Efficient Governments (Part 2) – Tech Viral Tips


One problem for governments in Mexico is that it is very difficult for most people to know which part of the government is responsible for public services. For many Mexicans, it would not be impossible to think that the quality of their education depends on the union, although it is possible that the state government would also have a significant influence on that public service. Something similar happens with health as well. It is not difficult to think that the Federation should be blamed for everything that is going wrong in Mexico, although it would be wrong to do so. Given that most collections happen at the federal level, and the same is true of important spending decisions, we’re not so wrong in one of them. If there are no good public safety or garbage collection services in our municipality or city hall, we can blame the federal government before our state or local governments.

Why aren’t local governments looking for efficiency? The reasons are different from the reasons for the national government. Last week we said that the governments of countries can set a tax rate, and since they are legalized by democratic process, that rate can be arbitrarily low or high. In the case of local governments, at least in Mexico, local governments do not have large collection capacities. They are tax collectors like the national government, but they have a much less fertile financial sector, as they cannot collect taxes on income and services. State governments have some roads left with taxes like tenure, payroll and entitlements. Municipal governments have certain rights and uses. Undoubtedly, as noted several times by institutions such as IMCO, CEFP, MĂ©xico EvalĂșa and respected economists such as Dr. Luis de la Calle, the main tax in the municipal branch in Mexico is the property tax, and it is one that has been done in an absurd manner. wasted from


The property tax is an important tax because land, unlike other properties, is not easily produced (or regenerated). Yes, it is possible to build multiple floors above the surface, but in the end, conquering land by air or sea is expensive and complicated. Wealth can be a non-distorted source of accumulation because the supply of land is independent of its price, which we economists know as an inelastic supply. The wealth tax is a property tax, the kind loved by leftists for its redistributive effects. It is also a tax that does not change production, but can have an effect on the spatial distribution of economic activity, and generates incentives in cities to be efficient in the use of a very scarce resource: land.

Liberals despise this type of tax on principle. Who the state thinks it is already charging me rent on my property? However, cities are not necessarily free and efficient markets. Many public goods are concentrated in one place. There are benefits to grouping and specialization. If the state wants to collect taxes in some place, it has to be there, as this is where a lot of public services are concentrated.


Unfortunately, our political system does not encourage state and local governments to take advantage of their financial crop installments. The governor sees himself as a satrap in training. It seems that the first priority of these governments (with honorable exceptions) is to manufacture war spoils to participate in future politics. Not everyone has the aspirations to become the head of the federal government. Some times he is already happy with making laws that facilitate looting and other times as governor. The same thing happens to Americans, with one big difference: there they punish governors who abuse their power. not here.

Municipal governments and the mayor are third divisions in a similar process; The loot of political finances. Of course, being the municipal president of Oxtepec is not the same as being mayor of Miguel Hidalgo, although the logic is the same.

Local governments are a means to an end: the prosperity and glory of our little tyrants, local politicians. So efficiency is not your top priority. If we do not punish climbers, we will never have efficient local governments.


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