Ilya Somin makes a great point about federalism:
Hitler and the Nazis rightly saw German federalism as an obstacle to the realization of their aims - which required a highly centralized state. And it is not surprising that they quickly stripped the German states of most of their authority after taking power in 1933. Other things equal, a totalitarian government is more difficult to establish in a federalist state than in a unitary one, because in the former state and/or local governments will retain greater ability to resist a totalitarian movement that comes to power at the center. If the totalitarians are unable to stifle the autonomy of state governments, then their vision cannot be fully implemented, even if they remain in power at the center. In Hitler's words, federalism makes it harder for a totalitarian movement to "impose its principles on the whole . . . nation." Furthermore, relatively autonomous state and local governments might make it more difficult for the totalitarians to seize power at the center in the first place.
There's more to it than that, but first things first. This comment on the page provides a prima facie counter to Somin's argument that actually ends up falling apart upon closer inspection:
Fair enough, but let's remember that federalism also makes it easier for smaller regions of a country to impose authoritarian restrictions on their people. A strong central government may be the only way to deal with that.
The commenter was referring to Jim Crow laws that were ultimately ended by Brown v. Board of Education of Topeka Kansas. The fault in this argument is the fact that a smaller authoritarian state is much more easily brought down than a large one. The end of segregation was largely possible because two cultures could exist within the same nation and compete through non-state means since the federal government left them to be at least somewhat autonomous. The civil rights movement was helped in no small part by the fact that blacks could leave the Jim Crow states without leaving America, and thus add to the political power of non-Jim Crow states over the ones they left. Such could have lead to a second civil war if all of these decisions had to be decided for all parts of America by a single government because every decision would have been more contentious.
The great genius of federalism is that it is at heart an engineer's solution to political problems. It works in practice because it creates areas of specialization, and it's been widely established that most things, ranging from mechanical products, to software to bureaucracies work best when they have small, discretely areas of responsibility. Imagine how bad the FBI's bureaucratic problems would be if it were in charge of managing the 700,000+ local and state police officers currently in uniform in America. The smaller the jurisdiction, the narrower the mission, the more likely the government agency will be to stay focused and execute its responsibilities well. This is clearly the antithesis of the totalitarian state which is only concerned with power, efficiency and total control.
One last thing to consider is the Electoral College. It is one of the last pure vestiges of federalism left in America. Its purpose is quite important to the territorial integrity of the United States. While it serves as a check on the democratic process on the one hand, it decreases the risk that smaller states might decide that their interests are being steamrolled by larger states and thus leave. Considering the fact that most of these states are between the large population centers on both coasts, getting rid of the Electoral College could end up fomenting secessionist ideas in "flyover country," splitting America into several countries in a moment of crisis. Not to mention the fact that some states, such as Louisiana, which are fairly small have some key strategic assets such as ports that are invaluable to the larger states.
When the Kennedy Clan sat at the Dinner table, Big Daddy Joe would randomly point at one kid and say, "Tonight you're Madison" and say to another, "Tonight you're hamilton". He would then instruct the participating children to argue the merits of the Federalist papers.
When President Clinton V2.0 suggested shortly after the 2000 elections creating direct election of the President, Ted dy admonsihed her by telling her, "It wouldn't be fair for the small states who entered into our Federal Compact to change the rules now."
How sad such things occur no more at the Dinner table, for those families whom still dine together...
That was probably motivated in part by the knowledge that half of the "liberal states" in New England are starting to lose population to the "red states." I don't think he'd like Massachusetts facing a state like North Carolina or Virginia in ten to twenty years because our population would shift decisive control away from these states at the rate that we're having kids.
I think he is also aware, regardless of whether or not he wants to admit it, that the red states would not long suffer being run rough shod by states like his and that the electoral college puts acceptable limits on democratic excess. The solution that I see as being the best for our country is parliamentary election of the Presidents by an extension of the Electoral College. What I mean by that is have a permanent Electoral College regulated by the states the way senators used to be and they exercise a daily right to bring a vote of no confidence against any appointee in the executive branch or the President himself.
That government which governs least, governs best. It is true, Mike, that smaller, federalist States (back when we actually had 'em, and when people knew what "federalism" was, instead of thinking it merely a synonym for Big Bro) are easier to leave, and go elsewhere.
There is another point to remember as well:
None of them had the power to print money - or make "any Thing but gold or silver Coin a tender in Payment of Debts".
It took a bigger, de-federalist Union both put a wooden stake into the States, and honest money.
It's a good example of how a lot of so-called "political scientists" do not in fact consider things from even a remotely scientific view. Federalism provides a perfect opportunity for those who have an empirical eye for politics to conduct experiments without the boundaries of morality and decency. If one state wants to do something, it need not necessarily have any impact on the rest of the union. The other states can merely watch and learn from the attempt by the other state(s).
I think the paper money issue was more of just a matter of time. People would invariably want access to easier money.