The Third Pillar: How Markets and the State Leave the Community Behind

by Raghuram G. Rajan

An interesting historical study by Luigi Zingales and others highlights the long-term benefits of localism.2 They find that Italian cities that achieved self-government in the Middle Ages have higher levels of social capital today – as measured by more nonprofit organisations per capita, the presence of an organ bank (indicating a willingness to donate) and fewer children caught cheating on national exams. They conclude that self-governance instilled a culture that allowed citizens to be confident in their ability to do what was needed and to reach goals. Decentralising powers to communities may thus reduce apathy and force their members to assume responsibility for their destinies rather than blaming a distant elitist administration.

Study on italian cities that had local govts