Theory and Practice in Public Policy: The Case of the New Federalism

Abstract

President Reagan's New Federalism has been identified as part of a broad programme of radical reforms based on market-oriented economic and political theories. This article tests the extent to which the reforms introduced in 1981 and 1982 are compatible with these theories. The New Federalism is shown to have no obvious rationale based on the achievement of economic efficiency. Increased accountability, improved government responsiveness to the people or administrative simplicity cannot be shown to follow in any obvious way from the reforms. Instead, the New Federalism would have reduced government expenditure in an economically non-rational way, and would have increased inequalities between jurisdictions and regions. The article concludes that the inequities and incoherence of the New Federalism helped contribute to its failure in an area in which under the best of circumstances, radical change is politically difficult to achieve.