Beyond the FS: A Broader Look at Federal Mandates and State Capacity

We are a bit in the weeds about overtime regulations for federal employees, contractors, concessionaires and ski area employees, but that reminded me a bit of a broader look I ran across earlier today..the author thinks that proceduralism is somewhat necessary, but well-intentioned government mandates not so much.

And the author doesn’t even get to the point that we can see- agency co-evolution in response. In the FS case, hiring and contracting rules encouraged the agency to issue grants instead, without apparent competition or transparent forms of oversight.

Today, a new movement has identified a different problem with government in America. The issue for these reformers is not that the public sector is too big or too small, but that it increasingly lacks what is known as “state capacity.”

State capacity is best understood as the ability of the government to accomplish its goals efficiently. Thus far, state-capacity reformers have focused on removing the burdensome procedures government has placed on its own operations, from extensive public-outreach requirements to excessive lawsuit opportunities. Such reforms are necessary. And yet, due to the democratic nature of our system and its separation of powers, some amount of procedure is inevitable, even desirable. Thus, improving state capacity in America cannot involve simply minimizing procedure.

There is, however, another significant reason for state capacity’s atrophy: The federal government has placed many mandates on its own operations that it could never impose on society at large, from compulsory unionized workforces to affirmative-action goals to “Buy American” requirements. Whatever the value of such mandates, there is no principled reason the government should force more of them on itself than it does on private citizens and companies.

The best means of improving state capacity is to stop the government from attempting to serve as a putative model for the rest of society by imposing mandates on itself. To push back against this sort of vanguardism, state-capacity reformers should work to establish a rule of equal treatment for government and private-sector projects, whereby regulators should not impose mandates on government that it does not impose on the private sector. Such a rule would sidestep debates about the value of any particular goal while improving government’s core competencies. They should also oppose federal attempts to force state and local governments to act as vanguards when they receive federal funds.

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The frequency with which the executive levies mandates on government operations poses a challenge for those in the state-capacity movement who want to centralize power in the executive branch and enable it to act with more limited legislative and judicial input: Historically, the executive branch has been more prone to using its authority to adopt mandates than to eliminate them.

Passing either a legislative or an executive mandate on the public sector is easier than forcing mandates on the private sector. The costs of interest-group handouts on government projects are spread throughout the system and end up being borne by taxpayers or consumers of public goods. Most private-sector regulations, by contrast, burden a distinct business or other constituency. The relative ease of adding public-sector mandates through the executive or the legislature is the core reason they proliferate.

Each public-sector mandate brings its own apologists, but almost all of their advocates share the conviction that government can become a model for the rest of society. Politicians hope that if the public sector demonstrates the value of well-paid union jobs, paid family leave, purchasing goods domestically, environmental and historical sensitivity, affirmative action toward minorities, and so forth, it will become a sort of vanguard of the social order, showing the private sector and other policymakers what a better workplace and society should look like.

The phrase public officials often use when pushing the state to act as a vanguard is that the government should “lead by example.” President Barack Obama said in a 2011 executive order that he wanted the government to “lead by example” by promoting diversity and inclusion in the federal workforce. The 2020 Democratic Party Platform pledged to “lead by example” by transitioning public-sector fleets at the federal, state, and local levels to zero-emission vehicles. The Biden administration announced in 2024 that it wanted to “lead by example” in achieving net-zero emissions in federal buildings by 2045. Senators and representatives, too, have argued the government should “lead by example” through domestic-purchase requirements in an effort to re-shore manufacturing. State and local officials are not immune from this sort of rhetoric, either. Former New York City mayor Eric Adams said that he wanted to “lead by example” in securing government contracts that mandated hiring in low-income districts and unionization.

But such efforts are foolhardy. The vast bulk of the innovation that has improved Americans’ health, welfare, and prosperity came from the efforts of private citizens, businesses, and civil society, all of which acted freely to address problems they saw in their communities. They already have all the incentives and wherewithal to find out what works best for them, while the government, especially when acting as an employer, contractor, or general funder, does not. Thus, there is little to be gained and much to be lost from following the government’s example.

Whatever the virtue of a particular mandate, there is no ju