June 11, 2006
Antiterrorism Allocations--Becker
Posner discusses many of the thorny issues involved in the
allocation of funds by The Department of Homeland Security
to American cities to combat terrorism. I will concentrate
my comment on how to align the incentives of cities to those
of the country as a whole.
Posner points out that there is a conflict between the
incentives of cities and those of the federal government.
When cities do more to prevent terrorism against their
residents and buildings, they also help the country fight
terrorism against other cities and towns without getting
compensated for that help. He also indicates that if the
federal government simply gives money to cities, the cities
may reduce the amounts they would otherwise spend fighting
terrorism. Both problems arise in many infrastructure and
entitlement programs, such as road-building, Medicare for
the poor, and the fight against contagious diseases.
These sources of the tendency for cities to underspend on
anti-terrorist activities can be at least partially overcome
if Homeland Security did not outright give various amounts
to different cities, but instead relied on the method used
to combat similar issues that arise with other grant
programs. The Department of Homeland Security should offer
to give cities a certain number of dollars for each dollar
they spend on antiterrorist activities. For example, if a
city spent $30 million, they might get an additional $60
million from the federal government. In this example, a city
would get to spend $3 dollars for each dollar they used from
their own funds to fight terrorism.
Federal matching of this type discourages cities from
cutting back on their spending to fight terrorism since they
lose say $3 dollars for each dollar they cut back. Matching
grants also induce cities to give de facto recognition to
the fact that each dollar they spend helps residents of
other cities as well by improving the overall American fight
against terrorism. The ratio of federal spending to city
spending should be a measure of the ratio of the benefits to
other cities compared to the benefits to the city spending
their own money to fight terrorism.
The matching need not be independent of how cities spent
their own monies. Cities are more likely on their own to
spend on salaries than on capital goods that are produced
elsewhere since spending on employees gives jobs to local
residents. The matching grants should then be oriented
toward capital spending rather than labor spending. In fact,
the Homeland Security program is so oriented, and that seems
to me to make some sense.
However, matching grants, particularly if the ratio of
federal to local contributions is large, can create the
opposite problem from that created by outright grants;
namely, cities may spend too much since their spending is
multiplied through the amounts available in matching funds.
This is usually controlled by placing upper limits on the
amounts that could be received in matching funds. Cities
that are especially attractive to terrorist attacks--such as
New York and Washington--would spend more fighting terrorism
even without federal grants. Still, on their own they may
not spend enough, so the upper limits they could receive in
matching grants should exceed that available to say Kansas
City.
One problem is that as coastal cities like Los Angeles, San
Francisco, Boston, New York, and Washington became better
prepared to fight terrorism, terrorists might shift inland,
to places like Detroit, Chicago, Cleveland, Omaha, Topeka,
and elsewhere. As the bombing in Oklahoma City showed, even
attacks in smaller cities cause considerable fear and
consternation. That is why a federal program has to be
national, and target smaller places as well as larger ones.
Matching grants encourage smaller cities also to contribute
to the fight against terrorism, and they will spend more
when they become more vulnerable after the more attractive
terrorist targets became better prepared. So the system is
partly self-correcting through the incentives that cities
have to protect their own citizens.
But matching grants do not solve all the problems of how to
best allocate limited federal funds. So the federal
government will still need some guidelines that determine
which cities should be given more Homeland money, although
in a matched way.
Posted by Richard Posner at 01:11 PM | Comments (6) | TrackBack (0)
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Comments
So the federal
government will still need some guidelines that determine
which cities should be given more Homeland money, although
in a matched way.
The answer is easy. Give the most money to those cities in those districts and states where there is the greatest risk of a Republican incumbent losing in 2006 or a Republican challenger needs a boost to get over the top. That is likely on what the allocations are based.
Posted by W at June 11, 2006 09:32 PM | direct link
Anti-terrorism allocations across states should be based on number of Muslims living in each state. As an add-on special situations should be considered for extra allocations. For example New York City should get a higher allocation for obvious reasons. Home of Purdue University in Greater Lafayette, Indiana has a higher allocation caompared to towns of its size. However given the threat level there, it should actually get more federal funding.
Posted by Arun Khanna at June 12, 2006 11:12 AM | direct link
Well, there is an answer. Somewhat comforting.
Maybe the Bush Administration has *good reason* to not expect another attack?
Just a thought. I mean, what if Bin Laden & Friends were on ice somewhere... just waiting for Bush to need another Zarqawi Moment... or maybe there is no need for an attack.
Bin Laden has GOTTEN everything for which he asked.
you *do* remember he has a Master's in Economics...
I'd say, he got what he was seeking. A financially crippled USA spending a fortune to hunt GHOSTS & a freaked out Canada...
Just a thought.
Namaste
BlueBerry Pick'n
can be found @ ThisCanadian.com
"Silent Freedom is Freedom Silenced"
Posted by BlueBerry Pick'n is ThisCanadian.com at June 13, 2006 11:59 AM | direct link
Anti-terrorism allocations across states should be based on number of Muslims living in each state.
If you believe the Republicans, then, rather than funding the solution to a problem directly, it's better to let the funding trickle down to a problem. For example, rather than funding schools directly it's better to give tax cuts to the wealthy and let the money trickle down to the schools - it's the classic multiplier effect.
What we need to do here, if you believe the Republicans, is exempt Muslims from paying taxes. That way, the money to fight terrorism will trickle down to the appropriate parts of the country along with a healthy multiplier effect to stimulate the economy in those areas most likely to be affected by terrorism.
Posted by Wes at June 16, 2006 05:29 PM | direct link
Wes: I am a Republican and you don't understand anti-terrorism or economics.
Posted by Arun Khanna at June 18, 2006 10:52 AM | direct link
"When cities do more to prevent terrorism against their residents and buildings, they also help the country fight terrorism against other cities and towns without getting compensated for that help"
Really? When I buy a car alarm and leave it blinking on my dashboard, I'm not helping in the country's fight against car theft. I'm just hoping that any potential car thief will decide that my car is too much trouble and go find a new target.
Similarily, if New York turns itself into an impenetrable fortress, the terrorists plotting against it don't become accountants and graphic designers; they start looking at DC, Chicago and LA. For this reason, I think that the Feds should only be involved in security measures that reduce the total likelihood and expected severity of an attack, such as: bombing the bejesus out of hostile nations with WMD's in the makes; surveillance; Airport/coastal security.
Posted by New Jack at June 18, 2006 12:50 PM | direct link
