Niall Ferguson has characterized the current state of America as “The Great Degeneration.” Another commentator has recently introduced a new term into the public domain to describe our present political and governmental distemper.
In Yuval Levin’s very useful conservative policy journal, National Affairs, we find an honest and perceptive liberal, Professor Steven M. Teles of Johns Hopkins University, decrying the size, complexity, and incoherence, not to mention ineffectiveness, of American government as a “kludgeocracy.”
I became aware of this challenging article thanks to the good offices of a friend, a business school professor, with a keen eye for sense and nonsense in political discourse. As it turns out, at least with respect to his diagnostic abilities, Teles isn’t bad either. His recommended solutions, however, are open to question.
“The complexity and incoherence of our government often makes it difficult for us to understand just what the government is doing, and among the practices it most frequently hides from view is the growing tendency of public policy to redistribute resources upward to the wealthy and the organized at the expense of the poorer and less organized,” writes Teles. His term for this dynamic is “regressive redistribution,” a phrase that could have been coined by a disciple of the public choice movement which sees “rent-seeking” in almost any government program or expenditure. I used to think this view was a bit cynical. But, witnessing the spectacle of corporate cronyism, Farm Bill subsidies, and assorted bail-outs of banks, auto companies, and labor unions, I have come around. Did I mention AARP, Solyndra, ethanol, or sugar tariffs? Teles rightly sees this dynamic as cutting across “those more familiar ideological divisions” usually characterized as conservative or liberal.
What is a “kludgeocracy”? Teles cites the Oxford English Dictionary which defines “kludge” as “‘an ill-assorted collection of parts assembled to fulfill a particular purpose’… a clumsy but temporarily effective solution to a particular fault or problem.” Teles says the term is derived from computer programming “where a kludge is an inelegant patch put in place to solve an unexpected problem and designed to be backward-compatible with the rest of an existing system.” With enough kludges, you get a complicated mess with “no clear operating principle” which is impossible to understand and sometimes crashes.
“Clumsy but temporarily effective” is how Teles describes American public policy today, which is being generous. His thoughts about kludgeocracy and its reform first appeared as a working paper for the New America Foundation’s Next Social Contract Initiative and Economic Growth. A glance at the Foundation’s board of directors reveals a group of very smart, moderate to liberal individuals such as Fareed Zakaria and, one my favorites, Daniel Yergin, the international expert on energy, Pulitzer Prize winner, and frequent contributor to the Wall Street Journal. The organization cannot be termed “conservative,” but serious and thoughtful it is.
Teles presents a bill of particulars to substantiate his case including “the mind-numbing complexity of the health-care system,” including Obamacare; “our byzantine system of funding higher education”; and a “bewildering federal-state system governing everything from welfare to education to environmental regulation.” These are examples of America’ self-chosen method of governing itself “through more indirect and incoherent policy mechanisms than can be found in any comparable country.”
Teles is clearly in the Progressive tradition, going back to Woodrow Wilson, which is not keen on various aspects of the American constitutional system, be it federalism or Madisonian checks and balances. He is clearly comfortable with a more activist government, but one that works efficiently. Still, there are elements of his critique, if not all of his proffered solutions, which merit consideration.
Teles abhors the flight from transparency, for instance, as seen in disguised subsidies in the tax code or through the plethora of small-bore programs to cater, say, to various education constituencies without showing much benefit. He believes liberals would be better off pursuing subsidies openly, honestly, and transparently. As a liberal, he thinks liberals are ceding the ground to anti-government conservatives by playing “hide the ball” instead of standing tall for more effective and efficient direct spending.
Teles cites the Simpson-Bowles commission’s estimate “that eliminating all tax deductions other than the Earned Income Tax Credit, the child tax credit, and a few others would allow marginal rates on middle-income taxpayers to be cut in half and those on the top earners to be cut by about a third, without reducing government revenue.”
He argues that the “transaction costs” of the tax code are “impressive and disturbing.”
“The Internal Revenue Service’s taxpayer advocate estimates that in 2008 the direct and indirect costs of complying with that complexity amounts to $163 billion each year,” writes Teles. “Included in that cost are the remarkable 6.1 billion hours a year that American individuals and businesses spend complying with the filing of requirements of the tax code.”
Noting our complex grant-in aid system for education, or the “tangled joint administration of the flood protection system in New Orleans” which led to disaster during Hurricane Katrina, Teles displays a less than reverential attitude toward federalism.
“Because administering programs through inter-governmental cooperation introduces pervasive coordination problems into even rather simple governmental functions, the odds are high that programs involving shared responsibility will suffer from sluggish administration, blame-shifting, and unintended consequences,” argues the good professor.
Complexity and opacity in government hurt conservatives as much as liberals in “concealing the true size of government,” says Teles.
Teles views our current problems as primarily a political or governmental problem. He does not seem to recognize the underlying social and cultural deterioration that is driving an ever-expanding government. Even a well-designed Madisonian and federalist system cannot withstand the onslaught of cultural decay and the deterioration of private and civic virtue. Still, he is absolutely correct in citing the old saw that “Americans are ideological conservatives and operational liberals. That is, they want to believe in the myth of small government while demanding the government address public needs and for everything from poverty and retirement security to environmental protection and social mobility.”
Most notably, cheap housing subsidized by generous tax breaks, Fannie and Freddie, below-cost mortgages, and flood insurance is the prime example of populist desire trumping social and economic rationality. Teles reminds us that these non-transparent means of providing Americans with a 30-year, fixed interest-rate, which “exists on a mass scale only in the United States, are “fundamentally regressive — vastly favoring people in the highest tax brackets and artificially increasing the prices of homes, thus increasing barriers for first-time home buyers.” Every physician has a story as to how his accountant recommended he buy a monstrously large house to get that interest and property tax reduction — whether or not they needed or wanted it. The Great Recession, according to many analysts, was, at least in part, caused by a housing bubble resulting from these governmental interventions.
Teles’s recommendations are problematic. For instance, he supports eliminating or radically reducing the filibuster in the Senate, a sore subject for Republicans these days. He also recommends reducing multiple referrals to congressional committees in the legislative process, which makes sense but seems to be a relatively minor cause of our current malaise. He also believes that things would be “less kludgey” if Congress avoided “micro-design” of policies and shifted more power to administrative agencies. He claims, “This is not a plea for greater delegation of congressional power to the executive” but the opposite. His explanation is not convincing and will be nails scratching on a blackboard for advocates of more limited and modest government.
Teles does cite my colleague, George Mason University law professor Michael Greve, for his norm, “one problem, one sovereign,” which, to me implies devolution up and down, which is something less than subsidiarity or pure federalism but not a bad prudential rule. One fears that the balance, especially for liberals and Democrats, will always be struck in favor of “up” more than “down.” On the other hand, having the Congressional Budget Office (CBO) estimate governmental and private compliance costs associated with the kludgeocracy is not a bad idea. It should also provide a “distributive score” to identify how policies or legislation “redistribute upward rather than downward.”
Steven Teles has more faith in government than most conservatives, traditional or libertarian. But his essay is worth reading, understanding, and engaging. His is a good faith effort and opportunity to find common ground between the right and the center-left of the political spectrum. It is an opportunity not to be missed.