Arnold Kling, blogger at Liberty Fund’s EconLog, posted the following interview with Michael Greve on fiscal federalism and other insights from his upcoming book, The Upside-Down Constitution. Greve’s thoughts on this subject can also be read in the three posts he did on fiscal federalism recently.
Below is an excerpt from a video conference with Michael Greve, Reihan Salam, and me on the problems with fiscal federalism in practice. The full half-hour video is here. And, yes, I also created a podcast.
It is a good discussion, but quite depressing. A naive view of federalism is that it encourages robust competition at the state and local level. Unfortunately, the reality is that competition gets suppressed, and the incentives are rigged in favor of government expansion.