Week Five: Understanding the Competitive Pressures Within a Federal System

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Week FiveUnderstanding the Competitive
Pressures Within a Federal System
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Child Care Spending

• FY97 Kidslt5 in Poverty
• California 856m 680,000
• Texas 180m 420,000
• Connecticut 101m 26,000
• Wisconsin 87m 53,000
• Oregon 85m 46,000
• Louisiana 61m 93,000
• Maryland 55m 58,000

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Factors Affecting the Assignment of Policy
Responsibilities

• Externalities
• Information
• Costs of Decision-Making
• Government Capabilities
• Interjurisdictional Competition

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Externalities and the Assignment of Policy
Responsibilities

• Definition A cost or benefit that an individual,
  organization, or government incurs due to the
  action of another individual, organization, or
  government.
• Nonrivalrous Does consumption by one affect
  consumption of others?
• Nonexcludable Can someone benefit without
  contributing?
• Export of Undesirables Can you transfer
  undesirable costs to other jurisdictions?
• Implication for Govt When externalities are
  present, we would expect greater national activity

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Information and the Assignment of Policy
Responsibilities

• Importance of Information Policy-making and
  implementation requires information.
• Information as Power Who has the most
  information about costs and benefits?
• Information Is Not Free
• What are the costs of gathering and disseminating
  information about a particular program?
• What are the costs of monitoring?
• Implication for Govt Level at which
  information is most costly will be less likely to
  act or garner discretion.

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Costs of Decision-making and the Assignment of
Policy Responsibilities

• Costs of decision-making Political costs (or
  benefits) associated with advocating governmental
  activity in a given area.
• Factors shaping considerations of costs
  Political party re-election considerations
  coalition-building credit claiming
  interest/advocacy groups
• Implication for Govt Where the costs of
  decision-making are high, likelihood of acting
  are low.

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Govt Capacity and the Assignment of Policy
Responsibilities

• Which level of government has the requisite
  resources?
• Which level of government has the administrative
  capacity to Act?
• Which level of government can ensure equity,
  consistency, and predictability?
• Implication for Govt Policy responsibility
  tends to be assigned to level with necessary
  capacity ties favor subnational government
  often.

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Interjurisdictional Competition and the
Assignment of Policy Responsibilities

• Competition is embedded within a federal system
• Impact of competition Is competition in a given
  level positive or negative?
• Indicators of competition tax exporting tax
  competition over-taxation of activities with
  spillovers underprovision of services
• Implication for Govt If competitive pressures
  underprovide services below an acceptable level,
  authority will be given to the national
  government.

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The Political-Economy of Subnational Government

• Decision-making Simple cost-benefit calculation
  between redistributive and development programs
• Act when B gt C what does this mean for expected
  policy outcomes?
• What is the role of politics?
• Assumptions of Model
• Actors can make cost-benefit calculations
• Mobility
• Citizens respond to shifts in governmental
  programs
• Development policy is consensus-oriented

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Two Key Dimensions to Political-Economic Approach

• Mobility
• Seek to match mix of residents to programs and
  revenue needs
• Sorting process occurs homogeneity within
  jurisdictions
• Desirability
• Attract desirable groups/residents
• Exploit, ignore, or reflect undesirable
  groups/residents

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Mobility and Desirability Donahues Matrix
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Discussion Questions

• What are the implications of competitive
  pressures and political-economic models for
  policy-making at all levels of government?
• What factors will mitigate or mute competitive
  pressures?
• What will exacerbate competitive pressures?
• Why does the federal government tolerate
  competition between subnational jurisdictions?
• What is the price of federalism?
• What is the difference between competing,
  learning, and adapting?

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Readings for Next Time

• Chapters One through Three, Implementation,
  Pressman and Wildavsky
• Chapters One, Two, Four, and Five, New Towns
  In-Town, Derthick
• Two Page Memo on paper topic due next week