Why Government Fails So Often: And How It Can Do Better (56 page)

But if these conditions largely explain the VRA’s enactment and durability, more is needed to account for its policy effectiveness in meeting its first-generation challenge.
⁷²
One reason is the nature of the right being protected. Voting is a simple, physical, unambiguous act—in contrast, say, to being “disabled” or “seeking work” for welfare program eligibility. The law clearly specifies the most common legal impediments to voting and categorically prohibits them, as well as other devices with vote-suppressing effects. Although some politicians and officials opposed it, the many who stood to gain from black votes, usually liberals and moderates, were intent upon enforcing the law, as was the DOJ under Democratic and moderate Republican administrations. (As noted earlier, many Republicans, having learned to use VRA-driven districting to their personal or partisan advantage, are among the law’s most ardent supporters.)

Another reason for the VRA’s success is that it became self-enforcing and then self-reinforcing over time. Efforts to intimidate would-be black voters did not vanish, and some analysts maintain that they persist today, albeit in different forms.
⁷³
But once the VRA enabled blacks to vote in large numbers, self-interested politicians (especially but not only Democrats) had to take notice or risk retaliation
at the polls by blacks and their political allies. As blacks became a significant voting bloc that could influence the outcome of close elections in many Southern states, the retrogression danger receded. Finally, the federal courts played a pivotal role in aggressively enforcing the VRA—for example, by interpreting the VRA to prohibit such retrogression. As we have seen, they intervened in many redistricting disputes to preserve and indeed maximize black voting power, interventions that the Supreme Court has begun to limit only in the last decade—partly out of concerns about heightened race consciousness in districting, and partly out of frustration with its inability to find neutral principles for reviewing such districting.
⁷⁴

A third reason for the VRA’s success is that it regulates government institutions, not private markets. State and local governments are constitutionally subordinate to Congress in this particular realm (voting rights) and are subject to direct controls and coercion, if necessary. This leverage is imperfect, to be sure, but it can be quite effective in combination with a clearly defined and morally compelling right and a self-reinforcing dynamic like the situation just discussed. In contrast, market actors have numerous ways (described in
chapter 7
) to neuter or circumvent government policies, usually without even breaking the law.

Probably no other law combines the VRA’s moral, implementational, and political advantages. These advantages have only increased over time, notwithstanding the law’s growing anachronisms. Certainly the landmark 1965 immigration law, to which I now turn, had none of the VRA’s advantages. In that sense, it may be more typical of policy making’s limitations.

THE IMMIGRATION AND NATIONALITY ACT OF 1965

No law has had a greater impact on the long-term character of American society than 1965’s immigration reform (sometimes referred to as the Hart-Celler Act). Interestingly, its importance was not heralded at the time, especially compared with the civil rights law enacted only a
year earlier. Although some scholars have depicted this demographic transformation as a classic case of unintended consequences, many of the law’s supporters did anticipate these changes in general if not in detail—particularly the increase in immigration from Asia and Latin America that would occur soon after its effective date in 1968.
⁷⁵
By far the most important of the new law’s enduring achievements was its repeal of the system of racially and ethnically biased national origins quotas, which had essentially been in place since 1921 and which had been reaffirmed (over President Harry Truman’s veto) in the comprehensive immigration legislation enacted in 1952. Inspired by the civil rights law enacted the year before (which received much more public attention), the 1965 act eliminated discrimination on the basis of race or national origins in granting permanent admission to the United States. At the same time, it substituted a per-country limit of twenty thousand admissions for every country outside the Western Hemisphere, and ended the traditional exemption of Western Hemisphere nationals from the quotas, instead subjecting them to a regional numerical quota but without the per country limit applicable to the rest of the world. It also allocated the overall visa quota according to a preference system of seven categories based on family ties, labor skills, and Cold War refugee claims. Many elements of this visa system have been revised since 1965. For example, the Western Hemisphere no longer enjoys a special status, the allotment of permanent visas is much larger, and temporary (“nonimmigrant”) visa categories have proliferated. But the basic regulatory structure for legal immigration—an overall quota, per-country limits, preference categories based on family ties, labor skills, and humanitarian claims—remains in place and is likely to continue. (Reforms, should they occur, may well increase the number of permanent and temporary visas for highly skilled workers and perhaps for seasonal farm workers.)

Like the immigration waves that preceded it, the 1965 law’s expansion of both the numbers and the diversity of the immigration flow has transformed our society in countless ways, almost all of them beneficial. Americans support
legal
immigration—the 1965 law’s focus—not just because so many identify as the descendants of immigrants
but also because of the immense social gains that it has produced: economic expansion and competitiveness, population growth, cultural diversity and enrichment, invigoration of religious communities, promotion of tolerance, a solidarity that is civic rather than primordial, and much more.
⁷⁶
Americans tend to admire legal immigrants both as a group and as individuals, and believe that they have been good for the country.
⁷⁷
They are generally assimilating well.
⁷⁸
Our openness to ethnically diverse immigration positions us well to meet the challenges of a mobile, diverse, globally competitive twenty-first century. All of this is the bountiful legacy of the 1965 law.
*

It is large-scale
illegal
immigration—a problem that the 1965 law did not anticipate but may have inadvertently encouraged
†
—that has had Americans up in arms (literally, in the case of the Border Patrol and some private militias) for the last thirty years. Indeed, one of the few things that President Obama and the 113th Congress seem able to agree upon is that policy reforms are needed to reduce illegal immigration—although disagreement about the precise nature of the reforms could well derail reform, as it did in 2007. The policy choices in this area are very difficult indeed. Although the political stars seem aligned to an unusual degree in the 113th Congress, enactment remained uncertain at the time of this writing (September 2013).
⁷⁹
Effective implementation in this chronically troubled area would be even more doubtful.
⁸⁰

Legal immigration policy in the mold of the 1965 law has been a much easier row to hoe.
†
What explains the policy’s success? Here, as with the Homestead and Morrill Acts, it reflects three factors: (1)
federal distribution of a resource that is essentially free to the government (there, abundant federally owned land; here, visas); (2) a mission deeply consonant with American ideology (there, manifest destiny and settler freedom;
⁸¹
here, the melting pot and national renewal through self-reliant immigrants); and (3) strong evidence that legal immigration, particularly of highly skilled workers, increases innovation, entrepreneurship, and economic growth.
⁸²
These three factors came together fruitfully in the 1965 law and in subsequent legal immigration expansions, but this combination is rare—and unlikely to be replicable in an era when government has no more essentially free resources (except perhaps for more green cards) to bestow to manifestly worthy claimants.

THE EARNED INCOME TAX CREDIT OF 1975

The Earned Income Tax Credit (EITC) is generally regarded among the most successful social policy innovations for low-income families of the past fifty years.
⁸³
It was passed in the wake of Congress’s failure to enact president Richard Nixon’s family income maintenance plan, and began as what Yale University tax scholar Anne Alstott calls “a small, obscure provision of the federal tax code” that evolved into “one of the largest programs in the U.S. social-welfare system [and] the largest cash-transfer program for low-income working families.”
⁸⁴
Congress expanded eligibility and benefits in 2009, 2010, and again in 2013. In 2010, when some twenty-seven million working families and individuals received EITC benefits, the average for a family with children was $2805, and for a childless family, $262. In 2011, the program lifted about six million people out of poverty, including three million children—more than any other program.
⁸⁵

The EITC garners praise from every quarter, including both political parties and most policy analysts, which helps to explain why it has grown faster than other cash transfer programs for the poor and unemployed. A principal reason for its popularity is that it encourages work. The amount of the tax credit rises for each dollar of wage earnings, up to the statutory limit. It includes an additional child tax credittied
to work. And because the credit is refundable, eligible families can benefit even if they do not pay federal income tax. In another sign of its widespread popular support, twenty-five states provide EITC supplements.

Even so, the EITC is criticized on a number of grounds. The first is its inadequacy. Alstott, for example, contests the common claim that the program “makes work pay.” She stresses that the labor market in which low-income people work is characterized by such low pay, job instability, and harsh working conditions that the EITC, even when coupled with a minimal social safety net, fails to adequately meet their needs. She also criticizes the definition of the baseline measure used to support claims about the program’s antipoverty effects. Second, the Internal Revenue Service estimates that roughly one in four EITC claims are paid in error due to some combination of governmental errors, honest taxpayer errors, and fraud.
⁸⁶
The Government Accountability Office found that the program made almost $17 billion in improper payments in 2010, the fourth highest level in federal programs, after Medicare, Medicaid, and unemployment insurance.
⁸⁷
This problem has increased as the program has grown and become more complex for taxpayers to use. Related to this complexity is the reverse problem: many eligible families do not apply for the tax credit. Third, the form of the benefit—a lump-sum payment once a year—does not help beneficiaries as a monthly wage supplement would.
⁸⁸
Fourth, its benefit for noncustodial working men is very low.
⁸⁹
Finally, the effective marginal tax rate at the benefit phase-out level is high, reducing work incentives at that point.

THE AIRLINE DEREGULATION ACT OF 1978

Airlines were regulated by the federal government since the advent of commercial aviation, largely under postal and military authorities. In 1938, however, Congress established a comprehensive regulatory scheme for commercial airlines under the authority of the Civil Aeronautics Board (CAB), which controlled their fares, entry, exit, and terms of service. The abolition of this system in 1978 reflected a number
of unusual factors carefully elaborated on by political scientists Martha Derthick and Paul Quirk.
⁹⁰
The analytical and political paths to deregulation had been cleared in 1975, a time of economic distress, when Supreme Court justice Stephen Breyer, then a renowned Harvard Law School professor and scholar of regulation, worked as special counsel to the powerful and mediagenic senator Ted Kennedy. They organized a set of hearings that presented evidence, including the fare and service patterns from airline competition within California, that systematically refuted the arguments for continued regulation.

Two reform-minded CAB chairmen, John Robson and Alfred Kahn, used this record to begin dismantling the regulatory system. Kahn, who was appointed by president Jimmy Carter in 1977, was an eminent economist and expert on regulation who was determined to complete the job. As noted by economist Elizabeth Bailey, who was then a CAB member, Kahn was an effective advocate before Congress and had access to the White House. He brought together an unusually effective team of academics and committed reformers that adopted “sunshine” rules for agency meetings and pursued deregulation administratively in ways designed to make Congress more comfortable with the deregulatory agenda. The rapid success of air cargo deregulation, which had been proposed by Robson in 1976 and enacted in 1977, also helped to push passenger fare deregulation over the goal line the next year.
⁹¹
Deregulation of the railroads earlier in the 1970s also helped, as did substantial reform of trucking regulation by the Carter administration.
⁹²

In the thirty-five years since airline deregulation, the results have been very favorable. In a recent review of the evidence, Bailey finds that consumer welfare increased by about $28 billion a year as of 2005, partly due to increased load factors. Rates have fallen more on long routes than on short ones, and airlines increasingly differentiate business fares from more price-conscious leisure travelers. Frequent-flyer programs and computer reservation systems have flourished. Unexpectedly, airline networks moved from linear point-to-point systems created by the CAB into hub-and-spoke systems,
enabling better scheduling of flights to facilitate one-day round trips. New nonstop service to many cities was added. Low-cost new-entrant carriers gained a market share of nearly 30 percent by 2007, with Southwest and US Airways becoming major players in the industry. The lower fares and increased efficiency by American carriers in turn have spurred privatization of many foreign carriers and kept international fares lower than otherwise.
⁹³
Investment in the industry has increased.
⁹⁴