A few weeks ago I blogged political polarization among states, and the potential upsides. The topic has traction. Adam Freedman and the Manhattan Institute have a fine take here. And the New York Times has two feature-length pieces here and here. Mirabile dictu, these actually convey information.
The first piece examines the national political strategies (on both sides) to shape state politics: hugely interesting. The pessimistic interpretation is that states are becoming mere staging grounds for national winner-takes-all combat. The optimistic interpretation: it’s good that the combatants have to fight state-by-state. It diffuses and compartmentalizes the conflicts.
The second piece is on the stark differences between Duluth (Minnesota) and Superior (Wisconsin), across the St. Louis river from each other and connected by a bridge. The article illustrates not only the pronounced, policy-driven differences among states that ought to be pretty similar but also federalism’s bundling effects: you get gay rights on one side and a favorable business environment on the other. You can’t have both.
The bundling effect is often mobilized to “demonstrate” that competitive federalism can’t be “efficient.” In blackboard models (of the “Tiebout” variety), this is true: you lose the equilibrium. But that has never struck me as a terribly useful line of inquiry. As one of my mentors (the late Aaron Wildavsky) used to say, “Life comes in bundles.” Children are a joy and a pest—you can’t have one without the other. You may want a car with the safety of a Sherman tank and the fuel efficiency of a Volt: you can’t have it. The trade-offs are everywhere, and no regulator can do anything about them. On federalism as on many other matters, the question is whether we get to choose the bundles or have the federal government decide the optimal mix.
Not even close.