The most recent editorial in the NY Times (link above) argues that a new report from the Center for Public Integrity showing that state governments are corrupt is evidence that they cannot be trusted with Federal programs like Medicaid, food stamps, and housing assistance. Of course this is a very naive and simple analysis (it is the NY Times editorial board after all), so I will try to probe a bit deeper here.
The main complaint from the report seems to be that state governments are not scrutinized by both media and citizens like the federal government. But might that be because the media and citizens don't really think that state governments matter anymore? Scrutiny is endogenous to power, i.e. if a government is perceived as having a lot of power over people, we will pay attention to their actions more. In this day and age of the federal government controlling just about everything, why would the media or citizens waste resources covering local governments? If there is a little more corruption on the local level so be it. We have to use our resources on watching the big fish. But if the states were given the reins to programs currently run by the feds, wouldn't the people who watch those federal programs continue to do so, just at the state level? The NY Times seems to think not. I guess they think those reporters and watch dog groups would just pat themselves on the back for a job well done and retire.
But more importantly, when states are given control of programs people can vote with their feet if they do not like what is being done. The article cites New Jersey as the state with the best grade. Could this be because people were voting with their feet and leaving New Jersey in droves? New Jersey had no choice but to clean up their act. If they didn't they would continue to lose people and their tax base. So over the last 3 year, NJ cleaned up their government and became the least corrupt state in an attempt to stave off their population decline. Thus if states were given the power to run the anti-poverty programs above and performed poorly and unethically, people would leave those states and move to others that performed well and did not waste taxpayer dollars. States would have to compete with each other for residents. When the federal government controls everything, people can't vote with their feet (unless they want to become a citizen of another country, but that has extremely high costs and is for the most part impractical).
I truly cannot understand why someone would think that putting all of the power into the hands of a relatively small group of people e.g. the federal government would lead to less corruption than spreading that power over 50 state governments. Who are these benevolent federal officials that run things so honorably? What are their incentives to do so? The goodness in their hearts? Let's not forget that nearly all federal politicians were state politicians at some point. Perhaps the NY Times thinks that they have a "born again" moment before moving to Washington.
It is time to get some real competition in this country and give more power to the states, not less.