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.

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