Towards A Good Samaritan World

Monday, July 03, 2006

ARE STATES COHERENT POLITICAL UNITS?

Libertarian economist Jeff Miron makes the case for federalism. Federalism is a great idea in the abstract, but somehow I can't work up much enthusiasm for empowering state governments. States, it seems to me, are mostly arbitrary lines on a map with no real cohesion. I grew up in Colorado, where the urban corridor of the Front Range, from Fort Collins through Boulder and Denver down to Colorado Springs, had very little in common with the ranching communities hundreds of miles away in places like Grand Junction. Now I live in Washington, DC, a metropolitan area which is spread across three states/quasi-states: Virginia, Maryland, and the District of Columbia.

A useful version of federalism would empower cities. Cities really have a certain coherence and unique character. Boston's America's #1 university town; Washington, the politics/policy hub; Los Angeles, an entertainment mecca; Houston, the energy capital; San Francisco, the financial capital of the west coast; and so on. If people have affection for their states, they probably have a more particular place in mind: if I'm nostalgic for "Colorado," I'm probably thinking of something totally different than what someone from Grand Junction, or a town on the plains, is thinking of. But "Washington, DC" conjures up some of the same images and associations for all its residents. I believe that strong city governments would be much more effective "laboratories for democracy" than states, and increasingly so as mobility and urbanization increase.

Unfortunately, there's a strong legal and historical basis for state-based federalism, but not for city-based federalism.

UPDATE: Greg Mankiw focuses on the redistribution issue raised by Miron; he thinks Miron is not convincing because he assumes a point that is controversial and needs to be argued for, namely, that redistribution is bad.

I think different kinds of redistribution are bad in different ways. Rich-to-poor redistribution is bad because it creates a culture of dependency among the poor, leading to family and community breakdown and crime. People's moral need to work and serve their fellow men is more important than their physical needs, and because of our fallen nature we sometimes require the threat of poverty-- of shame, pain, ultimately starvation-- to get us to suffer the humiliation of serving others. I expressed this idea in one of my favorites of my own essays, "Work, Service and Worship."

Middle-class-to-middle-class redistribution is bad for a different reason: middle-class people who think they need hand-outs from the government are contemptible, spoiled brats. Yes, I include all those affluent seniors who are living off Social Security checks. To some extent, it's a mitigating factor that they've been brainwashed by FDR and his successors into thinking that "they're owed," that it's a "compact between the generations," and so on. But ultimately, they're behaving disgracefully, taking all that money from the government when children are starving in Africa. It's sad because they did so many good things for their country in their younger days: winning World War II, rebuilding the economy after the war, containing the Soviets, and all that. I would be in awe of them if they hadn't squandered their good names by turning into such greedy geezers. Of course, middle-class-to-middle-class transfers are bad because they create perverse incentives, they corrupt politics with mass rent-seeking, and they fail to help those who really need it. But my reasons for opposing them are more moral than economic.

So, if you can't redistribute to the poor, and you can't redistribute to the middle class, doesn't that rule out redistribution altogether? Maybe not. I think public education is completely misunderstood when it's called a "public good," really, it's a form of redistribution, that limits the ability of wealthy parents to create inequities in the human capital endowment of the rising generation. I would like to see a voucher scheme, which would make the education economy more effective (and pleasant), but the public-finance/redistributive aspect would still be there. I'm also not against redistributing to handicapped people. Also, I think it may be worth redistributing to people who, for some reason, create a lot of externalities through their preferred consumption: thus, there may be a case for subsidizing drugs to seniors, because the money ultimately goes back to drug companies, who have market incentives to use it to develop new drugs, which will eventually become public domain and may lengthen all of our lives.

1 Comments:

  • Good points about city-centric federalism and redistribution. I agree with you 100%. Except for the "work is worship" bit (so, I guess not literally 100%). I think work is a fundamental need, like food and shelter, and if you are lacking in work, your fitness is lowered (not physical fitness, but rather the ability to be productive and ultimately survive).

    By Blogger Thomas Reasoner, at 3:52 PM  

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