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Voting with the Hands! Voting with the Feet!

Shuntaro Namba
Senior Fellow, Economic Research Center

March 24, 2010 (Wednesday)

Since its inception, the DPJ (Democratic Party of Japan) government has begun to steer Japan’s political system from “central sovereignty” to “regional sovereignty.” “Regional sovereignty” refers to local governments eliminating central control to the extent possible, establishing independent authority and responsibility, and adopting policy that prioritizes the needs and preferences of residents. The “decentralization theorem” in public economics is the rationale behind this concept.

The “decentralization theorem” holds that local governments have an information advantage over the central government regarding residents’ needs and wishes. Handing over power to local governments to take full advantage of this important information and having these governments provide public services will enhance welfare for society as a whole. There is no guarantee, however, that local mayors, governors, and assembly members will use this power for the benefit of residents over their own personal interests. “Voting with the feet” and “voting with the hands” is a system that prevents conflicting interests between local governments and residents, and encourages local governments to implement policy that truly values the needs and preferences of residents. “Voting with the hands” refers to selecting local leaders through election; “voting with the feet” refers to exercising the right to leave one’s region of residence.

Political science stresses “voice” and “exit” as methods for expressing one’s will to the government. People can express opinions and change government through “voting with the hands,” and if this proves ineffective, they can leave their area of residence through “voting with the feet.” As decentralization progresses, the supply of various combinations of public services in different regions will allow individuals to “vote with the feet” and reside in areas that allocate their preferred public services. “Voting with the hands and feet” will encourage competition among local governments to improve “living conditions.” It will also serve to discipline local leaders who will lose their jobs if residents leave the region because government policy ignored their needs and preferences.

“Change of government” and “concentration of population in Tokyo” can be called the results of “voting with the hands and feet” at the national level, while “regional sovereignty” can be considered “nation building” through applying the dynamism of “voting with the hands and feet” at the regional level.