ABSTRACT
This chapter discusses public sector growth to illuminate the puzzle in political economy regarding effective government constraints and to provide an analysis of the institutional structures that can "tame Leviathan." It argues that altering the institutional structures to be more polycentric would contain important self-generating mechanisms to tame Leviathan. A polycentric organization of government describes a system with many centers of decision-making units that are formally independent of each other and it involves multiple, overlapping systems of autonomous governments. An important feature of what makes an institutional structure "more" or "less" polycentric is the degree of autonomy of the states, localities, or subunits in the society. The features of a polycentric institution complemented by the decentralization of money would move us closer to the reality of a constrained government. Borrowing money and inflating are the remaining choices, and this is what politicians tend to do.
