Federalism: The Answer to Economic Crisis?

What is Federalism?

Federalism would refer to the compound or mixed mode of government, therefore, combining both the general government along with the regional governments within a single political system. It has a distinctive feature which is the relationship of the parity between two levels of government being established. In its simplest meaning, federalism is a form of government wherein there is a division of powers in between the two levels of government of the equal status.

There are majority of democracies all over the world having a unitary system of the government where the power is centered on the national government. In terms of federalism, there will be a written constitution that formulates the power-sharing arrangement in between the state and with the units as well. The said units would be referred as regional or provincial governments having the power to act independently with certain areas of governance. Say for instance in the US, the power is being shared between the regional or state and the national governments.

Federalism US Government

In addition to that, local governments are provided with exclusive powers in issuing licenses, providing public health, conducting elections, forming local governments, looking after the interstate trade and more. The said kind of political system was adopted in order to make sure greater autonomy and safety against the external and internal threats.

These days, federalism is being followed not only by the first world countries such as Australia, Canada, and USA but also by numbers of other developing countries such as Brazil, Mexico, and India. Along with that, Philippines and Sri Lanka are contemplating first the advantages and disadvantages of federalism before coming up with a change in the government set up. It is important that pros and cons of federalism should be scrutinized due to numbers of purposes particularly when it comes to addressing certain problems of a certain country like the most popular economic crisis. Indeed, there are numbers of countries and individuals also which belief that with federalism economic crisis could be alleviated. There are numbers of reasons behind that issue, and that should be tackled effectively.

But first, what is an economic crisis as well? It is important that before dealing problems like an economic crisis, knowing first what it definitely means might be of great help. Since many belief that federalism kind of government could be one of the solutions in order to address the economic crisis, being equipped with knowledge about the issue would be of great help. Economic crisis, in its simplest definition, is considered as when the economy of a certain country experiences sudden downturn due to a financial crisis. The economy that faces this kind of crisis might experience fall in GDP, dried up of liquidity and also falling or rising of the prices because of deflation and inflation. It could be of great challenge for a certain country to once economic crisis happens. But, on the other hand, it is a fact that this situation could particularly happen and good to know that there are numbers of ways on how to address it. That’s why many would say that federalism could therefore help.

Economic Crisis

Federalism might be a help or could also be a threat when it comes to economic situation of a certain country. It is a fact that federalism offers both advantages and disadvantages. And these could be associated to the economy of one’s country. To make it clearer and more understandable, consider the following points below:

  • Federalism could be a protection against tyranny and also runaway power. With this possible, there could also be of great possibility that an economy could avoid financial crisis since the government system might prevent it to happen.
  • There will also be an assurance of diffusing power in terms of federalism, and so power will not be centralized to only a single person thus everyone has the power to contribute in the economy of the country.
  • Federalism could be more efficient since the power is being dispersed into the states giving them the chance of solving whether there are simple problems, therefore, will not affect the entire country particularly the economy of the country. Conflict management is considered as of great advantage that federalism could offer.
  • With federalism, laws and policies could also be innovated. Through this, numbers of ways in order to come up with solutions on certain problem like economic crisis will definitely be considered. And so, economic crisis might as well be addressed.
  • Along with federalism, state governments are also becoming more responsive to the needs of the citizen, and this might include addressing needs with regards to the economic status of every citizen.

On the other hand, there are as well instances wherein federalism could lead to corruption, therefore, might continuously trigger economic crisis in a certain country. Uneven wealth distribution might as well happen when it comes to considering federalism. These instances might be of great factors that could increase more the chance that a certain country might suffer more with economic crisis. But, this could still be avoided or prevented based on those that are considered to be in the positions.

As we can see, there are numbers of countries that are into having federalism which could be considered as a country with lesser case of economic crisis. Indeed, it would depend on the country, whether into federalism or not, on how the economic crisis would be addressed and prevented as well.


Federalism: The Answer to Economic Crisis?

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