Why Government Fails So Often: And How It Can Do Better (16 page)

Second, the constitutional authority of the federal courts to constrain the actions of both agencies and legislatures—and in a real sense, to make law—makes the policy-making system remarkably accessible to the people. As discussed below, the Constitution—especially the Bill of Rights and the Fourteenth Amendment—strongly orients judicial power to the creation and protection of individual rights, usually at the expense of governmental claims.

Third, the constitutionally constrained system of administrative law delegates enormous power and discretion to federal agencies, but under political conditions that make it unusually difficult for them to establish the democratic legitimacy of their actions, especially when compared to their European counterparts. This, coupled with the fact that the constitutional system also leaves many of the most important political functions—education, land use, criminal justice,
transportation, domestic relations, tort law, occupational licensure, and much more—in the hands of state and local governments means that federal policy makers’ writs have limited reach.

DECENTRALIZATION

Hostility to centralized power has deep roots going back to the colonial period. As we saw in
chapter 3
, this hostility is institutionalized in a distribution of governing authority with both horizontal (separation of powers) and vertical (federalism) elements. Americans depend less on government—and hence on its effectiveness—than Europeans do. More skeptical of the gains that more government might generate, Americans are more intent on minimizing the harm that it can do. (Game theorists call this a “minimax” strategy.)

But the theoretical debate over the functional and power-diffusing values of decentralization (on which a vast literature already exists) is not my focus here. After all, state and local policy makers are not waiting for Washington to adopt those values; they are initiating their own programs to fill the policy vacuum created by federal failure and gridlock.
³
In this section, then, I focus on how they use localism and privatism, two aspects of decentralization, to resist federal policy controls.

Localism
. By localism, I mean the commitment to the principle that if governmental power must be exercised, it should be exercised at the lowest level of government that can do so: the states and their localities (including special-purpose units of government).
*
This notion has several normative components. One is the claim that state and local levels of government are “closer to the people” and in that sense more democratically accountable. (In reality, most citizens know even less about their state and local governments than they do about the federal one, those elections are usually less prominent, and the quality of state and local officialdom, as measured by formal educational credentials and some performance criteria such as incidence
of corruption, is lower.) A second is the claim that state and local decisions can better reflect the diverse social conditions that pose such an immense challenge to federal policy making. A third claim is that localism assures that error costs of misguided policies will be low.
⁴

Whatever the truth of these claims, the public clearly believes it. In a 2013 Pew Research Center poll, only 28 percent of respondents viewed the federal government favorably. This compared with 57 percent and 63 percent—and majorities of both Democrats and Republicans—who viewed their state and local governments favorably. This gap between views of federal and local government, Pew reported, has never been wider, yet the 63 percent favoring their local governments is unchanged in recent years. Even more striking at a time when Democrats control both the White House and Senate, only 41 percent of Democrats view the federal government favorably, down ten points from the previous year.
⁵
I speculate that this reflects their generally favorable perceptions of their local schools, police, and land use and other policies, as well as the negative attitudes toward the federal government summarized in
chapter 1
.

This pervasive belief in localism is reflected in several facts about American policy making that are remarkable, especially compared with other countries’ governments. First, very few domestic programs that are both federally created and federally funded are administered exclusively from Washington; the most important examples are Social Security and defense. (Medicare does not involve the states, but it is mostly administered through carriers and intermediaries that are widely distributed throughout the country.
⁶
) Almost all other federal programs delegate federal funds and substantial policy-making authority to the states (and on occasion, directly to localities). Second, as noted above, many of the most important public functions are primarily creatures of state and local law, funded and administered at state and local levels. Third (and related to the first two), the state and local government collectively employ about seven times more officials than does the federal government’s civilian workforce—19.8 million versus 2.8 million, respectively, in 2009.
⁷

As a political matter, this results in programs’ funding being divided into a relatively large number of smaller pieces—often too small for policy success, and inimical to economies of scale—as members of Congress insist that their constituencies receive some of the money. In 2008, for example, Congress created a special program to help local governments finance clean energy projects through conservation bonds, with Washington paying part of the cost. Four years later, few states and localities had participated because once the subsidy was spread nationwide, the amount available to each locality was too small to pursue projects.
⁸
This is true even of many experimental programs, such as Model Cities in the 1960s and Race to the Top in the current era of president Barack Obama, which were originally designed to achieve critical mass in order to demonstrate their potential or reward innovation but had to spread the funds too thin in order to satisfy each member of Congress.
⁹
From a policy perspective, this localism means that even programs that the federal government creates and largely or exclusively funds must almost always rely on 89,500 units of state and local governments not only to administer and enforce them but also to adopt state laws to authorize and implement the programs in those jurisdictions. This system of “cooperative federalism” (as it is optimistically called) aims to exploit the putative virtues of localism but often produces policy chaos and incoherence,
¹⁰
even in areas of great national importance. Part of the problem is that states may be unwilling to implement or enforce federal law, even when offered carrots to do so, and the federal sticks are far weaker and cruder than the law on its face might suggest.
¹¹
The problem is typified by three high-priority federal programs: the No Child Left Behind Act, the REAL ID Act, and the Affordable Care Act.

No Child Left Behind, a program adopted by a bipartisan Congress in 2001 with high hopes in the glow of president George W. Bush’s first year (before 9/11), has disappointed even modest expectations and, apart from its increased focus on school accountability, is fairly described as ineffective.
¹²
Such an indictment should acknowledge that the condition being addressed—inadequate student and school performance in disadvantaged communities—is among the
most intractable of all social problems, but localism makes it that much harder for the federal government to solve. Even President Obama, who along with his secretary of education has firmly embraced the program, in effect conceded defeat in July 2012 when, more than a decade after the law’s enactment, he exempted schools in more than half the nation from central provisions of the law. This followed years of fierce resistance by the states and Congress’s repeated refusal since 2007 to reauthorize the law.
¹³

The REAL ID Act, enacted in 2005 at the urging of the 9/11 Commission, was intended to reduce terrorism risks by requiring each state to assure that driver’s licenses and identification cards that the state issues are reliable enough to be recognized as “official” under federal law. The act prescribed a May 2008 deadline for compliance, but when all fifty states demanded extensions of the deadline, Congress agreed. Many states explicitly refused to enact implementing legislation, and the federal government has granted extensions that now extend to 2017. In 2012—eleven years after 9/11 and seven years after enactment—the Government Accountability Office issued a report detailing many states’ continued noncompliance and the federal government’s failure to address persistent authentication problems.
¹⁴

In the case of the Affordable Care Act, enacted in 2010, the law provides for state-based health insurance exchanges in which individuals and small businesses can shop for affordable, comprehensive health insurance plans. These exchanges are at the core of the federal scheme, yet by November 2013, only seventeen states and the District of Columbia had opted to run their own exchanges; by default, the federal government must establish and run the rest.
¹⁵

Localism—specifically, the geographic mobility that it encourages—poses another obstacle to policy coherence and effectiveness. Geographic mobility by individuals varies significantly by education level. Almost half of college graduates move away from their birth states by age thirty, whereas 27 percent and 17 percent of high school graduates and dropouts, respectively, do so.
¹⁶
Firms, and to some extent individuals, can and often do respond to a policy that they oppose by relocating to a different jurisdiction or region with a more
attractive policy mix. (This is known as the Tiebout effect.) Relocation is facilitated in a federal system in which different states or regions provide different goods, services, costs, and amenities. For example, firms often move to areas offering more congenial tax, labor, immigrant, regulatory, and other policies.
¹⁷
Individuals often move to find better schools, lower taxes, greater job opportunities, and more desirable public goods (or better weather; the evidence does not indicate that they move for more generous welfare benefits).
¹⁸
State and local governments may alter their policies to meet this competition—often a good thing for the public—but such adaptations take time, political will, and tactical skills, which are all hard to come by.

More to the point here, Tiebout-motivated mobility also frustrates
federal
policy effectiveness. Washington’s efforts to promote integration in housing and schools, for example, are constantly being subverted by firms’ and individuals’ choices and geographical mobility. Such efforts often encourage white, and even middle-class black, flight that simply exacerbates the problem in the communities of origin.
¹⁹
Freedom of choice has race-and class-separating effects in many policy-relevant areas of social life, which puts it in tension with more egalitarian, integrative ideals. But so long as liberal America embraces individual choice as a paramount value—and there is no sign that its appeal is waning in residential location or any other area of life—federal policy makers cannot effectively prevent these effects but must instead focus on indirect policies of remediation in the now increasingly segregated communities of origin.

Privatism
. Localism, in which power is delegated to (or retained by) state and local governments, hardly exhausts the valuation of decentralized power in our political culture. Indeed, decentralization is instantiated far more radically in the norms and forms of privatism, which holds that individuals, families, firms, and other civil society groups should exercise the dominant power over important decisions that in many or most other modern democracies have long been made primarily or exclusively by government. The list of such domains is very long, but even a partial one includes education, social welfare services, health care, low-income housing, museums and
other cultural institutions, and much philanthropy. In the United States, even political parties (discussed in
chapter 3
) are treated as private organizations, and religious organizations are as a constitutional matter hands-off for government. This contrasts sharply with the tradition in Europe, where government supports parties and religions in various ways.

The arguments favoring privatism are both principled and functional. We value individual autonomy in its own right as an expression of human dignity and freedom. In terms of Isaiah Berlin’s negative liberty conception, government intrusion on that autonomy is ordinarily an intrusion, a diminution of liberty. From a Kantian perspective, legally required actions not only infringe on liberty but deprive such actions of the distinctive moral quality produced by the exercise of autonomous wills. For libertarians, such requirements violate our natural rights to be free, within very broad limits, to do as we wish. The functional arguments for privatism are also appealing. As citizens are the best judge of their interests, their free choices will yield efficient outcomes. When government makes such choices for them, government will frequently make the wrong choices, and incur greater inefficiencies in the process, for all the systematic reasons discussed in this book. Citizens deprived of autonomous choice are infantilized to an extent, as their capacity for reasoned deliberation and initiative atrophies.

This insistence that individuals retain the right to make choices that in other societies the government would make for them has been exemplified recently by federal statutes allowing for defaults that individuals or their private delegates (such as employers) may select but that the government may not establish. Advocates of a “behavioral law and economics” approach to policy making, who emphasize that individuals often make irrational choices, have urged government to “nudge” them toward better choices by establishing default provisions that will govern individuals unless they specifically choose to reject them.
²⁰
Christine Jolls notes that where Congress has done so—as in the Pension Protection Act of 2006—it has been careful to allow
employers
to establish a default for their employees’ retirement
savings plan rather than allowing the
government
to do so. Jolls observes, “Yet such a default was never even seriously considered in the American context. Instead, [Congress] chose an arrangement under which a private actor, not the government, selects among potential default contributions, a positive 401(k) contribution versus a zero 401(k) contribution.” This is precisely the opposite of what other liberal democratic countries like New Zealand and the United Kingdom have done.
²¹
Nor is this a one-off instance of preferring private choice to government-set defaults; Jolls also shows that in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011, Congress also rejected a legislated mortgage structure default. Strikingly, Congress was aware that both of the rejected defaults would almost certainly have benefitted the vast majority of citizens, but the privatism principle prevailed nonetheless.
²²
The point here is not the merits of Congress’s policy decisions but instead that the political culture prefers to respect individual choices, however irrational, to government-knows-better paternalism.