America, Flooring It
How coronavirus exposes the inability to get stuff done in the U.S. and why simple choices leave us so hamstrung
The biggest challenge in the U.S. right now is state capacity — how much stuff does the federal government need to get done and how little is actually getting done?
The answer for the last several weeks has been distressing. Very little is getting done relative to the challenge facing us and the ramp up in execution has been painfully slow at best. The blame game is beginning in earnest and the usual characters are making their presence known.
The current episode reveals not only that we live in a failed state but how the state is failing. The state — which for the purposes of this letter is “the United States federal government” — is failing right now by choice because it has chosen for decades to intentionally misunderstand its power.
Drafts of this newsletter went in about 8 different directions and a guiding idea for this post was James Scott’s book, “Seeing Like A State.” An idea Scott advances is that taxing citizens is really just a way to count them. If I pay the government taxes on stuff I buy, places I live, and wages I earn, the government knows where I am basically all of the time. And the government’s power is derived not only from the resources it controls but how closely it keeps tabs on those resources and how efficiently it uses them.[1]
Scott’s framing also highlight what taxation does and doesn’t mean in America. Taxes aren’t a means by which the state “gets enough money to fund stuff.” U.S. citizens and government officials alike tend to think the taxes collected from citizens actually do things. In other words, people think their taxes “pay for” stuff. At the state and local level this is true(ish). At the federal level, it is a lie.
And yet we’ve operated the federal government and indoctrinated multiple generations of voters and lawmakers into believing this is how the appropriation process works. Must work. That the state is constrained by its tax income. The result of this misguided thinking is we’re left with a state running well below capacity because of an arbitrary decision to operate a regime of fiscal austerity as a default setting. And it is this fiscal policy that is at the core of the state’s failure right now.
There are many problems with deliberately denying the benefits of your state’s true capacity to most constituents. A pressing problem today is that we see how when a state atrophies over time you can’t just kick things into gear when needed. America is stepping on the accelerator right now — flooring it, really — and the engine is sputtering. This is the result of many choices, but most significantly the decades-long project to squeeze state capacity via an imagined budget constraint.
The money machine
Here’s how the U.S. gets money.
Also known as:
This is a joke but not really: money is not a constrained resource for the state under any circumstances.
But the current public health crisis has morphed into an economic crisis that is resulting in unemployment, in people going broke, in people losing access to healthcare in the middle of a public health crisis, in companies closing, in neighborhoods losing every local establishment overnight because the government doesn’t understand its power.
These things are happening because we’ve chosen a state that follows arbitrary market economy rules about how we reward and penalize our various economic actors. And we continue to operate along these lines, even in the most dire of circumstances. The state is still holding back from acting on its unlimited fiscal capacity, a choice being made simply out of habit.
Time has, for most intents and purposes, stopped. The penalties facing citizens and companies, however, are based on time having not stopped, on time rendering the expected economic consequences for mandated public health decisions. That a mandate results in consequences for those who follow it is, again, a choice from the state to harm citizens instead of protect them. And the decision is based on treating money like a finite resource.
Nathan Tankus this week had a nice overview of how budgeting works and how our appropriations process makes crisis responses so challenged, both now and in the past. That this process requires the allocation of specific dollar amounts to programs that might — or should be — aimed at things like public safety, public health, public welfare, short-circuits the effort from the outset.
“Congress inadequately funds reducing unemployment in the best of times,” Tankus writes. “However, in the worst of times it does even worse as its programs are always far smaller than the need because they can’t bring themselves to authorize programs with such large price tags associated with them.”
Tankus adds: “The only way to get [Congress] to spend adequately is demand programs without simple, single dollar amounts and shift [Congress] away from obsessing about specific dollar amounts all together. Appropriations for specific budgets is so twentieth century. But if we’re going to cause this political sea change, we need to create it quick.”
The choice we don’t have to make when this is all over is to continue constraining the state’s fiscal power and intentionally leave so many behind.
As Skanda Amarnath of Employ American said elegantly on Twitter this week:
Now, the state is using many of its tools to attempt an alleviation of these economic consequences resulting from a public health crisis. Treasury and the Fed have done a number of good things in an effort to soften the blow. Money is starting to flow to small businesses and those out of work. It’s not enough, but it’s something.
But that there is even a blow — instead of, say, the Fed simply crediting the accounts of every citizen and business and thus ensuring that everyone can stay home safely — is a problem in itself. We chose to run the state below its fiscal capacity and without any imagination and we’re now scrambling to open up the throttle by leaning on non-state institutions.
The impossibility of over-investment
In an interview with NPR last week, CDC director Robert Redfield discussed the need to “over-invest” in public health. The coronavirus crisis has shown that obviously this is the right course of action for the federal government to take.
The natural follow-up question from NPR, however, was: “Doesn’t that cost a lot of money?”
The answer is yes, over-investment tends to cost a lot of money. Except that the state literally cannot over-invest in anything. The state just decides to which efforts it wants to allocate money in greater or lesser amounts. The lack of healthcare capacity we’re grappling with now is the result of choices made to intentionally limit the state’s capacity in this area.
Because when we talk about “state capacity” what we’re really discussing is how much money the federal government can throw at any issue. And the answer is always the same: an unlimited amount. Though as Tankus outlines above, lawmakers are currently required to pretend like there is a finite amount of money available to the federal government at any one time.
And simply asking a question about the state’s fiscal capacity is what really prevents the state from meeting its full potential. There is no limit to its fiscal capacity, theoretically and practically. The question about said capacity is leading and starts from false premises. Definitionally, the state cannot over-invest in anything. Over- or under-investment are relative terms; the state’s fiscal power is absolute.
Areas of the economy can, however, be discussed in relative terms. And relative to the health sector’s needs we appear to have under-invested for decades. But the money allocated to healthcare is irrelevant in passing this judgement. Before coronavirus it was clear there were not enough resources to go around — the number of people who sought healthcare has exceeded the amount of care available for decades.
The state was already failing to ensure the safety and health of the vast majority of its citizens. The relative merits of spending more on healthcare don’t matter because the absolute state of healthcare was obvious: not enough people had it. It’s not a one-off or a fluke that one political party’s biggest debate right now is about whether the government should be the primary administrator of health services in this country.
And so the absolute dollar amounts allocated to the CDC, the FDA, infectious diseases, Medicare, Medicaid, and any other health program can’t be judged as too little or too much. At least not on their own merits. The dollar amounts just are. And the dollar amounts are going to increase.
The only reason they don’t increase more — and won’t increase by enough in the future — is because of one force: the private sector. And specifically, the private sector’s desire for cheaper labor.
Wages for thee, profits for me
One line in Redfield’s response about over-investment explains why it’s the private sector that prevents the state from meeting its full potential. Redfield said the over-investment in healthcare, “doesn't help if we can't create these jobs in a way that individuals want to come and enter the public health workforce.”
He adds: “So we're going to continue to try to increase, encourage and facilitate the local, state and territorial health departments to have the resources to hire these individuals as we try to motivate many in the American public to say that this is a great vocation to be part of it.”
If any healthcare lobbyists have hearts, they just skipped a beat. Because above all else, what the private sector doesn’t want is public sector work to be attractive. The private sector faces many resource constraints and chief among them is cheap labor.
An investment in public health is shorthand for paying more, incentivizing our best and brightest to work for the government and pursue projects that don’t return profits to investors but offer long-tail benefits to our populace. But making public sector work more attractive (read: higher paying) would also raise the private sector’s cost of labor. And higher labor costs are bad for profits.
Corporations lobby the government for lots of reasons but the most important function of Big Lobby is to make working for the government as unattractive as possible. Be it the CDC, State, Treasury, or any other government entity, the private sector needs the public sector to be less attractive so they can pay their workers lower wages and earn higher profits.
It might seem like the private sector consultants hired by DoD to do projects are well paid, and on an absolute level they might be compared to government pay tables. But pull back a few layers and it falls apart. The job security in the private sector is inferior, the benefits are inferior, the demands are higher, the ladder-climbing and politicking is table stakes, and any hint that you’re not fully throwing yourself into The Work makes you vulnerable. But tell a recent Georgetown grad they can make $80,000 a year vs. $55,000 a year and all that other stuff falls away.
And the only reason the state holds itself back from more actively bidding on this workforce is because lobbyists convinced lawmakers there is a “market constraint” on how much they can pay. But, again, the state’s fiscal capacity is unconstrained. The state represents unbeatable competition for resources to the private sector. That is, unless, you hire a bunch of people that work all day and night to convince elected officials to empower them instead.
And so here we are: witnessing the private sector’s capacity as a pathetic imitation of the state’s.
Need more ventilators? Call GM. Need masks? Call 3M. Need more doctors? Ask retirees. The resources aren’t available because the private sector has created for the government a scarcity problem that in peace time results in poor healthcare outcomes for citizens and better profits for shareholders. Right now, it results in more death.
And the systematic abdication of power by the state in deference to the private sector is the root cause of our current shortcomings in combating the coronavirus. And this deference comes back to the choice the state makes to pretend like it doesn’t have the money.
Everything isn’t infinite
The nation’s fight against coronavirus does, of course, face several real resource constraints. But this lack of real resources today is the outgrowth of fiscal policy decisions made for decades.
We don’t have enough doctors, nurses, EMS personnel, ventilators, hospital beds, COVID-19 tests, facemasks, and PPE among other resources that are scarce right now. But we could have enough of these things all the time and therefore be ready for this pandemic and other public crises. It just that the state has decided we can’t.
Enrollment in medical school, for instance, has been on the rise but residency opportunities have declined. Last year, the Association of American Medical Colleges said they are projecting a shortage of up to 122,000 physicians by 2032, including a shortage of up to 55,000 physicians in primary care and 66,000 in other specialties. The shortfalls are because these medical students can’t get the training required in residency. And who limits residency slots? Congress. Why? Medicare funding.
This is a choice.
Another choice lawmakers have made is to let the private sector control our healthcare system and run it for profit, not health. And so practices and hospitals are run at nearly full capacity as a matter of course, practices employ fewer doctors, hospitals are more sparsely staffed, there are fewer beds, fewer ventilators, less protective equipment, testing is outsourced, and so on.
As a going concern, our healthcare system is essentially ignored by the state. With the exception of a few elected officials, the vast majority of the debate around healthcare takes privatization as a given — the debate is about paying for the care, not who gets it.[2]
And so current efforts to re-engage the state in bolstering the healthcare system’s capacity are failing so miserably because the state has no real role in the day-to-day of this system anymore. The state has abdicated its responsibility to keep its citizens healthy and is therefore flailing as it tries to fulfill more of that task in a time of incredible stress. This is the decision that must be undone.
The coronavirus pandemic presents challenges on many levels but what it lays most bare is how our decision to fail citizens is arbitrary. The failures start and end with the federal government’s default fiscal stance that says money is a limited resource when in fact it is not. The U.S. government can’t run out of money and it needs to stop hamstringing its citizens by pretending it can.
And it is from the false premise of fiscal scarcity that the state operates and from this decision flows both the underfunded, barebones government operation that fails to meet its promise right now and the offshored, contractually thorny private companies that can’t meet the current challenge.
The state is failing in this crisis but the state has also failed its citizens for decades, incrementally and now all at once. And it has done so by choice.
And that is what we can’t forget when this is all over.
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1: The perils of drafting weekly, however, are that others beat you to the framing. In this case: Byrne Hobart’s Friday letter on Amazon.
2: Sure, cheaper healthcare implies that more people will be covered, but any argument to the right of Medicare For All is really just about cost, not administration.