For a long while, I've been meaning to post about my conception of an ideal libertarian government based on my particular brand of libertarianism. The central issue with which I have been philosophically concerned has been the concept of centralization and competition between governments.
This post by Angelica at The Art of the Possible gave me the opportunity to delve into this concept a bit, although by no means completely. The conclusion I have arrived at is that a system that decentralizes almost all powers over the private sector is far preferable than one that places those powers entirely into the hands of one central government. However, it is also my contention that a strong centralized government is an absolute necessity - but almost entirely as a safeguard of individual rights against local governments. My full comment is below with some minor edits for grammar and comprehensibility:
One of the most important things - maybe even THE most important thing - about decentralization is that it creates something loosely resembling a free market of governments. Although costs of moving remain too high to make this a true free market, the costs are low enough that bad governance (e.g., excessive cronyism) results in fewer government “customers” (ie, taxpayers). (All this, by the way, is approximately what happened in many of the corrupt cities of the Northeast and old Rust Belt; a good comparison is between the area surrounding Buffalo, NY, which has suffered an exodus of mammoth proportions due to its corruption and incompetence, and the area surrounding the nearby City of Rochester, which, while not exactly avoiding suffering, has managed to stay on its feet in a way Buffalo could only dream about).
But since the costs of leaving a given town/locality remain relatively high as does the amount of goodies the local government can offer to cronies, there is a legitimate concern that people unable to pay those costs of leaving will get stuck in a cycle of competition between localities for cronies rather than for taxpayers. All of which is to say that [it is correct to assume] that decentralization can spread problems.
That said, I think there is an important caveat to these concerns. That caveat is that when problems arise from decentralization, they occur gradually over time as the rent-seeking* company bribes, blackmails, and extorts its way to ever-more concessions from ever-more localities. But when rent-seeking occurs on a centralized basis, it immediately effects all localities subject to the centralized government. So in the former case, the opposition has time to organize in order to reverse, stunt, or at least significantly slow the corrupt practices, while in the latter case, the rent-seekers are able to win on a mammoth, even national, scale in a matter of one or two legislative or administrative acts, possibly before opponents even have an opportunity to organize.
This isn’t to say decentralization is perfect, or even that there is no role for centralized powers. Local rent-seeking and corruption will obviously continue on a large, but mostly below-the-radar scale in a decentralized system. Because the rent-seeking and corruption are at a lower level unlikely to be exposed on a politically significant level, it is far easier to get away with corruption (and other invidious government actions) on that lower level.
Luckily, there is a ready and obvious fix to significantly mitigate these problems, which would be unavailable in a fully centralized system (in which there is no higher authority than the authority making all the decisions). That fix is to make oversight of local governments one of -if not the - primary power of the central government. In essence, the fix is to apply the broadest possible reading of the 14th Amendment as a means for the federal government to intervene to stop clearly invidious local government actions. This would mean overturning the Slaughterhouse cases and reviving Lochner, but as a libertarian, this requirement is a feature rather than a flaw. A nearly-ideal conception of government from my perspective is one in which the centralized government’s primary responsibility beyond national defense is to ensure that subsidiary governments are respecting the rights of their citizens.