Drain the Swamp but Spread the Stench

– October 25, 2019 Reading Time: 4 minutes

What do you think about the idea of forcing Washington bureaucracies to leave that city and instead bring their employees to cheaper real estate around the country?

The proposal is a real one.

Republican Senators Josh Hawley of Missouri and Marsha Blackburn of Tennessee want to relocate ten U.S. government agencies from the nation’s capital to putatively economically distressed regions, including those they serve. If their bill (Helping Infrastructure Restore the Economy, or HIRE) passes, 9 out of every 10 workers at the Department of Agriculture and Department of Education would relocate to Missouri and Tennessee, respectively.

The Senators rightly observe that the DC-area economy thrives off of billions of tax dollars funneled into it from taxpayers across the country, driving up both rents and commute times. Debate over the merits of the bill, however, soon became mired in ugly personal attacks between Hawley and CNN’s Jake Tapper.

Critics contend that the highly educated people the federal government hires do not want to live in the country’s vast middle, a position that should rightly provoke economists at the Federal Reserve banks in Minneapolis, St. Louis, Kansas City, Chicago, and Dallas (and maybe Atlanta and Cleveland too!), as well as military officers serving at all those military bases on the Front Range and Great Plains, and law enforcement officers in the widely dispersed FBI, ATF, and so forth. And let’s not forget the federal biologists, geologists, meteorologists, and so forth stationed from sea to shining sea. Career diplomats and military personnel serve even beyond our borders, often in places much more inhospitable than KCMO, Nashville, or middle America’s many other lovely cities.

If we must continue to suffer the existence of a large administrative state, it would only be “democratic” to ensure that every American has a chance to serve in it. Right now, many highly qualified Americans do not want to live in or near Washington, DC because they love themselves and their families too much to subject them to the horrors of “the swamp.” So they move into state government, or private enterprise, or non-profit work even though they might have preferred serving in the Department of Agriculture, if only it had a larger presence where most of America’s agricultural activity actually takes place, the Midwest.

While during the Cold War some lovers of liberty may have relished the thought of the bulk of the federal government being wiped out by a few nukes, the allure of a capital no longer dominated by the employees of its many executive agencies has waxed stronger. HIRE would leave the DC swamp to POTUS, SCOTUS, Congress, Cabinet members, and lobbyists, but at the risk of creating smaller but numerous fetid low areas throughout the country.

The barriers to HIRE are completely political and economic, not technological. When couriers physically moved paper memos from agency to agency, close physical proximity made sense. In the age of bits and bytes, however, it is wasteful. An email can get from the capital to Wisconsin as quickly as it can get from the top to the bottom floor of the same ugly executive building in DC. So why pay all those worker bees enough to lure them to live in the swamp? Much work, including administrative functions and research, can now be done from anywhere, including the workers’ own homes. I know several federal government employees who work for Congress from South Dakota three weeks of every month.

Lovers of liberty would rather see these agencies eliminated and the resources they command either applied to the national debt or returned to taxpayers. Further decentralizing the federal government, though, will probably only strengthen it. Americans will be more supportive of federal agencies that generate local economic activity. Formerly faceless guhment bureaucrats will suddenly be neighbors and friends. The sons and daughters of agency employees and normal folk will mix promiscuously, leading to purple babies who will understand both red and blue ideologies but likely not limited government. This of course raises the spectre of the federal government moving an agency into an area that really doesn’t want it there.

A more widely distributed federal government would be somewhat cheaper to operate and also more robust in the face of physical shocks, from hurricanes to domestic insurrection to military strikes. It would also better insulate the macroeconomy from shocks as taxpayer dollars, which act as a form of automatic stabilizer, would be spread more widely instead of mostly descending into the swamp, as currently.

HIRE could also act as a Hamiltonian “cement of the Union.” Treasury Secretary Alexander Hamilton noted that the national debt bolstered support for the new federal government by wedding the interests of government bondholders to it (which the bonds actually did, as I show here). While few individuals today own US government bonds directly, deficit financing allows most states to receive more in federal expenditures than they send to the IRS in taxes. See how your state fares here.

The results vary annually but HIRE could make that corrupt bargain even more salient. Perhaps it could open the door to the reduction or elimination of certain subsidy programs for states that receive much more than they pay, but, just as likely, without proper checks in place, we could see the relocation of federal agencies to key swing states, much like during the New Deal.

A more liberty-friendly proposal would bring more incentives to bear, and less politics. Ultimately, what should matter most is quality-adjusted cost to taxpayers. The government, like private entities, must pay for inputs in the market. Where can it acquire sufficient physical infrastructure and human capital cheapest?

Robert E. Wright is the (co)author or (co)editor of over two dozen major books, book series, and edited collections, including AIER’s The Best of Thomas Paine (2021) and Financial Exclusion (2019). He has also (co)authored numerous articles for important journals, including the American Economic Review, Business History Review, Independent Review, Journal of Private Enterprise, Review of Finance, and Southern Economic Review. Robert has taught business, economics, and policy courses at Augustana University, NYU’s Stern School of Business, Temple University, the University of Virginia, and elsewhere since taking his Ph.D. in History from SUNY Buffalo in 1997. Robert E. Wright was formerly a Senior Research Faculty at the American Institute for Economic Research.