Why, then, are good municipalities good and bad ones bad? Chapter 6 steps back from the wealth of empirical data to ask this canonical question. I analyze key factors in the local economy, politics and society that drive government performance. Using these building blocks, I develop a model of government that integrates a variety of well-established insights on the role of elections and lobbying in democratic politics with more recent ideas about civic organizations and social linkages. The framework provides a structure in which economic interests, political actors, and civic organizations interact to make policy decisions. Placing this structural model of government in a dynamic context allows us to analyze how voting, lobbying and civic organizations interact over time to produce public decision-making that is responsive and accountable to voters, or not.

The resulting theory of government proposes that responsiveness and accountability are primarily products of the openness and substantive competition of politics. The quality of a municipality’s politics, in turn, emerges endogenously as the joint product of the lobbying and political engagement of its firms and other economic actors, and the organizational density and ability of its civil society. Where economic interests are many and diverse, the chances are greater that a broad variety of political parties will find financial support and vie for votes. The ensuing competition will better represent diverse currents within society, giving voice to groups whose interests might otherwise be overlooked. And where society is organized into a dense network of intermediating organizations that can solve the collective action problem to aggregate preferences and transmit information, government will receive more and better-quality information about society’s needs, as well as feedback on previous interventions. An organized society is far more likely to participate in public decision-making and provide counterpart contributions, thus extending investment budgets and increasing the quality and sustainability of public goods and services. Where there is broad representation and competition in politics combined with high information and mobilizing capacity in civil society, government will have a strong tendency towards responsiveness and accountability to citizens. This model is notable for going beyond the correlation that others have found between “civicness” or “social capital” and government performance; I propose a specific mechanism by which civic groups interact with economic and political agents to determine policy outcomes.