Federalism, Democracy and Regulatory Reform: A Sceptical View of the Case for Decentralization
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Description
In a wide range of recent policy literature, decentralization of political and economic power is advocated as a means to government that is more democratic, more efficient, and more sensitive to individual and community preferences. Often, federalism is viewed as the obvious instrument of such decentralization. Typically, what is implied is a prescription for greater devolution or delegation of powers in states that are already federal, or the creation of new federal structures in the case of unitary states. Much of the new-found enthusiasm for federalism as an instrument of decentralization has emerged in the context of policy debates about reform of the mature regulatory and social welfare state in advanced industrial democracies such as the United States and Canada, which are characterized by longstanding federal arrangements. Today, however, the case for federalism as an instrument of decentralization is often made in vastly different social and political contexts, whether the project is structural economic reform in developing countries or the transition to market economics and liberal democratic politics in the former communist countries of Central and East Europe, where (not surprisingly) the legacy of state centralism has led to intense interest in the devolution of political and economic power. This essay takes a critical look at this new-found enthusiasm for federalism as a solution to the supposed failings of central governments. I intend to develop three lines of argument. First, it is far from clear that in mature federal states such as Canada and the United States further devolution or delegation of power to federal sub-units is likely to result in more democratic, more liberal, or more efficient government. Second, many of the arguments for decentralization upon which the case for devolution of powers is based would more logically imply a transfer of power not to lower levels of government but to non-governmental actors, whether through privatization or contracting of delivery of services to community or non-profit organizations, or the use of incentive-based as opposed to centralized command-and control-type policy instruments. Third, in the context of many developing countries and Newly Liberalizing Countries in Central and Eastern Europe, there may be particular costs and obstacles to decentralization through federalism which have been often neglected by advocates of federalism as a general policy prescription. None of these three lines of argument is intrinsically opposed to federalism. Rather, my aim is to challenge the dogmatic bias towards decentralization through federalism which characterizes much contemporary discussion about policy reform, and to point those who are seriously preoccupied with questions of policy reform, whether in North American or other contexts, towards scholarship on federalism that examines the costs as well as the benefits of decentralization, and which takes a subtle and contextualized approach to the allocation of powers and the design of federal structures.
Source Publication
Rethinking Federalism: Citizens, Markets and Governments in a Changing World
Source Editors/Authors
Karen Knop, Sylvia Ostry, Richard Simeon, Katherine Swinton
Publication Date
1995
Recommended Citation
Howse, Robert L., "Federalism, Democracy and Regulatory Reform: A Sceptical View of the Case for Decentralization" (1995). Faculty Chapters. 893.
https://gretchen.law.nyu.edu/fac-chapt/893
