(A) single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.
1 Federalism is about competition among the States. It serves not so much to empower the States but to discipline them.
2 Tax competition among States rather than tax collusion is an objective to be sought in its own right.
3 Reform consists in taking a bone from a dog. Philosophy won’t do it.4
The practical implementation of competitive federalism has been ignored, if not shunned by all parties both at federal and state levels. Labor hates the idea of federalism. Is it any wonder that Australian productivity rates for several years were stationary and are now shrinking. Long overdue is the need for rigorous fiscal discipline to be imposed through competition among the States. The aim of this essay is to show how competition between the states is an essential element in improving national productivity. To achieve this increase in productivity voters need to embrace the idea of limited Government. It is directly opposed to the present received wisdom of the ‘nanny state,’ where every ill or disadvantage is to be cured by Government.
As Goethe said,
‘the best government is that which teaches us to govern ourselves’