Book contents
- Frontmatter
- Contents
- Foreword
- Preface and Acknowledgments
- List of Contributors
- 1 Constitutional Issues in Modern Democracies
- PART I CONSTITUTIONAL THEORY
- PART II ELECTORAL SYSTEMS AND INSTITUTIONS
- PART III CONSTITUTIONAL ISSUES FOR A FEDERAL STATE
- 12 Ensuring a Stable Federal State: Economics or Political Institutional Design
- 13 A Proposal for Dynamic European Federalism: FOCJ
- 14 The Maastricht “Excessive Deficit” Rules and Creative Accounting
- 15 Subsidiarity, Federalism, and Direct Democracy as Basic Elements of a Federal European Constitution: Some Ideas Using Constitutional Economics
- Index
13 - A Proposal for Dynamic European Federalism: FOCJ
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Foreword
- Preface and Acknowledgments
- List of Contributors
- 1 Constitutional Issues in Modern Democracies
- PART I CONSTITUTIONAL THEORY
- PART II ELECTORAL SYSTEMS AND INSTITUTIONS
- PART III CONSTITUTIONAL ISSUES FOR A FEDERAL STATE
- 12 Ensuring a Stable Federal State: Economics or Political Institutional Design
- 13 A Proposal for Dynamic European Federalism: FOCJ
- 14 The Maastricht “Excessive Deficit” Rules and Creative Accounting
- 15 Subsidiarity, Federalism, and Direct Democracy as Basic Elements of a Federal European Constitution: Some Ideas Using Constitutional Economics
- Index
Summary
Beyond Traditional Federalism
The economic theory of federalism yields one clear and overriding result: a federal (i.e., decentralized) state is superior to a centralized one in the sense that it fulfills the demands of the citizens more effectively. A federal constitution that endows the federal units (provinces, Länder, states, cantons, or communes) with sufficient decision-making rights and taxing power has three major advantages over a unitary state:
Advantage 1: More Flexible Politics. In all societies, citizens differ widely in their demand for services provided by the state. These differences in demand are not only the result of heterogeneous tastes due to differences in tradition, culture, language, and so on, but also of unequal economic conditions. The latter are caused by, for example, leads or lags in the general business cycle and, of course, special structural conditions such as differences in infrastructure, unemployment, the concentration of particular industries etc. These differences in the demand for public services must be met by differentiated supply policies if citizens' preferences are to be fulfilled. Federal sub-units are best able to meet this challenge. The politicians in charge are better endowed with information about the local requirements. They have the incentives to provide these services according to the preferences of the citizens because they are directly accountable for the local policy and their reelection depends on the satisfaction of the voters they represent.
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- Information
- Rules and ReasonPerspectives on Constitutional Political Economy, pp. 237 - 257Publisher: Cambridge University PressPrint publication year: 2001
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