Fairness vs. Innovation/Flexibility

UPDATED 10/29: I'm updating this post to link to Sarah Varney's fantastic deep dive piece on the bleak healthcare situation in Mississippi. Varney provides a stark example as to why there need to be federal minimal standards in state/federal programs to prevent vast inequality and unfairness. Mississippi's health care situations shows us what can happen when states are essentially left to their own devices. 

Often peopler summarize our political conflicts as being a battle between those who favor freedom and those who favor equality. I think this conceptualization is wrong. A better way of looking at these battles is to see them as pitting fairness against innovation and flexibility. 

This framing sprung to mind as I read Nick Confessore's fantastic piece on the political fight over school lunches. Well intentioned regulations designed and endorsed by experts to combat obesity, diabetes, and scores of other expensive and debilitating ailments had unintended consequences. Some kids stopped buying school lunches, and some went hungry because they refused to eat the fruits and vegetables that accompanied reduced portions of proteins and grains. 

Uniform rules and regulations implemented at the federal level pose several advantages. Their primary benefit is fundamental fairness and uniformity. The best examples of why legislating at the federal level is fairer than allowing states and localities to set their own policies probably come from criminal law.

Would it be fair for someone on one side of the Ben Franklin Bridge (which separates Philadelphia and New Jersey) to get arrested for, say, robbery, and get sentenced to 25 years in prison, while a person on the other side of the bridge commits the exact same crime in the exact same manner and is sentenced to 0 prison time? Is it fair when someone crosses a municipality line, or a state line only to get pulled over because the traffic regulations differ in some manner? 

Yet, because of our federal system this type of thing happens every day (albeit without such dramatic differences in sentences). We see this same unfairness in school funding, again because of its local base. Schools may spend dramatically different amounts per pupil in spite of being mere blocks apart. Wouldn't it be far fairer to distribute the money that we spend on schools in such a way that schools spend the exact same amount per pupil in every school district in the United States (at least when adjusted for cost of living differences)?

National laws give us one set of rules and regulations, and a uniform set of benefits. Not only is this uniformity fairer, but it offers the added value of discouraging people from moving to a new state to take advantage of far more generous benefits. Otherwise you have a system that essentially soaks the taxpayers in generous states because of the penury of other states. 

National laws also prevent a race to the bottom. For example, a Supreme Court ruling allowed credit card companies to charge up to whatever interest rate was the maximum allowed by law in their home state. This ruling explains why many of your credit cards originate in South Dakota. After the Supreme Court ruling, South Dakota changed its usury laws to eliminate the cap on interest rates and fees to attract Citibank (and subsequently other financial institutions). The result was that South Dakota rendered caps in other states meaningless by choosing to give companies carte blanche to charge what they wanted. 

Governing at the federal level, however, also has drawbacks. By their nature, regulation and legislation tend to be inflexible, and often fail to foresee potential problems and potentially disparate impacts. Vast bureaucracies also require rigid rules to guarantee consistent implementation, and these rules can only adapt slowly.

Additionally, governing at the federal level prevents states and localities from serving as laboratories of democracy. It's also hard to adjust the rules and regulations to state specific differences (even legislating at a state level poses this problem as the needs of major urban areas often differ from those of rural areas). 

This drawback has significant costs. One topic about which I plan to write either this week or next is the lack of innovation in policy. It seems to me that most policy ideas on both sides of the ideological spectrum are either stale retreads or proposals dictated by rigid ideology. 

Yet, attempting to innovate on the federal level can result in larger, more expensive failures when untested programs do not work as envisioned. These failures, in turn, can foreclose future opportunities to innovate. Opponents can also point to the potentially large costs of a new program, or warn that the program will inevitably cost far more than expected (as happened with Medicare in the 1960s)— which makes it far harder to enact programs. 

Innovating at the federal level also requires a functional federal government, which at the moment we only sometimes have. Even when bills can be pushed through by a partisan majority (as happened with the Affordable Care Act), the process is so broken that it is politically impossible to subsequently tweak and improve massive and complex legislation. 

How then should we balance the need to be fair to all Americans with the critical need to foster innovation? 

My view is that we ought to fund programs on a national level and probably set certain minimum standards as well. But we need a process through which the federal government grants waivers freely, and rewards states for experimenting. We need to encourage states and localities to serve as the laboratories in which we discover the next set of public policies. 

An example of this process at work is the way in which the Department of Health and Human Services allowed some states to take the money that would have been used to expand Medicaid under the Affordable Care Act and use it to give the same population private health insurance. HHS has also allowed other states some flexibility in using this funding creatively to cover the designated population. If I had my way, we'd evaluate the outcome of these "experiments" in 5 years. 

We'd look, for example, at what provided better outcomes— Medicaid or private insurance? We'd look at the health of the policy holder, how much their policies covered, how satisfied they were with their policies, what complaints they had, whether Medicaid or private plans were more efficient and had more overhead costs, etc. While this wouldn't be a perfect experiment, it would give us knowledge as to which option worked better. From there, we could regionalize or nationalize. 

This method would allow us to create a more efficient and more effective government. By having minimum standards and federal funding, we would avoid states shirking their responsibilities, and guard against some of the worst inequality. By allowing states to experiment, we would reduce the drawbacks of one size fits all federal programs. 

So what would I do with the school lunch program? I'd keep the regulations in place, regardless of what companies they hurt, how many kids initially drop out of the program, and/or refuse fruits and vegetables, etc. Why?

Because the long term health costs of obesity, diabetes, etc., are worse. We need to teach our kids about healthy eating, and prevent crippling weight gain that can lead to debilitating health  problems later on (which can make it hard to keep a job and live a happy and productive life). All told, these ailments cost society a great deal of money. 

I have a weird ethos when it comes to the Nanny State. On the one hand, I tend to be fairly libertarian in impulse— if people aren't hurting others, let them do what they want. On the other hand, when we, the taxpayers, pay for a program (like the school lunch program), we should be able to attach conditions. It only seems fair. 

I'd also place chef Marc Vetri in charge of reconceptualizing the school lunch program and school lunches more broadly. He has done some amazing work towards making lunch time educational, while also improving students' diets, and teaching them that eating well can taste good too.