People who make the laws should live under those laws
Laws suitable for one community may not be so for others, making law confusing and overblown
The need for law is a symptom of an underlying problem that needs to be addressed before law is made
One of the challenges of smallism is the economic matter of negative externalities, that is the problems caused to others by another's actions. For example, a community may choose to have a diesel generator and place it next to another community that does not benefit from using it. The pollution caused by the generating community is an example of a negative externality. So how would Smallism resolve such problems?
Firstly we need to consider the traditional approach. A group of activists will demand the government does something to solve the problem, but institutionally in western democracies, the government is nothing but a law-making body and when the only tool you have is a hammer, every problem looks like a nail. However, for some rural communities, the diesel generator may be the only solution to their power problem. When the law is created we have to ensure that there are exceptions to the law which fundamentally breaks the system by introducing loopholes caused by many different activists with their own agendas. This makes a mockery of the law.
Smallism deals with these problems in a more direct and civil manner by giving one community the ability to sue another. So, in this case, the polluted community would state that they were going to sue for damages. At this point, we need to re-align the focus of Lawyers and Courts to three considerations. The damage caused, the intent and the compensation required. That's it. Nothing more or less.
The polluting ward now has two options, to resolve the problem of pollution or go to court. In this case, the community would order the Utility Service Manager to find some way of solving the problem (If s/he hasn't been sacked for creating the problem at provisioning which cannot be done under our national utility provision system). Usually, it would be cheaper for the community to resolve the problem themselves than to go through the courts and thus the problem is resolved.
With hundreds of communities resolving their own problems across the country Smallism drives invention and innovation and good ideas will be adopted while bad ones are rejected and manufacturers design solutions that work, not those that fit one size fits all regulation.
Social Law and Order
In keeping with the self-sufficiency ideals of smallism's wards, will also have stronger powers to create laws for their area should they need to do so, although we must remember that the need for law is a symptom of an underlying problem and that the causes of the problems should be addressed before law is enacted.
For example if an area has problems with begging, then there should be no reason why an anti-begging law shouldn't be enacted, however, if the people of a ward are happy with beggars on the street then they would not enact this law. However, Smallism's structure encourages people in the wards to consider the need for laws as a warning of an underlying problem and motivates people to deal with the true root causes.
In the example above, why are beggars attracted to this ward? and what can be done to either remove them or better still help the beggar become a member of the community and improve their lives? These solutions are far more effective when done at the local level through social and community networks that can ever be achieved by National Policy. This devolution of power is already happening in the UK although some argue against the use of these laws because the power to make these laws by local government rarely represents the interests of the local stakeholders and often see bylaws as a way of making money as we see from the 'bizarre' laws created by local councils.
While Smallism doesn't remove the perverse incentive of using the law to make money, it will mitigate that ability as the people most affected will be the very people instigating those laws in the local environment.
A far cry from the one-rule-for-them-one-rule-for-us politics we are currently subject to.