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Recovery and Risk

Vice President Joe Biden’s speech on the progress of the Recovery Act dwelled substantially on how the act was supporting and even spurring innovation in communities across the country. (My colleagues have uncovered several examples.)

But the act’s focus on accountability and transparency raises the difficult question of whether a hunt for waste, fraud, and abuse could end up squelching local creativity. The fear of making mistakes can stifle the kind of transformative policy making that was one of the stated goals of the Recovery Act. If state and metropolitan leaders feel like an army of inspector generals is ready to pounce, they’re less likely to take risks that could lead to great outcomes, but that also could fizzle. (Some places are already taking heat for legitimate projects that others, not necessarily their constituents, deem ridiculous.)

The act’s insistence on transparency, accountability, and efficiency not only can root out crooks and fools, but also could show actors at all levels of government what kinds of initiatives work, and how, and how well, keeping cash-strapped, time-pressured state and local governments from reinventing the wheel, which is a particular concern with Recovery Act funds because of the law’s strict timelines. 

But sometimes a good idea translates into a bad result, not because of malfeasance but because of everyday limitations of knowledge and the vagaries of circumstance. And that has lessons, too. Experiments in laboratories of democracy sometimes fail--and that’s explicit in Justice Brandeis’ famous quotation about the benefits of a federal system: “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”

Brandeis’ full dissenting opinion from which this quote is taken is quite eloquent on the need for experimentation, and its attendant risks, particularly in times of crisis (this dissent was written in 1932):

The remedy might bring evils worse than the present disease. The obstacles to success seem insuperable…. Even more serious are the obstacles to success inherent in the demands which execution of the project would make upon human intelligence and upon the character of men. Man is weak and his judgment is at best fallible. Yet the advances in the exact sciences and the achievements in invention remind us that the seemingly impossible sometimes happens.… There must be power in the states and the nation to remold, through experimentation, our economic practices and institutions to meet changing social and economic needs.… To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the nation.

Those consequences of drowning policymakers’ innovative impulses are at least as bad as the consequences of waste, fraud, and abuse that so exercise Washington lawmakers. 

The Recovery Act’s goal of transformation was lost in the “jobs jobs jobs” rhetoric surrounding its passage. But the act could in fact be transformative if it creates a system of accountability and transparency that encourages voters and governments to learn from others’ mistakes and not fear the downsides of creativity.