THE GEORGE W. BUSH administration's decision to negotiate a settlement of
the federal multibillion-dollar lawsuit against the tobacco industry is another
example of this administration's belief that public policy disputes are better
solved at the state level of government rather than the federal level.
Conservatives have long argued that states are "closer" to the needs and
wants of their citizens. Hence, it is this level of government that supposedly
ought to decide public policy even toward such controversial industries as
tobacco, alcohol and gambling. But this devolution of power often allows these
"sin" industries to utilize divide-and-conquer strategy in their dealings with
state governments.
Critics of the Bush administration worry that it is merely letting the
tobacco industry off the hook. But one can easily view this decision as one of
many that have empowered the states to be the focal point of public policy.
The recent decision by the U.S. Court of Appeals for the District of
Columbia, which threw out the ruling that Microsoft be broken up, adds to the
role of the state as chief public policy enforcer. The court left open the
possibility that the state attorneys general could still sue Microsoft because
of its monopoly power, particularly as Microsoft attempts to launch Windows XP.
While conservatives have long placed an abiding trust in the abilities of
state governments to solve social problems, the ability of states to be the
chief formulators and implementers of public policy does have some interesting
economic and ethical consequences.
States compete with one another for economic resources, especially in their
never-ending search for additional sources of revenue. The cigarette excise tax
is the classic example of a public policy measure where this state level of
competition can have less than desirable results. A demonstration of this is
the relationship between Massachusetts and New Hampshire. Currently, New
Hampshire's excise tax on cigarettes is 52 cents a pack, while Massachusetts'
excise tax is 76 cents a pack. In addition, since there is no sales tax in New
Hampshire, a Massachusetts cigarette smoker could save more than $5 on a carton
of cigarettes by buying that carton in New Hampshire.
Since the same holds true for purchase of alcoholic beverages (which are
sold directly by the state government of New Hampshire), many residents of
Massachusetts make the journey to their northern neighboring state in order to
purchase their "sin" products. It would appear that New Hampshire has adopted a
"business" strategy of lowering its price in order to gain market share, while
Massachusetts is attempting to milk all of the revenue it can obtain from its
remaining cigarette smokers.
While the states have remained free to enact public policy in a fashion
they deem acceptable, one must wonder whether a more consistent and coherent
public policy towards the cigarette-smoking issue would not benefit the common
good.
Every state claims to have as one of its goals decreasing cigarette sales.
Yet, the actions of many states make it plain that they are more interested in
increasing cigarette sales while shifting health costs to neighboring states.
The same could also be said for issues such as alcohol, gambling, the Internet
and environmental concerns.
This lack of concern over the common good is the troubling aspect of the
tendency to push public policy concerns to the states. Americans typically
bristle at the thought that Big Brother in Washington is making regulations
that have shown little or no concern for local interests. Yet, there are issues
about which a national consensus must be achieved, and then the federal
government needs to act.
Currently, the thorniest issue facing the European Union is achieving
uniformity over a variety of issues. Many members of the EU still insist that
they have the right to determine public policy over taxation, working
conditions and environmental standards. Supporters of a stronger EU try to use
the United States as an example of a country that has overcome regional
differences in order to have uniform policies.
It is somewhat ironic that as the Europeans are trying to obtain some sort
of coherent public policy infrastructure, public policy makers in the United
States are willing to transfer power to the states.
In order to avoid the debate over whether the freedom of the individual
takes precedence over the common good, our national officials are seemingly
passing on to the states (without any additional revenue) a multitude of public
policy controversies. In many cases, the states are not equipped to handle
policy issues such as tobacco, alcohol and gambling in the best interest of the
country as a whole.
Richard McGowan is an economics professor at Boston College and the author of "Business, Politics and Cigarettes: Multiple Levels, Multiple Agendas."
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