Research Handbooks in Law and Economics series
Edited by Daniel A. Farber and Anne Joseph O’Connell
Chapter 6: Federalism and Public Choice
Roderick M. Hills, Jr 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’,1 then the articles in law, political science, and public economics that refer to public choice concepts number in the thousands.2 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.3 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 (Cornell 1999). 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...
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