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15 Cato J. 269 (1995-1996)
Federalism and Individual Sovereignty: Comment on Buchanan

handle is hein.journals/catoj15 and id is 273 raw text is: FEDERALISM AND INDIVIDUAL SOVEREIGNTY: COMMENT ON BUCHANAN Jean-Luc Migud James Buchanan has succinctly restated the Tiebout tradition of federalist analysis. The foremost contribution of federalist structures is to minimize political coercion in society and thereby to promote the advancement of human liberty. As Buchanan (1995/96: 260) puts it, competitive federalism ... is simply the extension ... of the market economy to the organization of the political structure. Although most economists, if not most observers, would agree that the entry and exit process is the determining feature of federalist structures, I feel obligated to bring out the limits of that arrangement in contemporary national federations. The downside to the competitive process as envisioned in idealized federalism, writes Buchanan (ibid.: 265), is that no existing political structure comes close to the ideal. As Buchanan argues, once constitutional limits to the power of the central government break down, as occurred in all federations in the last 50 years, the benefits of intergovernmental competition also evaporate. I now wish to argue that the consequences can be worse than monopoly government. Limits to National Federalism In the Tiebout analytical tradition, resource mobility through decen- tralization offers a substitute to, not a transformation of, the political process, as the instrument to discipline governments. Economic agents can choose the administrative location in which to place their assets rather than seek to influence government directly. Individuals and firms act in their capacity as asset owners rather than as voters or Cato Journal, Vol. 15, Nos. 2-3 (Fall/Winter 1995/96). Copyright @ Cato Institute. All rights reserved. Jean-Luc Migu6 is Professor of Economics at the Universit6 du Quebec. This paper is based on a presentation made at the Mont P6lerin Society's regional meeting in Cancun, Mexico, January 15, 1996. 269

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