Links on States, Localities, and Federalism

Longer-term readers know I have a deep interest in federalism and the role of the states in American society. Our federal organization provides the opportunity for a lot of experimentation ("laboratories of democracy"), decentralization of power, more responsive government, and the development of distinct regional identities that make our culture more robust. Unfortunately, these opportunities are often wasted.

One thing I've been concerned about is the role that state governments have played in aggravating the downturn. Balanced budget practices that cut spending dramatically at the state level when revenue is down have neutralized much of the federal stimulus. Analysts who don't take the time to look further than the federal budget insist that we've implemented massive fiscal stimulus. But the emphasis on the federal budget is meaningless. Total government spending in the U.S. - spending that includes the state and local governments - has been much less pronounced. That's a huge danger that many proponents of fiscal stimulus seem to be unaware of, and the many opponents of fiscal stimulus seem to ignore when they decry Keynesianism in America today. However, we do have some good news. The Wall Street Journal reports today that state tax revenue has started to stabilize, and since budget cuts have largely been a response to reductions in revenue, this is a good thing. It still probably won't add any deficit spending, but the cuts should stop. Recently, Megan McArdle blogged on state debt levels, although I think her treatment leans too heavily on the very real moral hazard concern and doesn't engage enough of the other important issues that need to be considered. Finally, Veronique de Rugy does an abysmal job engaging the issue of intergovernmental transfers and the stimulus, and draws a lot of misleading conclusions. Thankfully, it's been thoroughly covered and disputed, but it is unfortunate. The last thing politicians need is more sloppy research to work with.

More good news is shared by Coordination Problem. They link to a paper by Robert Nelson on sub-local government. Nelson argues that sub-local governance structures can operate more efficiently than state and federal governments, and should be created more freely. Peter Boettke, highlights the fact that as government gets bigger, it also may very well be getting more decentralized as a result of these sub-local governance structures. This reminds me of something I blogged about last summer: the work that my great-grandfather (H. Vernon Eney) did in the sixties writing a new constitution (which was never ratified) for the state of Maryland. Most of my blog post focuses on the role that the discourse surrounding "states' rights" played in the failure to ratify, but it's also worth pointing out that one of Eney's biggest goals was to make it easier to establish and adjust sub-state governance structures. He wasn't thinking of sub-local organizations in particular. My understanding is that he was thinking of more regional structures. But the idea is the same: local communities can govern themselves better, and hamstringing these governance structures by relying on a more rigid system of states and counties can be counter-productive. Eney always emphasized that states' rights does not have to be a reactionary position. It is a very reformist position. He thought that the federal government demonstrated that it was not up to the task of solving a lot of modern social problems. An effective reform movement would have to strengthen the states to accomplish anything.

I'd also highlight some posts that Evan has written in the past on localism that are somewhat related. More recently, he's written on "what localism should not be" (his answer: "a romantically quixotic attack on the very technologies that are good for it"). This post rightly denounces the tendancy of people to equate localism with primitivism. He's also written on localism, food production, and culture, and I responded with some agreement and some critique.