What’s Better in a Pandemic: Federalism or a Central State?

(Bloomberg Opinion) -- The Covid-19 pandemic has rekindled old controversies, including the centuries-old debate about which form of government is better: a federal state or a unitary one. The latest to raise the issue, albeit obliquely, is German Chancellor Angela Merkel.

Flustered by the perception that Germany, a federal republic of 16 states, seems to be floundering in managing SARS-CoV-2, she told a television interviewer that she’ll “have to think about how that might be dealt with federally in a uniform way.” What she has in mind is new public-health legislation that would let the feds seize certain powers from the states.

In many ways, Germany is in the same conundrum as other federal states, from the U.S. and Canada to Belgium and Switzerland, Brazil, India and Australia: How, in a pandemic, do you balance regional autonomy and flexible local responses with national coordination and coherence?

In Germany, the ambiguities about which level of government is in charge of which Covid measures has of late sowed chaos and confusion. The 16 governors and Merkel regularly spend long nights convening in search of a common policy. But then the premiers go off and largely implement whatever they want. Currently, with Germany in a third wave of contagion, some states want to tighten restrictions, while others — notably Saarland and Berlin — want to cautiously loosen.

The debate inspired me to dust off old treatises about the trade-offs between unitary and federal states. The former have strong central governments that decide what to delegate to local politicians; France is a classic example. The latter are constitutionally decentralized, so that a national administration formally and irrevocably shares power with the regions.

One advantage of federalism is said to be that it provides a moat against tyrants. Both unitary and federal democracies create checks and balances by separating the executive, legislative and judicial branches of government. But federal states have the additional protection of “veto points” in the regions. With their own legitimacy, the states can resist power grabs from the center.

Another benefit is that the state governments are presumably better placed than central authorities to match policies to the preferences of their regional populations. This leads to striking differences between, for example, some German-speaking cantons of Switzerland and the French or Italian-speaking ones. In that sense, federalism is conducive to pluralism and diversity.

Better yet, as different regions diverge politically, they become “laboratories of democracy” and the stage for an ongoing contest to find the policies that work best. In the U.S., California has often led with environmental standards. In India, the state of Kerala pioneered education reforms that later became a model for others.

These advantages come at a cost, however. Inevitably, some functions of government end up being duplicated, which is inefficient and can lead to coordination problems. By replicating rather than sharing certain responsibilities, states also lose economies of scale. If you’re trying to introduce electronic medical records, for example, it’s cheaper and more useful to have one national and large system than many fragmented ones, or what the Germans call a “patchwork quilt.”

Yet another disadvantage is the one Merkel noted on television, when her interviewer remarked that German federalism appears to have become a form of “organized irresponsibility.” Regional leaders are blaming problems on the feds, and the feds are returning the favor. If the theory is that federalism makes politicians more accountable, the practice is sometimes the opposite.

Which system, then, would win in normal times? It’s hard to say because so many other factors — from legal traditions to history and culture — come into play. One study from 2012 crunched all those numbers and concluded that there’s “strong empirical evidence supporting unitarism.” It’s statistically associated with better regulation, higher prosperity, lower infant mortality, higher life expectancy and literacy and other good things.

That case for unitarism might seem even stronger now, in times that are anything but normal. During another disaster, Hurricane Katrina in 2005, some people blamed the botched U.S. response on the lack of a decisive and coordinated response from Washington — that is, excessive federalism. That’s what Merkel now seems keen to avoid.

And yet, a look around the world doesn’t corroborate her hunch. Federal Brazil has failed against Covid-19, but federal Australia is doing well. On the flip side, unitary South Korea as well as Vietnam seem to have the virus under control, but unitary Ireland, Hungary and France don’t. When the U.S. centralized one aspect of its corona struggle — the procurement of vaccines — it succeeded. When the European Union (more of a confederation) tried to do the same, it failed. Clearly, federalism and centralization as such are neither the problem nor the answer.

So my advice to Merkel and others is to go easy on the centralizing. By all means, let the feds lead wherever vast resources are required — above all, in getting tests and vaccines to the whole population. But let regional leaders decide whether their local infection rates warrant reopening schools or restaurants, and with what precautions. Done right, this kind of federalism isn’t clunky but precise.

If Merkel and her ilk do call a time-out on federalism, let them at least guarantee by law that the step is temporary and will soon be reversed. Yes, federalism can be inefficient. But as a classical liberal, I still feel it helps guarantee liberty in the long run. That’s not something to give up lightly.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andreas Kluth is a columnist for Bloomberg Opinion. He was previously editor in chief of Handelsblatt Global and a writer for the Economist. He's the author of "Hannibal and Me."

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