The Federal Reserve Bank of St. Louis recently held a conference on state and local government finances. I presented a paper discussing four reforms for state and local governments to consider: abolishing corporate income taxes, privatizing government activities, cutting public-sector compensation, and reforming public-sector labor laws.

Those may seem like disparate policy ideas, but the common theme is that governments need to be smaller, more efficient, and more flexible if America is to prosper in an age of intense global competition.