The Follies of Federalism in the U.S.
Over the past century, there has been an unprecedented shift in power from the states to the federal government. The idea of 50 relatively autonomous states under the blanket of the federal government has completely been thrown out the window. Go to another state and you will see that there are tremendous differences in the people; their ideologies, their “typical” jobs, their culture, and even their demographic make-up. Yet, you will always find that one relative constant: all of them have essentially the same laws, income taxes, and government services. Now, how does it make sense for the same set of “one size fits all” rules and regulations to apply to 300 million people who are all incredibly diverse in their needs and wants.
It doesn’t.
It breeds inefficiency. If there is one way to describe the federal government, it would be inefficient. If you are a congressman from a state, and a potential project is being talked about in congress, you will push your hardest for it to pass… even if the costs outweight the benefits. The reason for this is you are really only paying 1/50th (for simplicity sake, I’m assuming all 50 states are the same size tax revenue wise) of the cost. This may not seem like a huge deal, until it happens over and over again and all 50 states are doing it. The bottom line is there is absolutely no incentive to reduce spending since all the costs are spread around.
Imagine how much more efficient and strong our economy would be if each state could specialize in the needs and wants of its citizens. This was the original idea of the whole 50 state system! It allowed for each state to set its own rules that fit its own people. It was a brilliant idea, and it still is. The idea that we could have 50 states each competing with each other economically and ideologically for people, and competition drives efficiency. For example, states would have incentives to actually reduce spending, not only because they are paying the whole 100%, but also, the more they save, the more they can reduce taxes or provide services to its citizens.
The fundamental concept behind the free market is that no transaction occurs unless it benefits both parties. This is a concept that is violated over and over in our country. People are paying taxes for services that they do not want and they are not receiving services that they are willing to pay for. Under the “original” concept of the United States, the taxpayers actually had a voice… which today has been reduced to the faintest of whispers. Sure we can determine the President, our congressmen, but can we really drive our politicians to change? I would argue we have very little impact, because of how un-localized our voices are. The more local and specific your voice is, the stronger it is. A single voice among 300 million is quite miniscule, but a single voice within a single state is magnified by about 50x.
To be honest, I’m getting sick of everyone talking about how “Washington is broken”, because it reminds me of just how far we have fallen away from the original founding principles of the country. I’m not angry that Washington is broken, I’m angry that people aren’t questioning when Washington became the sole decider of all things American. When is the last time you heard someone say “Albany is broken” or “Phoenix is broken” or “Olympia is broken”. Chances are it has been a long time. In fact, state capitols have become such a figurehead name and they don’t even have any importance in the grand scheme of everything (to test this, try naming all 50 capitols… I had enough difficulty naming 3). Well, at least relative to their intended importance set forth by our founding fathers.
I love the idea of the United States of America. Fifty states all operating independently but under one united entity. But, I fear that over the past century the fifty states are no longer operating independently under one entity, but they have become one entity. Being united is great, but not when it comes as a Washington mandate.
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Amen, Donald. I have felt this way about our system of government for some time now. The state system was set up not as a novelty to be put through the motions, but as an effective means of competition among governments. The federal government of these United States should be considered something of a police force and judicial body among the states more than an all-powerful ruling body. Great article, I can only hope that its importance and applicability is read and comprehended.
One thing:
It’s baffling to me that California has the weather, the scenery, the ports, a high tax burden, Hollywood, and a huge population, and yet it still is facing a massive shortfall.
If a state like California literally has it all, then they can be as corrupt as they want to be. People will always want to live there. The feds, as long as they can sell bonds or print money, will never let it fail. Where’s the motivation? The system is flawed either way. If the Feds didn’t support California, would it try to secede?
Sure, California has the biggest economy in the U.S. and presumably would have the highest tax revenues from this. But, it also has the biggest population who the state would have to support independently. There would be no more federal subsidies for infrastructure projects like freeways, power plants, utilities, etc. The reason they are facing a massive shortfall is precisely because they know they will be bailed out which doesn’t exactly give them motivation to save taxpayers money. If the feds didn’t support California, it would not try to secede, because there would be no need to. I would argue that there is a greater desire for California to secede now under the current system of federalism than there ever would be if the feds didn’t directly support it. Because, now, they have no independence in setting their own laws, yet, in the revised system, they would be able to set what ever laws they saw fit. The federal government would simply be the judicial body (in supreme court cases) and a police force among the 50 states like Jeremy mentioned. Think about the US federal government being some sort of WTO where when interstate disputes and crimes occur, they issue the binding agreements.
Well said, Donald. The only thing I’d point out is that it wouldn’t be a “revised” system as much as a reinstated system. This is how the UNITED STATES (just look at the name) was intended to be, a unification of multiple states. God bless those fine founding fathers.
But what precisely is wrong with going over-budget and requiring a bailout if people are still moving to and loving the state of California?
Sure, it screws the taxpayers of the rest of the 49 states and inflates the currency, but isn’t the point here to improve the quality of life? What does California care if Nevada or Arizona’s quality of life suffers so long as their state doesn’t?
They don’t, and that is the problem with federalism. If the federal government were as simple as Donald and I are suggesting then California would have to fund its own ventures or face bankruptcy, this would inspire more fiscal responsibility and not affect inflation. It would also be rid of the problem of taxation without representation.
A simple solution would be a federal law that requires every state to balance their budget, as many states have laws that their municipalities must balance THEIR budget.
Oh right, that IS the law, isn’t it?
Sure states may have balanced budgets, but that just shows you how screwed the system is. The states “budgets” are inadequate in funding the state itself that it relies also on the federal budget for funding as well.