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The government has reached the stage where government by performance is showing what it can do. A lot of government is now performance based, and is working well. A lot of government is still left over from the old days and isn't doing any better than it ever did. The time has come to work out the final transition where all government comes under the government by performance umbrella.
Up until now, government by performance has concentrated on problems which can be handled successfully at the local government level. There are clearly a great many problems that span the borders of cities, counties, states, or even nations. For example: how do we move things like environmental protection under government by performance? Obviously you can measure air and water quality at the local level, but the source of any pollution might not be under local control.
To successfully transform all of government to be performance driven, we have to provide a definitive answer to a question which has been the source of much bloviating among the pundits since the end of the cold war: "What is the proper role of government?".
Fortunately, government by performance provides an answer to this question. The proper role of government is to maximize the performance of government measured against the national goals. The national government should do what it does best, the states should do what they do best, and the cities should do what they do best. The determination of just what "best" means is what the performance measurements are for.
Imagine for a moment that we start by transferring responsibility for everything to the cities, but we give the cities a tool to deal with problems they don't feel they can handle themselves. The cities can pick problems they don't feel they can deal with at a local level. They can transfer responsibility for those problems to the next higher level of government and let someone else take a shot at solving the problem. What's to prevent the cities from just passing the buck on everything? The fact that real bucks (in the form of dollars) get passed. The higher level of government certainly can't be expected to take on a problem without the funds to deal with it, so the cities would negotiate the transfer of some of their federal performance payments to the states. The cities will still be getting rated based on performance, and their federal grants will still depend on how well they do in comparison to other cities. If they just pass the buck for all their problems, then the odds are that the state won't do as good a job and the federal performance payments will start to dry up. It will be to the cities advantage to do the best job they can on their own problems and only enlist the states when the cities really can't tackle the problem locally. The states, in turn, can pass national and international problems on to the federal government in a similar fashion.
We now have a structure that creates a strong incentive for local problems to be handled locally, and for non-local problems to be correctly identified. What makes the states do a good job? For one thing, the cities in the state will only do well in the performance measurements if the state does well on those problems the cities give it. For another thing, the cities always have the right to tell the state to "forget it". They can take back their money and just not solve the problem (if the state wasn't solving it anyway, the least they can do is avoid wasting the money). Perhaps the cities can use the money to create a private/public agency to try to work with industry to solve the problem, etc. So the states will only be able to keep the money the cities are giving them if they do a good job. A similar situation would exist between the states and the federal government.
So the answer to the original question about the proper role of government is now clear. The role of government is not prescribed by some esoteric theory. It is determined by a common sense practical measurement of performance. The proper role of government is that role which, in actual practice, maximizes performance. It is quite likely this is not a static assignment of responsibilities. New technologies, new ideas, war breaking out, peace breaking out, all these and more will have an impact on which level of government is best able to perform which tasks. There is nothing wrong with shifting responsibilities, and everything right with them. In fact, attempting to force a static structure on a changing world is doomed to failure.
We now have a complete picture of a government governed entirely by the quest for maximum performance. Naturally we won't get there in one step. Even this final step won't take place as described. Some functions are clearly the responsibility of the federal government. Shoving them onto the cities so they can eventually work back up to the federal government would be pointless and wasteful. The actual transition will probably require an independent commission to make recommendations and a gradual transition as the cities themselves decide how fast to take on the new responsibilities (and, of course, the new money freed up by the transition of the old program).
The most important point is that there is always a way to make government performance oriented. When we have done that to America from top to bottom, the people will wonder how we ever did things any other way. It may not be perfect, but it will be as close as any human society can get.