Kitchen Table Economics

Federalism: Laboratories of Democracy

Recent reports reveal that a growing number of Californians are fed up with the state’s high taxes and bad policy. These disaffected Californians are now fleeing to states with low taxes, affordable housing, and friendlier business environments—among other attractive factors.

Similar stories are playing out in other states, including New York and Illinois. This shows why federalism is important.

Federalism is the framework that gives states the opportunity to enact their own policies regardless of others. This framework is often referred to as “laboratories of democracy.” This means states can try new social and economic experiments without bringing risk or harm to the rest of the country.

In this grand experiment, some states will enact good policies while others will enact bad ones. This should be viewed as a valuable learning experience that helps all states improve while discovering which policies are best—and which are best avoided.

This also safeguards against onerous policies imposed by the federal government—keeping many governing decisions at the local or state level.

By putting this check on federal power and allowing more local governments to investigate differing policy paths, we are all the stronger for it.