Securing the Fault Line of Federalism in Turbulent Times: Three Countries
Earthquakes don’t just occur in the ground beneath us. They can emerge unexpectedly in our personal lives, communities, or society. On a grand scale, they can threaten the most critical sectors that make a society. In today’s dynamic and turbulent times, we feel these earthquakes. Personally. Nationally. Globally. Today, I would like to focus on the Government sector. Speaking of the U.S., J. Edwin Benton states,
“Considerable pressure continues to build up at the fault lines of governance inherent in the country’s unique federal form of government.”
Many forces have contributed to this pressure, affecting us personally while also tugging at the foundations of government balance and stability:
— The COVID-19 global pandemic that calls for a unified federal response, and which has accentuated so many other challenges
— Economic inequalities that either push us toward government intervention or hyper-local community control
— Financial insolvency often at the state and local level resulting in a demand for federal funds and the need for further oversight
— A battle over who should decide on regulations that affect traditional vs progressive values
— A lapse in corporate responsibility through self-governance that forces government to play a greater role
— Populism and challenges to democracy that incite a frenzy to increase federal and often specifically executive control
In the U.S. and abroad, these forces are challenging the balance between the unified national strength that protects freedom, and the local self-determinism that defines it. There is a tug-of-war between these centers of power within our society, and our ability to continue benefiting from them depends on our ability to stabilize this fault line in the midst of turbulence.
What do we do about it? Well, first, we need to step back and understand the system itself. If we understand how the system works, we can understand its impacts and begin to make the right moves.
The Federalist Balance
In the late nineteenth century, French politician Pierre-Joseph Proudhon postulated that the twentieth century would see the establishment of numerous federations around the world. He was right. Some of these federations, however, suffered an unwelcome fate. Within the same year (1989), the federations of Czechoslovakia, Yugoslavia, and the Soviet Union all disintegrated. The Soviet Union had been declining near the end of the Cold War, Czechoslovakia experienced the non-violent Velvet Revolution, and Yugoslavia suffered the worst fate in the midst of its violent conflicts and wars.
In light of this common fate, we should ask a few questions:
— What would motivate a state to choose federalism?
— What does successful federalism look like?
— What is the impact of this system in today’s world?
—What are the common threats to the stability of federalism?
— And what are the right moves to make when its fault line is most vulnerable?
To answer these questions, I will provide a brief account of three of the world’s most prominent and successful federalist states — The United States, Germany, and Brazil. Beginning with the basic structure of American federalism, I will highlight distinctions in the German and Brazilian models. I will discuss impacts of these federal systems, those they share in common and those determined by unique aspects of each state. We will see that though federalism can be a risky undertaking, it can also be a bedrock of unity, liberty, and empowerment. Finally, we will peer into the bucket of challenges collected throughout, in order to assess what actions could be taken to solidify the balance and stability of federalist states in turbulent times.
The Heritage of Three Federalist States
The United States was founded as a confederation in 1776, through The Articles of Confederation that declared each state would operate independently. In 1787, this was replaced by the U.S. Constitution, which strengthened the union between states while giving greater powers to the federal government. This change only occurred through significant effort, largely by Alexander Hamilton and James Madison via publication of The Federalist Papers, which helped convince the states that a more powerful federal government was necessary to overcome limitations experienced during the confederacy. States’ initial resistance to this change stemmed from ideals at the heart of American federalism: Promoting cooperation among colonies, valuing democracy on a local level, and protecting individual liberty (1). In the American mindset, a unitary state would have been distasteful and even contrary to these ideals.
In particular, these ideals demand a clear division between federal and state powers. The federal government is delegated many of the powers you would expect: Foreign policy, international trade, national defense, the printing of money, and implied powers through the “necessary and proper” clause of the Constitution, which grants broad powers as needed. States hold concurrent power with the federal government to tax, to regulate commerce, and to pass, enforce, and interpret laws if they do not violate the Constitution. Powers reserved primarily for the states include education, intrastate commerce, and police powers (3). As the holistic protection of states’ rights and local democracy, the 10th Amendment to the U.S. Constitution clarifies,
“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
This “dual federalism”, in which states hold all power not explicitly given to the federal government, evolved into a more cooperative federalism as part of Franklin Roosevelt’s New Deal in the 1930’s. It involves a strict division of powers while requiring significant informal cooperation among federal, state, and local government, all of which acknowledge federal supremacy. Later, Ronald Reagan’s new federalism of the 1980’s enabled states greater freedom for self-determination in commerce and finance (5), which demonstrates the continual push-pull between federal and state authority.
In contrast to the American model, German federalism is most notably distinct in its “interlocking” powers between the state (“Lander”) and federal levels. Unlike the United States, German representatives to the upper house (“Bundesrat”) are instructed how to vote based on their own state’s local priorities, and are required to vote as a block with representatives from their state. In other words, rather than a strict division between state and federal legislature requiring them to act as direct representatives of local populations, they are indirect representatives instructed by local (state) governments. This system reflects Germany’s heritage. As several decentralized dynastic territories were unified under Otto von Bismarck, many ruling elites in those territories wished to retain more direct power over representative decision-making (6).
This same heritage has helped define the German model in other ways, such as local authority over issues of arts and culture, regional planning, and public school curriculums. Though most federalist states around the world have imitated the American model, both the European Union and South Africa have chosen to adopt the German model (4), with its formal hierarchies rather than the U.S. system’s informal web of relationships.
Similar to the U.S. experience, Brazilian federalism has evolved through a tug-of-war between centralized power and territorial self-governance. Following a military coup d’état that shifted rule from monarchy to a presidential and federal system, Brazil’s government was initially defined by a weak central government and strong rule by territorial governors. In extreme shifts of power, Brazil later experienced two dictatorships (1930–1945 and 1964–1985), before returning to federalism (8).
The evolution of Brazilian federalism has largely mirrored the Catholic authoritarian traditions in Latin America, desiring central powers to have more direct control of its vast territories via local authorities. For example, a distinction of Brazil’s model is the existence of just one parliamentary body, in which Senators have at times served only as voices of assent to centrally-dictated policies (7). This flow of power seems to be the reverse of Germany’s locally-driven mentality.
The tug-of-war continues, however. The inefficiencies of over-centralized government in a state with expansive territory, and the bottom-up pressure of those territories to institute their own policies, especially regarding commerce, periodically shift the balance back toward greater territorial authority. The greatest impediment to this shift has been poor coordination of fiscal transference in order to execute local and regional policies, a result of Brazil’s developing economic environment. Still, federalism remains strong in Brazil (8).
The Impact of Federalism
In the constant push-pull between local and central authority, federalism offers balance. As we have seen, though, this balance ebbs and flows over time. When executed well, it continually seeks to harmonize local autonomy and responsiveness, with national unity and strength. The former satisfies the human drive to govern their own affairs, while the latter provides advantages such as a common defense and economies of scale in both trade and international affairs.
Additionally, this division between federal and territorial power increases accountability, both through direct representation, and through power distance as a check against bad leadership or bad policy. A common criticism, however, is that this separation of powers is a fault line between levels of government, which impedes efficiency and intensifies conflicts (3).
In the U.S., coordination between state and federal bodies is largely informal, which creates uncertainty and results in personal disagreements on how to proceed. Fortunately, the innovative nature of the U.S., combined with its federalist structure, enables “social laboratories” of local learning, in which policies can be tried on a smaller scale before potential adoption on a federal level (5).
In contrast, Germany’s more formalized system of interlocking powers creates a unified position among state (Landen) representatives. However, this can create federal gridlocks because representatives are not flexible to form coalitions, as they are beholden to the wishes of their state governments (6). Further, while this system makes it easier for a few people to become power brokers, concentrating power to control the game, it also creates alignment among levels of government that enhances transparency and trust.
Culturally, distance between governing bodies, such as in the U.S., can be a “pressure valve” to release tension on local issues addressed locally. Yet, this can also reinforce cultural identities within particular states, further accentuating strife that may later rise to the level of federal concern (3).
For the three Eastern European states mentioned at the outset, cultural tensions were rarely higher than at the point of their dissolution. In fact, context has much to say on the impact of government structure. The communist economic structure and political philosophy of these countries contributed significantly to their destabilization and collapse, before federal structures were able to influence the evolution of state institutions.
While Brazil does not have a history of communist ideals, it is a developing political economy as were the failed states above. This developing status means political and economic instability, which increase the risk of a wealth or power grab by people or parties seeking personal gain. The top-down flow of power in traditional Brazilian political culture also delays the positive impacts of federalism on various institutions that could otherwise create needed balance, stability, and investor confidence.
Specifically, Brazil faces the challenges of obscured accountability and a lack of empowerment. First, states may in some cases have the authority to disburse funds as they see fit. However, due to the economic instability in Brazil and a lack of coordination, the funding often does not follow program mandates. These “unfunded mandates” are common to federalist systems elsewhere, but are particularly acute in a developing nation (8). This leaves states without the necessary resources to create needed change, or to deal with major issues swiftly and powerfully.
Second, while Federalism generally provides for greater accountability of local to federal and vice versa, this is not always the case. As more authority is allocated to the states in Brazil, there is also greater vulnerability to political distortion by special interest groups. This is enhanced by the weakness of political parties in Brazil, making it tougher to limit other (often negative) influences on political decisions or monitoring. One such example is the lack of monitoring police power in Brazilian states, which often results in abuses of police power, creating distrust among the people (7).
By identifying the impacts of federalism through the lens of three of the world’s largest federalist states, we have seen how federalism can be a unifying and empowering force, or it can be an impediment to a developing political economy. In the three Eastern European cases, it can also be a ticking time bomb overwhelmed by inherited political, economic, and social context.
Of what use are these insights, today?
The Moves We Make
We can survive the earthquake, and come back even stronger. We can do this — intelligently, humbly, boldly.
Intelligently. Despite efforts to implement a stable federalist structure, the three federalist states that failed in 1989 exhibited at least three major contextual factors leading to their collapse:
— Authoritative “top-down” political philosophy that leads to imbalance (inherited from communism)
— Extreme economic tension (inherited from communism)
— Significant cultural tensions (stemming from these and other factors)
This tells us two things. First, it will be critical to keep in mind where federalism is an appropriate structure for developing political economies. Implementing a new federal system will be difficult in a state that suffers from one or more of these factors. Therefore, it should be weighed with care and consideration of risk factors, such as how well it could be implemented with accountability and empowerment.
Second, as successful federal systems feel pressure building in the fault line, government stability requires intentionality in regard to political, economic, and social factors in order to maintain balance and steer clear of catastrophe, or of a forced choice between reduced freedom or reduced strength and unity.
Thankfully, Brazil, Germany, and the U.S. all have strong capitalist ideals that protect against the communist idea of federally-controlled production and its effects.
Unfortunately, each suffers from cultural tension related to regional differences. Brazil’s regions have vastly different and often conflicting priorities, such as habitat protection in the Amazon region, and economic development in the urban south. German tensions largely stem from the influx of immigrants over the past decade. While compensating for the decline in the native German population, this trend also creates discomfort as immigrants and native Germans try to build mutual trust and find a new normal. In the U.S., present tension comes from historic social and economic inequalities between European and non-European immigrants. It also flows from diverging regional economic experiences as a result of globalization and technological progress, a fierce debate about values and priorities in a changing world, and a resulting “us against them” political rhetoric. The economic impacts of COVID-19 have exacerbated these tensions in all three countries.
Politically, each suffers from imbalance along the fault line of federalism. The primary driver in Brazil is economic instability, in Germany is the interconnected political system, and in the U.S. is the aforementioned cultural tension. To benefit from the best traits of federalism, each needs to find a balance of power and relative stability along the fault line.
As an “emerging” political economy, Brazil is impacted more significantly by changes and challenges than either Germany or the U.S. The driving forces are felt more deeply, though less visible on the world scene, and drive a deeper wedge into fault lines between parties, regions, or levels of government. As a result, Brazil finds itself under immense pressure to exert political control, oscillating far more drastically between territorial and (most recently toward) federal power, in order to respond to those challenges. These oscillations cause Brazil to suffer from the worst of both worlds: Limited accountability to protect against political distortion when and where states have power, yet limited trust and empowerment when and where the federal government has power.
To combat this fate, Brazil must find a way to increase territorial power, despite its top-down political heritage, in order to prioritize local issues most necessary to the local population. This will re-establish political balance while helping ease cultural tensions, as people feel confident their voice is heard on the issues that matter most to them. Brazil’s federal government must also learn from other countries how to effectively coordinate fiscal support for local projects, vastly reducing the quantity of unfunded mandates. Further, it must increase coordination of accountability programs to ensure projects and funds are used appropriately, free of political distortion from self-interested groups. This increased local control, coordination, and accountability will reduce cultural tension, help establish political balance, and grow investor confidence in Brazil to enhance its economic growth and stability.
As Europe’s most efficient and productive economy, Germany’s system is certainly more stable, relying on production for its short and long-term stability. Additionally, Angela Merkel has held together a governing coalition for the past fifteen years, with consistently high public approval ratings. Its cultural tensions are real, however. Without such a strong coalition, Germany’s formal interconnectedness in which local priorities drive federal politics, tends to result in inflexibility that can stall local and national priorities. In that reality, future tensions on the scale of 2020 could result in a firestorm of gridlock and backlash.
Therefore, Germany’s greatest challenge will be when it needs to find a successor to Merkel or her coalition, without losing its ability to circumvent gridlock while maintaining German ideals. To do this, the country will need to either maintain its current coalition with new leadership, leverage it to transition from strength to strength while maintaining German ideals, or find a systematic way to break through gridlock quickly in the future when such tensions arise.
The U.S. is somewhere in between — far more economically stable than Brazil, yet experiencing a significant increase in tension between levels of government. Pressure is mounting to meet today’s challenges with the assumed panacea of increased federal government regulation, mandates, and control. The informal relationship between levels of government only increases tension on matters too grand to be solved locally.
Dr. Thomas Hueglin stated,
“The overall impression of federalism in the United States… is one of enormous continuity and stability. American politicians rarely raise fundamental questions about whether a constitutional document that is more than two hundred years old still serves the needs of its citizens in a world of rapid global change. …Despite a growing trend of regional multicultural fragmentation, American federalism remains firmly embedded in its commitment both to the primacy of individual rights and a strictly territorial organization of politics.
…Americans instinctively know that the system of horizontal as well as vertical checks and balances works in protecting them against any excessive and lasting abuse of power.”
Cultural, economic, and political tensions have pushed even these absolutes into the limelight, where the relevance of the Constitution, government checks and balances, and the primacy of individual and state rights are increasingly questioned. As uncertainty rises, public pressure builds for the federal government to step in as arbitrator, financial lifeline, or ultimate authority on each matter. And as power shifts in one direction, a sense of imbalanced priorities grows, and political pressure builds in the fault line.
Whereas stagnating economic growth drives political imbalance in Brazil, and political gridlock in Germany, cultural tension is driving it in the United States. Regional and racial cultural identities and economic inequalities rock the boat, all-the-more due to COVID, so they must be acknowledged and addressed to ensure stability. Culturally, people-groups whose voices have been historically ignored must be offered a platform for their voices to be heard. This will have to happen on a local level, though all leaders can help set an example and contribute to constructive public discourse.
Economic inequality and political polarization contribute to this tension as well. Hence, social grievances cannot be addressed in isolation. In the most innovative large economy in the world, generating economic solutions that address inequality should not be too big a challenge. Strategic incentives can help attract the necessary capital and talent to accelerate this process and even the playing field. This is not only the right thing to do, but it brings stability which is good for the whole of society.
Similar incentives, particularly from the federal government, could help ensure balance is maintained between levels of government. Government incentives, rather than regulation and control, can be used to prompt state and local governments to effective leadership in areas such as addressing racial tensions and managing tight budgets efficiently. They must include an element of mutual accountability to ensure they are vehicles of empowerment, not of control. Though in effect working against its own aggregation of power, these incentives by the federal government would serve to formalize, in a different way, the relationship between levels of government.
Humbly. To stabilize the fault line of federalism, and to benefit from the system’s positive impacts, we must learn to live in the tension. We lose so many benefits if we push all responsibility and authority onto one level of government. Instead, we must hold things together. Even when it gets messy, we can remember why we chose this system, and therefore the need to heal imbalances. As with any other fault line or divide, this means sitting at the same table, listening to and learning from one another (realizing we may not always be right), and collaborating or compromising to maintain the principles and systems that sustain our way of life (realizing we may not always get our way).
Boldly. If you do not hold up your side of the tent, you get a lopsided tent. In the governance sphere, imbalance reigns as a result, the “other side” controls the game, and everyone loses when balance is lost. Everyone loses when balance is lost. In a federal system, many benefits derive from maintaining an effective balance between federal and local authority.
Proceed intelligently, using these and further insights. Lead through the beautiful balance of humble collaboration and a willingness to fight for what you believe in. This approach is our only hope to “win” the game, securing the balance that holds our system of governments together across fault line such as this.
Additional References
1. Taylor, Jeff (2013). Politics on a Human Scale: The American Tradition of Decentralism. Lanham, MD: Lexington Books.
2. Faguet, Jean-Paul, Fox, Ashley M. and Poeschl, Caroline (2014). Does decentralization strengthen or weaken the state? London: Department of International Development, London School of Economics and Political Science.
3. Gerston, Larry N. (2007). American Federalism: A Concise Introduction. London: M.E. Sharpe.
4. Hueglin, Thomas (2015). Comparative Federalism. Toronto: University of Toronto Press.
5. Katz, Ellis (1997). American Federalism, Past, Present, and Future. Washington, D.C.: Issues of Democracy, The U.S. Information Service Electronic Journal.
6. Leonardy, Uwe (1999). The Institutional Structures of German Federalism. London: Friedrich-Ebert-Stiftung.
7. Samuels, David, Abrucio, Fernando Luiz (2000). Federalism and Democratic Transitions: The “New Politics” of the Governors in Brazil. Sao Paolo: University of Minnesota and Pontifica Universidade Catolica.
8. Selcher, Wayne A. (1989). New Start Toward a More Decentralized Federalism in Brazil? Elizabethtown, PA: Elizabethtown College.
