Arnold Kling  


For Economics Teachers... AS vs. PSST, again...

Scott Sumner writes,

Denmark is much more decentralized. The same sort of policies adopted in Denmark would work less well in the US, because we are much more centralized, and hence far less democratic (if you define democracy properly, where people can affect their government.) Denmark has nothing like the LA school system or the McAllen, Texas, Medicare system.

I think that from a libertarian point of view, the number one structural problem in America is scale. Spending per government entity is the product of spending per constituent times constituents per entity. If we had higher spending per constituent but many fewer constituents per entity, we would have a healthier diffusion of government power.

How could the U.S. operate like Denmark or Switzerland? Imagine the U.S. carved into 30 sub-nations of 10 million people each. At the national level, we would definitely have a common defense and foreign policy, plus a supreme court. Otherwise, see how much we could devolve to a sub-national level: health care policy, public pension policy, education policy, environmental policy, trade policy, monetary policy, financial regulation...if you say that's impossible, look at Denmark.

Each of the sub-nations would have state governments, just as the Swiss have cantons. Each state government might have 400,000 constituents. A lot of government responsibility would be devolved to these state governments. Each of the state governments would have local governments--again, that is what the Swiss have.

I am not saying that we should jump to this structure. However, we should be able to imagine it. I think that devolving power from Washington down to 30 sub-nations would give us 30 times the number of experimental models for issues like health care and education. That would make it more likely that we would find the most successful models.

Comments and Sharing

COMMENTS (7 to date)
Mike writes:

Aren't we supposed to be a nation of, say, 50 sub-nations? I know we started with only 13, but the way I read the history, that was the intent, wasn't it?

So there are lots of us our here that can envision the sub-nation idea. We either need a new incentive scheme or we are going to have to devolve the power out of their cold dead hands.

kurt writes:

I think Arnold has just reinvented federalism. The problem of scaling within states is already mitigated by having incorporated places and unincorporated places, not?

kurt writes:

As as side-note, some 75% of the French municipalities have a population of less than 1,000! And these municipalities have roughly the same administrative powers as a municipality that has a population of say 100,000. Talk about inefficiency :)

MernaMoose writes:

Great idea.So the Fed is going to let the states do their own thing again, when?

Eelco Hoogendoorn writes:

Heresy! Reinstituting slavery, thats what this is all about, isnt it?

There is only one correct body of law, and im here to bestow it upon you; you lucky bastard.

The real question is; how are you going to inoculate this old and dying meme against these others, which have proven far more fecund and virulent?

Or seen through a different lens; any plans for changing the incentives that have thwarted your desired outcome like clockwork since time memorial?

If not; yawn.

Jacob Hedegaard writes:

As a Dane...

I'm not sure where Sumner gets his information on our country, but he should try harder.

2. Denmark is much more decentralized.
To some extend this might be true, but to others far from it - and increasingly less so with EU taking over much legislation.
I'm no expert on Medicare, but the Danish health system could hardly be more centralized, being payed for and governed almost solely by tax money. The upcoming election will most certainly hold a debate over the increasing effects of private health insurance - something which is bigoted in the public debate, yet everyone tries to convince their employers to get one.

3. Denmark is much more civic-minded that the US.
Again, with modifications. Yes, Danes take great part in community life such as youth sports, where one pay for attendance. However, school is something which parents take relatively small part in, because it is presumed cared for by the tax money that pays for the school.
It is correct, that a special kind of unemployment benefit, which secures many income groups 90% of their income after being layed off, was cut from 4-2 years, resulting in steep increase in how fast people got job - same results have been seen in Norway and elsewhere. People still get transfers after those 4 years though, enough to live by.
Special retirement benefits are being discussed a lot right now in Danish politics. A study of the program which allows worn down workers to leave the workforce at 62, finds no increased health problems in the group who takes advantage of the program. Often, elderly use the opportunity to take up golfing, move the Spain or just get more time on their hands.

The stories could go on.
The bottom line is, that Danes take care of themselves and their communities in areas in which government take no place, and expect to get A LOT in return from the huge amount of money they pay in taxes.

Max Marty writes:

Like Eelco said, all signs point to continued US centralization rather than a return to federalism.

I think the bigger question to ponder is how we'd get there from here given political realities.

Comments for this entry have been closed
Return to top