Krugman is Right: Yet Again

I have to admit that this comment from Krugman raises an issue I have often pondered about. First here’s his column from today’s New York Times: Op-Ed Columnist – Paul Krugman – Fifty Herbert Hoovers – NYTimes.com

This is a fundamental problem for America. It is, for many issues, fifty small countries rather than one large one. That is an unfortunate historical mistake. And I mean mistake. The nonsense I hear about the virtues of the Federal system is ridiculous. Americans are wedded to an eighteenth century system of government that hobbles them repeatedly in the modern world. It is quaint that Alabama or Alaska can establish economic and educational standards independently from those of New York or Ohio, but quaint is for tourists to photograph and comment on, not for Americans to live.

The existence of separate state level policies on whole swathes of social and economic issues prevents America ever having a coherent response to existential threats from abroad when those threats are not military. Globalization is one such threat. The interconnectedness of the economic and social worlds was not envisaged back in the late 1700’s when America’s old fashioned governmental system was being formed. The only serious threat to the nation was thought to be military. Indeed the founders who saddled us with the unwieldy system we have could not possibly have foreseen the rise of China and India as homogenous economic powers capable of stripping America of its manufacturing base. That was then. The ramifications of their self belief in inflexible systems is now exposed.

The current situation is a prime example of the problem. Krugman should be commended for highlighting it.

The actions of the fifty states is now acting to undo all the national level economic effort to end the recession. Each state is acting within its own rules and according to its own constitution. Many states are restricted by ‘balanced budget’ laws that prevent them running deficits. These laws are designed by right wing extremist anti-government groups to disallow government growth. Somehow Americans believe that government spending is always bad: then they complain when government cannot help them in times of hardship. Balanced budget laws have been voted onto the books of many states in reaction to the profligacy of local politicians who are unfettered by the consequences of their actions over the long term: many have term limits so the results of their policy initiatives are often not associated with their own period in office. Such is the hodge-podge that is America. Forcing politicians to balance the books sounds sensible and virtuous to the average voter. It is horrendous economics in times like these. Countries that hobble themselves with constitutions are always likely to fail in times of extreme circumstances: no constitution can cover all future events. The founders were not omniscient they were just very conservative farmers.

So here we are. Another American flaw exposed. There are many good ideas floating about as to how to undo the State level damage being done by the Governors. Those being put forward by Ted Strickland and referenced by Krugman, are the best I have seen so far. Direct funding of State level programs by the Federal government makes sense.

My point shoes Krugman: why stop when the crisis abates? Many of those programs are Federally mandated. If so fund them nationally. Having a coherent national economic or education policy is hardly a modern idea. Only in America would it be viewed as novel. Only in America would anyone oppose it. State’s rights are an antiquated sham, or worse, in a global world.

Time to grow up.