Rebooting American Federalism

Bruce Katz has a thoughtful paper on the role of federalism in economic strategy, and while calling for further study is rarely the most exciting policy suggestion I think this is a good idea:

Finally, the federal government, in conjunction with the states and localities, could create a National Laboratory on Federalism and Competitiveness. The laboratory would have three separate missions: (a) capture and disseminate the best economy-shaping innovations under way in states and metropolitan areas, to speed replication and improvement; (b) capture and disseminate the best innovations under way in other nations, particularly countries where key powers are shared among different levels of government; and (c) report periodically to the federal, state and local governments on ways in which policies at all levels could be refined to enable or scale up the most promising innovations. A biennial Federalist Forum could be held to debate the recommendations, bringing together, for the first time in decades, key representatives of each level of government and key corporate, civic and academic institutions.

It’s striking that the particular division of responsibilities between federal, state, and local government in the United States is largely a product of contingency and path dependence rather than specific thinking about what should be done by whom and why. The federal government, for example, is very involved in the financing of local transportation infrastructure in a way that seems unwarranted. At the same time, given that people move a fair amount we seem to me to be under-centralized in terms of curriculum design. Medicaid and Medicare treat the state/federal division of responsibility for health care in a totally inconsistent way. DC politics seems like crazytown nine days out of ten so it’s difficult to imagine a calm rethink of the division of labor and careful study of how other federal countries split these things up, but it would be nice to take a look at.