though with private involvement), as was the Erie Canal in the United States. Development of railroads typically evolved similarly, with buildouts within specific nations in the US and Europe. This lead to a far more integrated system in the US (and USSR) given their much larger geographical area, whilst Europe's freight rail system remains much less capable than that of the United States.

That's part of what I mean: we have these antiquated divisions (i.e. states) that have little connection with the actual economy. Why not create a system that does that?*

* In the United States we know the answer, of course: rural areas have the power, and doing so would require them to cede that. One can dream, though.

Rural areas have the power? This is news to me, unless you're trotting out the tired argument about two senators per state, regardless of population.

Rural areas are poor, their industries have been gutted, and they are experiencing demographic death, as all the young people are forced to leave for urban areas in search of non-poverty level work.

> Rural areas have the power? This is news to me, unless you're trotting out the tired argument about two senators per state, regardless of population.

It's not at all a tired argument, especially given:

1) the fact that the residents of smaller states get seriously-disproportionate presidential voting power in the Electoral College as a result of the two-senators-per-state rule --- in presidential elections, the votes of residents of any of seven small states (Delaware, South Dakota, Rhode Island, Alaska, North Dakota, Vermont, District of Columbia, and Wyoming) are weighted more than twice as much per person as the votes by residents of 13 larger states such as California, New York, Texas, Florida, etc.; [0] and

2) the fact that the Senate insists on keeping the 60-vote rules to open- or close debates, leading to frequent stonewalling of controversial matters.

[0] http://www.thegreenpapers.com/Census10/FedRep.phtml?sort=Ele...

I always read this as a feature, not a bug, of the constitution.

> I always read this as a feature, not a bug, of the constitution.

Indeed; it was part of the Great Compromise. But that's not what you argued in your GP comment: By implication, you were claiming that this feature of the Constitution supposedly did not support the GGP comment's assertion that rural areas have significant political power (which to me seems well-nigh indisputable).

Well, since this is Boston and New York we're talking about, South Boston riots, while New York doesn't notice anything happened. Windows are smashed to mighty cries of "YANKEES SUCK!"... in Boston.

There's no parts of Connecticut that are part of "the Boston area" nor is the southern part of Rhode island.

There certainly are, according to the definition of the Boston CSA.[1]

[1]: https://en.wikipedia.org/wiki/Greater_Boston#Combined_statis...

https://en.wikipedia.org/wiki/List_of_divided_cities

As it happens, I grew up in one.

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