When Federalism Works

Paper Summary:

This paper discusses federalism in terms of the implementation of public policy and economics. Federally funded developmental programs are looked at as well as competition between states for funds. The paper sums up how federalism can work when redistributive policies are used correctly.

From the Paper:

"The United States is both a united country and a compounded nation of fifty states. This paradoxical status of unity and division is at the heart of the nature of federalism. Federalism is both a political means, a way of ensuring that all citizens have a voice in the government of their day on a micro-political as well as a macro-political level, and also an end in itself, according to James Madison, one of the authors of the Federalist papers. The Founding Fathers believed in federalism because they hoped that a strong national government would be counterbalanced by states imbued with specific political powers and rights that could not be impinged upon. This way, neither rampant republicanism (as voiced through the states) nor totalitarianism would reign in the new union they had created. (Federalism Web Site: Philosophy of Federalism in the U.S.)
In terms of the implementation of public policy, the philosophy of federalism is particular significant when reviewing the difference between developmental and redistributive policies of allocating funds. Developmental policies are primarily designed to enhance the economic development of a specific community by benefiting those who have borne the cost directly. In more technical terms, developmental policies "have benefit/tax ratio of more than 1, so that marginal benefits exceed the marginal cost to the average taxpayer." (Peterson Chapter 3)"

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