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The problem with Federalism

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MyGodItsFullofStars Since: Feb, 2011
#1: Oct 5th 2011 at 9:42:49 AM

So thought this would make an interesting discussion, so I'm posting it. The other day someone mentioned something to me that I found kind of interesting - the fact that in the United States, each state is in competition with every other state over jobs. In a way, the USA is actually 50 separate countries that happen to pool their money on expensive projects that no single state could handle alone, like defense and highways.

The downside is that companies basically want to go to the state with the most competitive (i.e. lowest) tax rates, and some states are going to lose the bidding war. Because interstate economic cooperation is so limited in the USA, this ultimately leads some states, such as Michigan, into steep downward spirals which they cannot get out of. If they want jobs, they have to lower tax rates - but if they lower tax rates, the increase in jobs doesn't offset the expenses, such as the need for better roads to support the growing transportation requirements that those jobs bring in, of the state.

Now, if there were some mechanism in place to regulate tax increases - say, a bunch of states all agree to not lower their tax rates past a certain point - then a lot of the regional economic disasters would be avoided, and unemployment and its costs to society would drop.

I guess I had never really thought about this before, so it seemed to me like a brilliant analysis of our current economic troubles. Anyone else have something to add?

Lawyerdude Citizen from my secret moon base Since: Jan, 2001
Citizen
#2: Oct 5th 2011 at 10:34:43 AM

Tax rates aren't the only consideration that businesses consider when deciding where to go. There's also the cost of moving, the likelihood of an appropriate workforce, the level of competition in the area and the nature of the business itself.

For example, Boeing couldn't just pack up and move its assembly plant to another state even if it wanted to. The cost would be prohibitive. Likewise, plenty of businesses can and have opened in multiple states. Wal-Mart, Mc Donald's, etc.

Honestly, I don't think that tax considerations influence corporations that much when deciding whether to do business somewhere. They may affect how they do business, or how much business they do.

For example, given a choice between opening up in a highly prosperous location with little competition but a very high tax scheme vs. someplace with no money and no taxes, a business will choose the first almost every time.

What we obtain too cheap, we esteem too lightly.
Carciofus Is that cake frosting? from Alpha Tucanae I Since: May, 2010
Is that cake frosting?
#3: Oct 5th 2011 at 10:39:41 AM

A certain amount of decentralization is necessary in such a big country as the U.S., I think. Yeah, it results in a bit of inefficiency; but centralizing all decision-making would be an awful, awful idea.

Now, the people who are trying to turn Italy into a federal state (yeah, they exist and are one of the biggest parties... sad), they do not have a clue of what that would entail. We are smaller than most U.S. states, and we already have a problem with inefficiency and lack of organization: by Hastur's lacy panties, why would we want to add more independent nodes to our decision-making processes?

edited 5th Oct '11 10:48:45 AM by Carciofus

But they seem to know where they are going, the ones who walk away from Omelas.
HungryJoe Gristknife from Under the Tree Since: Dec, 2009
Gristknife
#4: Oct 5th 2011 at 12:23:53 PM

Some regions are very cooperative with eachother. New England states work on some big projects together, and the various states that make up the New York Tri-State Area often work on roads together.

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Nohbody "In distress", my ass. from Somewhere in Dixie Since: Jan, 2001 Relationship Status: Mu
"In distress", my ass.
#5: Oct 5th 2011 at 4:05:03 PM

Lawyerdude, you forgot one of the important non-tax reasons for moving to another state: regulations.

In general, the heavier the regulatory burden imposed by a state, the more expensive it is to do business in that state regardless of taxes (though there is something of a direct correlation between more regulations and higher taxes).

I would've thought someone with "lawyer" in their handle would've been thinking about regulations. grin

As for the OP, how about "no"? tongue If several related states decide to go together on something, like the New England area example above, fine, more power to them. But the more you centralize decision making to the federal government, the less responsive the laws get in regards to the local needs, by and large. The concerns of someone in NYC are not those of, as a random example off the top of my head, rural Pennsylvania (which really isn't that far away, geographically, but differs socially and economically by a significant degree).

All your safe space are belong to Trump
TheyCallMeTomu Since: Jan, 2001 Relationship Status: Anime is my true love
#6: Oct 5th 2011 at 10:09:01 PM

This can be described the race to the bottom.

It's a fairly decent argument for having stronger federal powers, rather than weaker federal powers, as some people want.

[up] Actually, empirical evidence suggests it's less about "responsive to the needs of the populace" and more "The smaller level of government, the easier it is to buy off."

edited 5th Oct '11 10:09:49 PM by TheyCallMeTomu

SavageHeathen Pro-Freedom Fanatic from Somewhere Since: Feb, 2011
Pro-Freedom Fanatic
#7: Oct 6th 2011 at 5:08:08 AM

Centralization is a bad thing: Anything that gives the fundies in the Bible belt greater say over normal people on the Coasts should be fought at all costs.

edited 6th Oct '11 5:13:31 AM by SavageHeathen

You exist because we allow it and you will end because we demand it.
Carciofus Is that cake frosting? from Alpha Tucanae I Since: May, 2010
Is that cake frosting?
#8: Oct 6th 2011 at 5:18:55 AM

Total decentralization, on the other hand, would allow them to institute the bloodthirsty theocracy that many of them apparently wish for.

It's a matter of balance, really.

But they seem to know where they are going, the ones who walk away from Omelas.
joeyjojo Happy New Year! from South Sydney: go the bunnies! Since: Jan, 2001
Happy New Year!
#9: Oct 6th 2011 at 5:37:47 AM

Centralization is a bad thing: Anything that gives the fundies in the Bible belt greater say over normal people on the Coasts should be fought at all costs.

I can't see any reason why the USA couldn't of ended with a fundie run federal government while the states have a progressive grass roots leadership.

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Nohbody "In distress", my ass. from Somewhere in Dixie Since: Jan, 2001 Relationship Status: Mu
"In distress", my ass.
#10: Oct 6th 2011 at 5:48:14 AM

"bloody theocracy"

/facepalm

As for smaller government meaning its easier to buy off, how small is the US federal government, again? tongue Those eeeeevil tax breaks, loopholes, and so forth that means a millionaire may wind up paying less in income taxes than his maid, in spite of having umpteen dozen times the income? Voted into place by members of Congress for the sake of appeasing a big contributor or as a favor to someone of a compatible political stance.

And it's not a left/right or Dem/Repub thing, either. BOTH sides have at one point or another passed a law or regulation to favor one person or organization over another, not-infrequently for reasons rather far more personal than "for the good of the country".

Relating to the OP, what's easier to influence buy off? Up to 50 individual state governments, or one single federal government?

All your safe space are belong to Trump
SavageHeathen Pro-Freedom Fanatic from Somewhere Since: Feb, 2011
Pro-Freedom Fanatic
#11: Oct 6th 2011 at 5:52:24 AM

Buying all 50 is insanely expensive, labor-intensive and time-consuming.

Thing is, you only need to buy a couple out of the 50.

edited 6th Oct '11 5:52:45 AM by SavageHeathen

You exist because we allow it and you will end because we demand it.
Nohbody "In distress", my ass. from Somewhere in Dixie Since: Jan, 2001 Relationship Status: Mu
"In distress", my ass.
#12: Oct 6th 2011 at 5:53:43 AM

"Couple" is still greater than one, or so I've heard...

tongue

All your safe space are belong to Trump
Carciofus Is that cake frosting? from Alpha Tucanae I Since: May, 2010
Is that cake frosting?
#13: Oct 6th 2011 at 5:55:07 AM

"bloody theocracy"

/facepalm

What's there to facepalm about (well, apart from the misuse of "bloody" instead of "bloodthirsty", but that was not in my original post)?

Note that I never wrote that all, of even the majority, of conservatives and "fundies" wish something like that. But I have read enough material to see that a good number of them does.

edited 6th Oct '11 5:55:38 AM by Carciofus

But they seem to know where they are going, the ones who walk away from Omelas.
RavenWilder Raven Wilder Since: Apr, 2009
Raven Wilder
#14: Oct 6th 2011 at 5:56:23 AM

While voter turnout is overall not too great in the United States, my experience has been that far more people vote for federal Senators/Representatives and Presidents than vote for (or even learn the names of) state or local officials. So the claim that state/local politicians better represent their constituents has always seemed pretty iffy to me.

"It takes an idiot to do cool things, that's why it's cool" - Haruhara Haruko
Cojuanco Since: Oct, 2009
#15: Oct 6th 2011 at 8:08:01 AM

Of course, if I have a problem with the city, I can just take the bus to City Hall and talk to them - I actually know some of them personally.

breadloaf Since: Oct, 2010
#16: Oct 6th 2011 at 8:44:36 AM

It's hard for me to pinpoint what exactly would be improved with centralising or decentralising in America. The problems are all small but combined create a rather corrupt government.

For instance, Canada has a similar set up with provinces and a powerful federal government. On paper, the federal government is vastly more powerful. In reality, the provinces combined have twice the budget of the Feds, making them much more important both financially and in terms of the functions they handle.

I don't particularly think that centralising or decentralising in a blind manner would help the USA at all. It's more of a matter of figuring out which particular systems would be better centralised and which would be better decentralised.

So some general things I've noticed:

  • It also seems like most states need to get off their high horse of "no taxes". Lower federal tax, increase state income tax.
  • I'd prefer centralised crime punishment and so on. I don't think it makes sense to me that a person can be sentenced to different jail times or even death penalty depending on the state.
  • A single auditor general per state, a single federal one... each one only looking at government programs under their jurisdiction with the federal one taking precedence.
  • Healthcare decentralised is not likely to be a big deal, but equal per capita funding is important.

ATC Was Aliroz the Confused from The Library of Kiev Since: Sep, 2011
Was Aliroz the Confused
#17: Oct 6th 2011 at 9:59:18 AM

The biggest problem with Federalism is that Alexander Hamilton wasn't immortal. He was a genius among geniuses who saved the U.S. economy by getting it out of a situation much worse than anything we have now or have had since.

If you want any of my avatars, just Pm me I'd truly appreciate any avatar of a reptile sleeping in a Nice Hat Read Elmer Kelton books
breadloaf Since: Oct, 2010
#18: Oct 6th 2011 at 3:18:17 PM

I'm pretty sure that's the problem with every country. Their best leaders weren't immortal.

Erock Proud Canadian from Toronto Since: Jul, 2009
Proud Canadian
#19: Oct 6th 2011 at 4:33:57 PM

Damn, breadloaf beat me to the Canadian punch.

What the states needs is an amendment to the consitution guaranteeing equalization. This is a part of Canadian law that guarantees that services will be equallt availible to a Canadian no matter which provicne you are in. The American lack of this ahs lead tot he no-tax state government policies.

If you don't like a single Frank Ocean song, you have no soul.
SavageHeathen Pro-Freedom Fanatic from Somewhere Since: Feb, 2011
Pro-Freedom Fanatic
#20: Oct 6th 2011 at 7:23:33 PM

https://tvtropes.org/pmwiki/posts.php?discussion=13179413600A26160100&page=2#44

Still for a bigger and strengthened Federal Government?

You exist because we allow it and you will end because we demand it.
kipz61 Since: Nov, 2010
#21: Oct 6th 2011 at 7:59:22 PM

"normal people on the Coasts"

You're implying that people hailing from the red states are somehow... what, abnormal?

Erock Proud Canadian from Toronto Since: Jul, 2009
Proud Canadian
#22: Oct 6th 2011 at 8:02:50 PM

[up]Politcally yes.

Practically, not really.

edited 6th Oct '11 8:03:04 PM by Erock

If you don't like a single Frank Ocean song, you have no soul.
kipz61 Since: Nov, 2010
#23: Oct 6th 2011 at 8:08:01 PM

I wouldn't say that they're abnormal politically either (misguided, perhaps?). In my experience, the politics of an individual seem to be formed more through peer pressure than anything else...

MyGodItsFullofStars Since: Feb, 2011
#24: Oct 6th 2011 at 10:44:05 PM

@Savage Heathen - somehow this thread got turned from "our state economies should work out mutual regional trade agreements to avoid undercutting each other" to "increase the power of the central government". I don't think encouraging regional cooperation equates to giving the federal government more power over our lives, unless you want to go off the deep end and just have a planned economy.

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