What if residents could allocate their town’s spending like some people do their 401(k)’s?
I’ve been a homeowner for a little over a year, so for the first time I’m tracking town expenditures and, as important, listening to other residents’ town-solvable needs and frustrations.
Arlington’s issues can feel piddly. (The divisive issue this year was a leaf blower ban.) But dissatisfaction can grow faster than my crabgrass, and my own dissatisfaction doesn’t have to do with present issues as much as the process we’ll have to use when things really do get serious.
Design and Effect of Governance and Taxes
Arlington Town Hall
Arlington has a governance structure similar to many towns in Massachusetts. There is an elected, five-member Board of Selectmen. Its job is initiate stuff, with its two key powers being to appoint the town’s top bureaucrat and decide/certify the issues that should be debated and voted upon at the annual Town Meeting. That Town Meeting is composed of 252 members from the town’s different precincts; those members actually vote on the issues presented.
Now, that seems like a great way to run a town. It’s good representative democracy. But, like other versions, it has a particular design flaw: to work best, it requires full participation. It never does. Policy, then, suffers from a self-selection bias. The most engaged residents are the ones who participate.
“Engagement” and “participation” sound like synonyms, but they’re not.
Arlington is largely divided between homeowners west of the Center and renters to the east. (The homeowner/renter ratio is about 60/40.) Their interests often diverge, over property taxes, school fees, elder care, and commercial development. But even with (or because of) 252 Town Meeting members, those who think they have less at stake — often renters, even long-time renters with kids — don’t voice their opinions. Or never mind that — their issues aren’t even brought up. Scan the 2012 Town Meeting “warrant” (PDF) and you’ll see every residential issue up for debate affects homeowners, not renters.
After listening to a variety of residents, I’ve narrowed the problem down to design and structural affordances, implicitly related to real estate taxes. Because much of their financial relationship to the town goes through a landlord, renters are a step removed from real estate taxes. Real estate taxes are included in their rent payment; they don’t have the same quarterly gobsmack of a tax bill that homeowners do. Renters are also more mobile. If rent goes up to an unaffordable level because a landlord is paying higher taxes, the renter moves when their lease ends. Conversely, if a homeowner’s monthly payment goes up to an unaffordable level because of higher taxes, they may be stuck.
There’s a stronger incentive, then, for homeowners to pay attention to, and act on, real estate tax decisions and allocations.
There’s also an interesting transparency issue. Renters don’t see taxes broken out from their monthly payments. Homeowners, however, see a tax bill. When it goes up, they’ll be the ones more likely to say, “Christ, that’s a huge increase. What am I actually getting from the town for it?” So while it’s just as easy for renters to push their Town Meeting member to do what they want, it’s owners who are more often reminded to do it.
That’s a design flaw.
A 401k.com Design Model
Here’s what I’d like to see instead, borrowing a 401(k) allocation model. Tell me if it makes any practical sense.
MIT uses Fidelity’s 401k.com to let employees manage their own investments, should they want to. When they do, they can adjust where their money is allocated. It must add up to 100%, and they can compare it to their current allocations.
What if residents did the same thing for how they ask their town to allocate resources?
Take this design for instance…
At intervals (every year, every four years?), each address receives a single sheet of paper and a prepaid envelope. On the front of the sheet are ten categories: schools and teachers, roads and maintenance, social services, public safety, commercial development incentives, etc. Next to each is a “current allocation” column. Next to that are blanks, for each resident to fill out percentages that add up to 100%. If there’s a ScanTron way of doing this, even better. The prepaid envelope is printed with a unique number to ensure no duplicates. Town hall receives the sheets and averages out the percentages. The results are published and used at the basis for decisions at the next Town Meeting.
Barriers to Participation
My great frustration with our representative system isn’t lack of participation per se. It’s barriers to participation. These barriers don’t have to be as extreme as voter ID laws. They’re little things, seemingly. Scheduling a city council meeting during the work day is a barrier to participation. Burying a rep’s phone number in an ugly website is a barrier to participation. Measures written in legalese, minutes only available as PDFs, bus lines without a stop near the town hall…they all thwart the participation needed for representative democracy to work.
“Enhanced Delegation”
But what a 401k.com model does is have a meaningful way for residents to say, “Listen, I want my potholes filled. I want that more than I want recycling picked up every week instead of every other. That’s my priority. I don’t care how you do it. Just do it.” At Fidelity, I can say “I retire in 2055. Put everything in the ‘Vanguard Target 2055’ plan.” The primary design goal is to invest something, to participate. Fidelity does that by setting a ridiculously low barrier, allowing me to avoid highly committed participation. That’s sounds bad, but it’s a hundred times better than not participating at all. I’m delegating my decision-making to the mutual fund’s manager. But it’s “enhanced delegation” because 1) Vanguard Target 2055 is tailored to my self-interest and 2) I never hit the mental hurdle of choosing the right balance of stocks and bonds.
Town-level design should do the same. You shouldn’t have to take Latin or two buses to participate in the legislative process. You should be allowed to avoid high levels of participation if there’s a way to guarantee a meaningful baseline level. You should be able to tell your town councilman, “In all honesty, I haven’t had time to read up on how our teachers’ pay matches against other towns’. All I know is my daughter is in a class with 35 other kids. I want money put into the schools, and I want that more than I want to redevelop those blocks with the empty storefronts. That’s it. Just do it.”
This way of avoiding full participation may well be essential to meaningful engagement. We have to think of ways to put a platform under our residents, so that the default is “an effortless little bit of participation” rather than none at all.
I’ve suggested 401k.com’s allocation feature as one such model. What are others?