Fedarlism: Guardian of Individual Liberty

Federalism is not merely a separation of powers doctrine dividing the federal government’s three branches. It is not simply a tug-of-war for political power between federal and state governments. Finally, it is not an outmoded approach to our national polity. In reality, principles of Federalism are the primary protectors of individual liberty.

The first justification for Federalism is that political entities are laboratories of democracy. The laboratory idea contends that we benefit from the lessons learned of other governing entities. We can learn how to implement public policy. Positive lessons include Wisconsin’s welfare reform success and the school choice experiments in Milwaukee. Negative lessons are valuable too: we can be glad that only California was caught in the state legislature’s experiment with energy deregulation.

The second justification is that Federalism allows the satisfaction of diverse preferences. Centralization of governance works best on homogeneous populations – which America neither encourages nor has found beneficial. We could take a page from an environmentalist view: diversity and stability in social and biological ecosystems are guaranteed with small, but multi-layered governing entities intertwined in a “web” of life. Governance using these Federalist principles works for state and federal governments and other entities, such as local school, water resources districts, associations, churches, and even for individual people.

Federalism safeguards individual liberty because of the principle that no higher level government should do something that a lower level could do as well or be. Economic considerations and resource stewardship make this policy logical. Nebraska should not have stewardship of oceanic ports. Ohioans should not administer the St. Louis Arch. Focusing on the economic efficiency of geography-based administrative decision making keeps the diversity of preferences intact, thus allaying sovereignty concerns.

Conversely, decentralization can go too far because economies of scale are lost. The national government provides for the national defense because it is economically efficient. However, we still have hundreds of thousands of fire districts in America because fire suppression needs differ across jurisdictions. Furthermore, these laboratories of democracy contribute to society as lessons learned are shared.

When economic and political entities are mismatched, inefficiencies occur. For example, “pork-barrel” spending happens when the cost of a government project is spread across many jurisdictions and people but the benefits flow only to a limited group. This is wasteful because those burdened with payment do not get the benefits of the project. It is critical to align the political jurisdictions (decision-making powers) with the economic jurisdictions (cost-effective implementation over time) to steward scarce resources. Examples include water districts, school districts, municipal maintenance areas, enterprise zones, and private property generally.

Principles of Federalism illuminate individual sovereignty. Individuals have discrete preferences and decisionmaking capabilities and thus are laboratories of governance. Leaving a decision in private hands is often the best way to ensure that he who gets the benefits also pays the costs. A person is an example of the results of their governance choices. Drunkards end up in the gutter, defensive drivers have fewer car crashes, and exercise leads to fitness. It makes sense to see Federalism beyond traditional federal versus state conceptualizations.

Individual liberty is safeguarded under Federalism because when power is decentralized individuals can escape unfavorable policies by moving to a more preferable jurisdiction. Thus the monopoly governmental entities must meet real needs or people and capital flees. This is true consumer sovereignty. Moreover, the mobility of people and capital are significant checks on centralized power. As experimentation flowers, choices for mobility increase, and governments are blocked from the onerous exercise of authority.

Freedom of mobility for capital means the government has a harder job expropriating wealth and thereby undermining economic growth. The smaller the political entity, right down to the individual, the more the threat of exit can cause changes in governmental policy. Even individuals dissatisfied with their governance choices can change and effectively “exit” their old life and rebuild.

In the United States, power is limited at the national level by the enumerated powers protections of the Constitution and is limited at the local and state level by mobility. Federalism’s purpose is to ensure individual freedom and liberty. When scholars argue that Federalism is an out-moded argument on behalf of so-called “state’s rights,” they are implicitly arguing against its true mission as a guardian of individual rights, and they end up advocating for centralizing power in the federal government. See generally U.S. v. Lopez, 514 U.S. 549 (1995).

Federalism is a unique contribution from the Framers to the historical structure of governance. Today’s danger is in abandoning Federalism because the federal government appears to be governing better than the states. Individual liberty must remain our focus in understanding the necessity and efficiency of Federalism. In the 1700s, the philosophy of Federalism was new and untested. Today, to check the national power, we must reinvigorate its application.

Unfortunately, Roosevelt’s New Deal ended the philosophy of “enumerated powers.” The structure of Federalism was abandoned as the federal government began to regulate areas that were a mismatch with its economic efficiency and its protective responsibilities as the guardian of individual liberty.

For example, the Commerce Clause was originally meant to be a check on state squabbling. It has evolved into federal power over most commerce, which completely ignores interstate boundaries. The arguments for expansion of federal power from Ogden to Filburn have led to a dead-ended “centralized power if you do, centralized power if you don’t.” We canhardly imagine it today: could Congress be prohibited from passing what appears to be a good law? The answer of the Framers would have been an unqualified and resounding “YES!”

Federalism and the Bill of Rights should be perceived as co-equals in guaranteeing individual liberty under the Constitution. Federalism should be understood to address numerous societal organizational issues. Federalism is not limited to a long past struggle between states and federal power. Today, principles of Federalism can be extended to reestablish individual sovereignty and liberty for Americans.

Disclaimer: The substance of this article was gathered from a talk on Federalism given by Alex Tabarrok of the Independent Institute, a public policy research organization located in Oakland, CA (www.Independent.org) under the auspices of the UC Hastings Federalist Society on September 20, 2001. This article is not an official statement of the National Federalist Society or the UC Hastings Federalist Society.