Getting Liberal Federalism straight

There is a fascinating article in the NYT Sunday Book Review on what essayist Franklin Foer describes as liberal federalism. Now my long-time readers will know that I have used this phrase for one of my pet ideas, namely developing a new model of government policy-making that makes the states part of the process. Foer's piece has a very interesting background on the history of the left and federalism. He traces left-wing defenders of states rights from Jefferson through Brandeis and Wilson to the 1960's communitarians and Bill Clinton. The basic idea of liberal federalists is that state governments are more open to popular participation and hence are more democratic than centralized D.C.-based bureaucracies, and that the government should defend small businesses and small towns rather than just selling out to big corporations and focusing exclusively on cities.

Foer also describes the liberal nationalist vision (I'm really not that crazy about his label!) founded by Herbert Croly, who Foer describes as a complete elitist in favor of essentially emasculating state governments. This perspective (according to Foer) was embraced by FDR and the New Frontier/Great Society liberals.

The implication of Foer's piece is that Democrats would be well-advised to concentrate their efforts on state governments rather than the nation. Now while I agree with the essential thrust of the article, Foer suggestion is far too simplistic. Of course Democrats should use federalism on social issues, because it takes them off the national table. And of course we need to make the states more of "laboratories of democracy" again. But Foer is missing the real nature of a new liberal federalism.

What Foer fails to understand is that an exclusive state-centered focus would be just as disastrous, and accomplish less substantively, than the Washington-centered obsession. This is so for two reasons: first, the national government can still easily pre-empt state policy, so if we concede Washington to the Republicans they will just neuter everything we do. Second, Foer's version of liberal federalism fails to address the key problem with decentralization, namely the "race to the bottom." States have a strong incentive to cut social services in an effort to attract business. Any state-centered liberalism has got to find a way to grapple with this phenomenon. Just saying "let's shift power to the states" is really just a way of cutting social programs. Which is why Republicans are always for it.

The fact is that Croly (and the nationalists) had a point on the real problems with allowing states to control domestic social policy. He was too tough on the competence of state government - they were incompetent and corrupt at the time, but he had the typical and misguided Progressive response of destroying an institution rather than reforming it (like they did with political parties). But Croly was right about the poor incentives and limited capacity that states have to tackle the big issues. I mean really, could Kansas have dealt with the Great Depression all on its own?

The plain fact is that state governments don't really have the resources on political muscle to push through major change. Which is where my version of liberal federalism comes in. It is in fact a synthesis of the nationalist and federalist visions, in which the national government uses its power to establish broad policy positions and supplies resources, leaving the states and local governments to work out the details. This gives to each level of government a responsibility for which it is capable. The D.C. govt is bad at detail, and the states are bad at priorities and money, so we can combine the two. It calls not for a myopic focus on one's own back yard or the destiny of the whole country, but cooperation horizontally across state lines and vertically between national, state, and local political institutions. It is, to turn Croly on his head, to use Jeffersonian means to Hamiltonian ends.