Noah Smith observes that over the past almost 50 years the federal government has been privatizing core functions and core expertise, with the result that services are more expensive to provide as well as being less effective.
Of course, those private contractors make campaign donations, so it's all good, I guess, if you are a politician or a political consultant, in which case, ka-ching!
This is a picture of Deirdre Beaubeirdre, a character from the comedy sci-fi movie Everything Everywhere All At Once — an IRS auditor who hounds the immigrant protagonists mercilessly. I loved that movie, but I also thought Deirdre’s character was emblematic of a common and unhelpful way that Americans tend to think about the civil service. Ronald Reagan famously said that “the nine most terrifying words in the English language are: I'm from the Government, and I'm here to help.” I think that antipathy toward government workers has filtered through to much of American society — not just to libertarians or conservatives, but to many progressives as well.
I believe that the U.S. suffers from a distinct lack of state capacity. We’ve outsourced many of our core government functions to nonprofits and consultants, resulting in cost bloat and the waste of taxpayer money. We’ve farmed out environmental regulation to the courts and to private citizens, resulting in paralysis for industry and infrastructure alike. And we’ve left ourselves critically vulnerable to threats like pandemics and — most importantly — war.
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If government spending isn’t going to pay government workers, it must be going to pay people who work in the private sector — nonprofits, for-profit contractors, consultants, and so on. In other words, state capacity is being outsourced. But this graph doesn’t actually capture the full scope of the decline, because it doesn’t include outsourcing via unfunded mandates — things that the government could do, but instead simply orders the private sector to do, without providing the funding.
At this point, Mr. Smith cites a John DiIulio book approvingly, I am not quoting, but I am listing as a warning, given that Dilulio has been aggressive in promiting religion in the public sphere, and he, along with Bill Bennett and and John Walters, pushed the myth of the teen super-predator, which lead (at the Clinton Administration's urging) to a massive increase in incarceration, particularly among Black and Latino youths.
The alternative to a strong state regulatory apparatus is private
litigation, which has many negative externalities:
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But in fact, this is not actually how the most cumbersome environmental regulation works in America! Instead, we have laws like NEPA and its stronger state-level equivalents like CEQA, which farm out the job of environmental regulation to citizens and the courts. The way it works is this: A developer starts work on a project, like a solar plant or an apartment complex. Then private citizens who don’t want that project in their backyards — because of concern over scenic views, or property values, or “neighborhood character”, or whatever — sue the developer in court. Even if the project satisfies all relevant environmental laws from day 1, citizens can sue the developer under NEPA or CEQA to force it to stop the project and complete a cumbersome environmental review — basically, a ton of paperwork. This often delays the project for years, and drives up costs immensely — which of course discourages many developers from even trying to build anything in the first place.
Enforcing environmental regulation via judicialized procedural review has had devastating consequences on America’s ability to build the thing we need. Housing projects are routinely held up by NIMBYs using environmental review laws to sue developers, often under the most ridiculous of pretexts (such as labeling human noise from apartment complexes a form of pollution). The solar plants and battery factories and transmission lines that we need to decarbonize our economy aren’t getting built nearly as fast as they should, because they’re getting held up by these review laws. And remember that most of these projects aren’t violating any environmental review laws in the first place — the NIMBYs have the right to sue and hold up development regardless of whether any regulation is actually being violated!
Which raises an obvious question: How can we know if no environmental regulation is being violated, other than waiting for a lawsuit and a multi-year environmental review? The answer is: bureaucrats. The answer is that you have a bunch of government workers examine the project and make sure it checks all the relevant regulatory boxes, and then if it does, you simply allow the project to go ahead, without lawsuits or multi-year studies. This is called “ministerial approval” or “ministerial review”. This is how Japan does things, which is why they’ve been able to build enough housing to keep rent affordable.
In addition to the problems mentioned above, protection by litigation only protects rich people, because lawyers are expensive.
Having a competent, well trained, and well paid bureaucracy produces a huge benefit to most of society.
In its absence various malefactors, finance, insurance, real estate, and their respective lawyers benefit to the detriment of the rest of us.
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