Why Government Fails So Often: And How It Can Do Better (14 page)

3. Economic regulation
.
³⁹
This specialized bureaucratic process combines aspects of both courts and legislatures to control prices, output, and/or the entry and exit of firms in an industry—particularly those regarded as public utilities.

4. Social regulation
.
⁴⁰
This, too, is a specialized bureaucratic process that, in contrast to economic regulation, seeks to restrict behaviors that directly threaten public health, safety, welfare, or well-being, including discrimination on the basis of race, gender, religion, and so forth.

5. Government insurance
.
⁴¹
Here, government undertakes to compensate individuals or firms for losses from certain specified events, charging a premium for this insurance. Examples are insurance against flooding, crop loss, and health care costs.

6. Public information
.
⁴²
Here, government disseminates information to elicit desired policy outcomes by influencing what people think, know, or believe when they engage in the targeted behavior.

7. Corrective taxes, charges, and tradable permits
.
⁴³
These policy tools use prices and other market mechanisms to create economic incentives—penalties or rewards—for individuals or firms to induce them to change their behavior in ways that reduce social harms or secure other social benefits.

8. Contracting
.
⁴⁴
This is a business arrangement between a government agency and a private for-profit or nonprofit entity in which the entity is paid to deliver, on the government’s behalf and under conditions specified in the contract, certain products or services to the agency or to third parties (such as clients in a social services program). One public policy expert calls this process, and the policy uses that the executive branch can make of it, “the power of the purchaser.”
⁴⁵

9. Grants
.
⁴⁶
These are payments from government to a recipient organization (typically another level of government or a nonprofit group) or to an individual. They are intended to either stimulate or support some sort of service or activity by the recipient. The grants can take the form of cash, land, or anything else of value.

10. Loans and loan guarantees
.
⁴⁷
In a direct loan, the government borrows from the Treasury to lend money directly to borrowers, and then services the loan and—if the borrowers default—forecloses or otherwise attempts to collect. With a loan guarantee, a private lender such as a commercial bank or mortgage lender makes the loan to the borrower. The government agrees to make full or partial payment to the lender in case the borrower defaults on the guaranteed loan. The private lender originates the loan, secures the government guarantee, and services the loan according to government regulations or minimum standards.

11. Tax expenditure
.
⁴⁸
A tax expenditure is a provision in the federal tax law that usually encourages certain behavior by individuals or firms by deferring, reducing, or eliminating their tax obligation. In this way, the government pursues its policy objectives not by spending the tax dollars it collects but by allowing individuals or
corporations to keep and spend dollars that they would otherwise have to pay the government.

12. Vouchers
.
⁴⁹
A voucher is a subsidy that grants purchasing power in a certain amount, or as a percentage of some price, to an individual the government wants to assist in order to enable the recipient to choose among a set of goods and services (restricted according to the terms of the voucher program) whose consumption the government wants to encourage. By giving program beneficiaries the resource (i.e., the exchange value of the voucher), it gives them control over the consumption decision rather than placing that resource and control in the hands of providers of the vouchered good or service.

13. Private cause of action
.
⁵⁰
This policy tool gives a right to individuals or other entities to seek monetary compensation (damages) or injunctive relief through the judicial system for certain types of loss caused by the negligence, breach of contract, or other wrongful conduct of others. This right is ordinarily recognized or established by common law courts but may also be created by statute or, in some cases, by administrative regulation. As a mechanism for preventing loss, it can be a decentralized, privately initiated, privately processed alternative to other tools.

INSTITUTIONS

Policy making and implementation are conducted through formal institutions, and these institutions are suffused with their distinctive cultures. In this section, I make no attempt to introduce and explain the principal institutions that shape government policy, which is a huge undertaking best left to political science textbooks and one that many of my readers may not need. Instead, I shall briefly mention here four more or less formal or structural elements of the institutional landscape. (The more informal political culture that surrounds and shapes these institutions is discussed in
chapter 4
.)

These elements are: (1) separation of powers at the national level; (2) federalism; (3) parties, campaign finance, and plurality elections;
and (4) media. In discussing them, I shall stress their impact on policy effectiveness, which even otherwise well-informed readers may seriously underestimate or misconceive.

Separation of Powers
. The federal government (and to a large extent its state government counterparts) is a theater of unending titanic conflicts among the executive, legislative, and judicial branches—and often
within
each of those branches. This system of “separate institutions sharing power” exhibits many virtues,
⁵¹
particularly the protection of what Isaiah Berlin termed “negative liberty.”
⁵²
These virtues are justly celebrated in liberal theory and in democratic practice. Another consequence of this system, however, is a veritable scrum of vigorously competing power centers that often produces public policies that, while interest-driven and democratically legitimate, are so (literally) compromised that they are ambiguous, hard to administer, and even incoherent. By incoherence, I mean inconsistency or illogic, a genuine problem for, or at least constraint on, public policy effectiveness. In the rough-and-tumble policy world, however, too much fastidiousness about coherence is probably unrealistic.
⁵³

Each of the three branches contributes to this policy free-for-all, which is rendered even messier by intrabranch conflicts simply by doing its constitutionally ordained job. The framers of the Constitution intended such conflicts, with the policy incoherence that such conflicts would tend to produce, in order to keep the federal government from infringing unduly on the powers of the states and the liberties of the people in civil society.
*
Sometimes, this policy free-for-all yields reasonably good outcomes when compared with policymaking processes, such as Westminster-type systems, that are designed to minimize executive-legislative conflicts. Pietro Nivola, for example, argues that America’s superior post-recession performance relative to Europe’s “may well have much to do with the actions that
our system
impeded
, not just the actions that it permitted. Unlike the British parliamentary model—so admired for its capacity to act decisively—our separation of powers, with its sometimes frustrating checks and balances, blocked precipitous budget-cutting and tax increases.”
⁵⁴
Chapter 10
discusses how the separation of powers affects bureaucratic policymaking and implementation in our system.

At a time when the federal policy agenda was exceedingly limited by today’s standards, albeit daunting enough—to prevent dangerous wars, maintain the fragile union, promote commerce, settle the vast interior, deliver the mail, and gain investment and forbearance from Europe—domestic policy confusion was the least of our problems. Today, when federal spending constitutes 22 percent of gross domestic product, we have vastly more reason to worry about such confusion. A striking example of this confusion occurred in the wake of the Newtown, Connecticut, mass school shooting when president Barack Obama vowed not merely to seek gun control legislation from Congress, which often occurs with highly controversial legislation promoted by either party, but to use his independent authority to accomplish administratively some of the same ends without congressional action. Many months later, few of the twenty-three executive orders he issued have been implemented, and his nomination of a permanent director of the key firearms regulatory agency—a position that has been vacant since 2006!—has not even been scheduled for a Senate hearing.
⁵⁵

Federalism
. Like the “horizontal” separation of powers, the “vertical” separation, which we call federalism, was designed to protect state prerogatives and individual liberty, not to facilitate federal policy coherence. Indeed, when the Constitution was adopted, federalism was an entirely novel invention for so large a polity and was expected to inhibit federal programmatic initiative and performance. Even so, the relationship was complicated and unstable from the outset; federal commandeering of state officials for some federal purposes was widely endorsed in the early republic, only to be opposed later on.
⁵⁶

The expectation that the states would inhibit federal power has in one sense been turned on its head in the modern era: the states have
participated in, and to some extent instigated, the vast expansion of national policy making since the 1960s, although resisting it in particular cases. The states play essential roles in the political support, substantive content, administration, and substantial funding of these (nominally) federal policies. As Nelson Polsby put it, numerous policy domains “cannot possibly be understood without a disaggregated look at the activities, policies, decisions, and inclinations within each of the fifty states.”
⁵⁷
I elaborate on this theme in
chapter 4
, under the rubric of localism.

For present purposes, however, the more important point is that these roles vastly complicate and confuse the policy system in ways that will become apparent in
part 2
. In emphasizing this, I certainly do not mean to disparage American federalism. Quite the contrary, it has succeeded admirably in making more workable than otherwise a federal policy juggernaut that the framers could never have imagined and would certainly have opposed. As Martha Derthick, a leading scholar of federalism, observes, “It takes a very large leap to imagine the United States with a unitary government, run from Washington with the help only of wholly subordinate units, and a still larger leap to suppose that such a country—it would of course need a different name—would be a better place to live.”
⁵⁸

Parties, campaign finance, and plurality elections
. The American party system is a creature of this federalism. At its inception, the Jeffersonian Democratic-Republicans and Hamiltonian Federalists were largely sectional parties—and this pattern (with name changes, and solidified by the Civil War) continued essentially until the New Deal. The party system today is experiencing remarkable changes. During most of the twentieth century, the two major parties were notably less programmatic and ideological, and far more heterogeneous demographically, than their European counterparts. Essentially bargaining entities, they were organized and administered largely at the state and local levels, coming together nationally only for the quadrennial presidential election. Polsby, probably the leading scholar of both the party system and the Congress, viewed “each of the two American major parties [as] in most respects a loose coalition of state parties.
These coalitions are not structured alike. Democrats are primarily a mosaic of interests making claims on government; Republicans are bound together much more by ideological agreement…. [It is] in its devolved aspect close to a one-hundred party system.” Accordingly—and also because of numerous primary contests that the weak parties cannot prevent—many more (and longer) elections are held than other liberal democracies.
⁵⁹

In addition, these votes—particularly those for Congress and the presidency—tend to be more fiercely competitive between the parties than they were during most of the twentieth century, when the solid Democratic control of the South enabled that party to control the House (with two brief interruptions) from 1930 until 1994, and the Senate for most of that period. The periodic gerrymandering of House districts has reduced this competitiveness only slightly in recent years, and displaced much of it to party primaries.
⁶⁰
These closely contested general and primary elections are both a cause and a consequence of higher campaign spending, which in turn has increased the reliance by parties and candidates on private campaign contributions and other forms of cash and in-kind support. This reliance, which parties and candidates regard with some ambivalence, has been heightened considerably by the recent emergence of Super PACs, 527 committees, and 501(c)(4) organizations that can engage in unlimited independent expenditures funded by individuals and groups,
⁶¹
and by Supreme Court decisions that allow corporations and unions to make unlimited independent expenditures.
⁶²
These developments are deeply controversial for several reasons: their supposed threats to political equality; suspicions that these putatively independent expenditures are surreptitiously coordinated with the campaigns and candidates; and doubts about how effective (and constitutional) ostensibly equalizing legal reforms have been and would be in the future, having been crafted by incumbent politicians determined to disadvantage their challengers. The effects of the campaign finance rules are discussed in greater depth in
chapter 7
.