Federalism and Public Choice
Files
Description
The public choice literature on federalism and its near-relation, localism, is voluminous in size but narrow in focus. If one includes articles on fiscal federalism and Tiebout’s spatial economies under the rubric of ‘public choice literature’, then the articles in law, political science, and public economics that refer to public choice concepts number in the thousands. Most of this literature revolves around the idea of mobility between competing subnational jurisdictions. Less of the literature focuses on how political activity by voters or politicians in federal regimes differ from unitary states’ politics. The literature, in other words, focuses on exit, not voice. The absence of substantial public choice scholarship on democratic behavior in federal regimes oddly contrasts with the political tradition of federalism in the United States. The Anti-Federalists opposed the US Constitution on the ground that only aristocratic elites would be able to compete in large electoral districts required by a continental nation. The Jacksonian Democrats opposed a broad construction of Congress’ power to fund infrastructure on the similar ground that wealthy ‘monopolists’ would exert disproportionate power at the metropolitan centers where the federal government’s officials would work. These ‘voice-based’ arguments treat federalism as a device by which to reduce slack between the agent (elected officials) and principal (the voters), by reducing the cost to voters of monitoring the agents’ actions. Public choice theory does not have much to say about the merits of this traditional theory of federal democracy, preferring to focus on the capacity of individuals to discipline officials by exiting, or refusing to enter, badly governed jurisdictions. In what follows, I will describe three aspects of public choice theory and federalism. First, I will outline public choice theory’s exit-based normative justifications for federal regimes. Second, I will describe voice-based normative justifications for federal regimes that are consistent with public choice theory, although not public choice theory’s central focus. Finally, I will examine public choice theorists’ positive theories for how federal regimes are sustained through the political process. In general, I will suggest that the most promising trend in public choice theory is the effort of economists, political scientists, and lawyers to tackle the thorny question of ‘voice’ in federal regimes—that is, how subnational politics differs in federal regimes from the politics of unitary states. Public choice theorists may have an inveterate suspicion of claims that subnational government is closer to the people or facilitates political participation: such positions have a sappy flavor that does not mix well with the public choice theorists’ self-image as hard-boiled realists free from illusions about the capacity of individuals to engage in collective action. William Riker, one of the founders of public choice theory, roundly ridiculed such claims on behalf of federalism. And yet nothing in the conventional account of how decentralization improves political ‘voice’ is inconsistent with the abstract principles of public choice theory. Moreover, while sketchy and conflicting, the evidence does not disconfirm the account of decentralization as improving democratic accountability. Whatever normative case can be made for federalism depends critically on this voice-based defense of federal regimes. In particular, the case for federalism based on exit critically depends on the argument for federalism based on improvement of ‘voice’.
Source Publication
Research Handbook on Public Choice and Public Law
Source Editors/Authors
Daniel A. Farber, Anne Joseph O’Connell
Publication Date
2010
Recommended Citation
Hills, Roderick M. Jr., "Federalism and Public Choice" (2010). Faculty Chapters. 783.
https://gretchen.law.nyu.edu/fac-chapt/783
