The State Capacity Crisis

Crumbling infrastructure, inadequate housing supply, failing schools, public disorder—few government services seem to work as they should. For a decade, a nascent scholarly movement has been warning that America faces a crisis of state capacity. Although the major figures in this “state capacity movement” have identified the right problem, they concentrate almost exclusively on the federal government. That yields a misdiagnosis of why the American government lacks capacity and leads to solutions that are unlikely to accomplish much. In the United States, it is state and local governments that do most of what “the state” does, and they suffer from different pathologies from the federal government. First, voters know next to nothing about their state and local representatives, and instead base their votes on national political affiliation. That dulls public accountability for good government performance. Second, state administrative law is as strict, and often stricter, than federal administrative law, especially when it comes to rules around public participation. That privileges interest groups that have the organizational wherewithal to exploit the procedural opportunities that administrative law affords. Third, states have limited fiscal capacity relative to the federal government. When a recession depletes tax revenue, states have few choices except to increase taxes or reduce spending, right when public services are needed most. These three factors are the primary drivers of a dearth of American state capacity, and they are all getting worse. Yet they are basically invisible in the state capacity literature. To improve the quality of American governance, we must examine the right governments and ask the right questions.