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What Can the Federal Government Do Better than the States?

We tend to think of “federalism” as being all about what the states can do better than a national government. What about things that the federal government can do better than the states? Professor John McGinnis discusses some examples of enumerated powers of the federal government, and why it makes the most sense for these issues to be handled at a national level. https://youtube.com/watch?v=FPbpB2ft86E


So one way of thinking about the enumerated powers in the federal government is they're really all about public goods that can't be as successfully done at the state level. What I mean by public goods are goods that markets cannot easily provide, because of free riding problems. A classic example might be defense, for instance. And for the same reason that markets aren't very good at providing defense, providing defense for the entire United States isn't very well provided for by the states. Because the states have free rider problems. In other words, they'd like to provide the least amount of money and get the most amount of defense. But if all the states do that, you're going to end up with very little defense of the realm. And that's why the public good of defense needs to be provided at the national level. Another kind of public good is the absence of regulations that interfere with trade on the basis of localism. Because one of the great truths of economics is that advantage of trade. And the states, on the other hand, may think that they can do better by limiting a trade. And so that's, again, why the public good of the absence of these barriers is best done at the national level. That's why they were elevated to the federal level, and that's why there needs to be government to do them.

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