Decentralize The Government

From health care reform and transportation to education to the environment, the Obama administration has--from the beginning--sought to expand the power of the central state. The president's newest initiative to wrest environment, wage and benefit concessions from private companies is the latest example. But this trend of centralizing power to the federal government puts the political future of the ruling party--as well as the very nature of our federal system--in jeopardy.

Of course, certain times do call for increased federal activity--legitimate threats to national security or economic emergencies, such as the Great Depression or the recent financial crisis, for example.

Other functions essential to interstate commerce--basic research, science education, the guarantee of civil rights, transportation infrastructure, as well as basic environmental health and safety standards--also call for federal oversight. Virtually every modern president, from Roosevelt and Eisenhower to Reagan and Clinton, has endorsed these uses of centralized government.

But what is happening now goes well beyond the previously defined perimeters of the federal government's powers. Obama seems to possess a desire not so much to fix the basic infrastructure of the country but to re-engineer our entire society into the model championed by liberal academia.

There also seems to be a conscious design to recreate the country as a European-style super-state. Forged by an understandable urge to minimize chaos after a century of conflict, the super-state generally favors risk management through centralization of authority. This has traditionally been accomplished by ceding regulatory powers to national capitals, though lately more and more powers have been ceded to the European Union.

Initially the administration had hopes of imposing similar controls through acts of Congress. However, with the shifting political mood, this seems less and less possible. With its latest action the administration sends the message that it will now impose the desired results through the bureaucracy. Under the proposal, private firms that do not raise wages will be bullied into doing so through the manipulation of federal contract awards.

This marks a departure from our basic traditions. For most of our history the burden of expanding opportunity has rested with the private economy, albeit in conjunction with often necessary protections for workers and consumers. Now the overall control of the economy is shifting to Washington--from government contracts to ownership shares in companies like General Motors and much of the financial sector.

This new order would transform the very nature of American capitalism. Now the economic winners will not be those working for the most agile or profitable companies, but those who gain the blessings of the federal overlords. In some senses this extends the corrupt, largely failed political economy of Chicago politics to a bastard American form of French dirigisme.

Climate change provides another critical and necessary rationale for the expansive federal role. With the "cap and trade" system all but dead, the administration now wants to regulate energy and land use through the gentle graces of a largely unaccountable EPA apparat. As a result, we may see energy use, land use and transportation--as is increasingly the case in California--controlled by the whims of the unelected bureaucracy.

Such command and control approaches have their advantages in making people do what the mandarins demand. This is one reason there are so many admirers of Chinese autocracy now. In that regime, unlike our messy democracy, you can be forced to be green in precisely the way they tell you. There are always firing squads for those who go off the program.

Of course, even the most passionate centralists don't advocate adopting the Chinese model. But the notion of an enlightened super-state has long appealed to those disgusted with American-style muddling through. In some ways, the current fashion recalls Americans' attraction for the Soviet Union or even fascist Italy during the troubled 1930s.

Fortunately, most Americans do not appear ready for unbounded autocracy. This is particularly true outside the coastal urban centers. The Tea Party may have some cranky--even ill-advised--ideas, but they reflect a genuine--and broader--American preference for solving problems at the state or local level.

Indeed, Americans, including some on the left, are instinctive decentralists. We express this tendency physically, first in our decades-old movement to the suburbs, and increasingly to smaller towns and cities as well as rural areas. Even in cities like New York or Los Angeles, local neighborhood identity trumps ties to more grandiose visions of City Halls or regional bodies. The rise of the Internet and social networks has enhanced this decentralizing trend by providing instant linkages and helping ad hoc organization among neighbors.

Economic evolution mirrors this trend. Over the past few decades U.S. employment has shifted not to mega corporations but to smaller units and individuals; between 1980 and 2000 the number of self-employed individuals expanded 10-fold to include 16% of the workforce. The smallest businesses--the so-called micro enterprises--have enjoyed the fastest rate of growth, far more than any other business category. By 2006 there were some 20 million such businesses, one for every six private sector workers.

America's entrepreneurial urge, in contrast to developments elsewhere, has actually strengthened. In 2008 28% of Americans said they had considered starting a business--more than twice the rate for French or Germans. Self-employment, particularly among younger workers, has been growing at twice the rate of the mid-1990s.

The remarkable volatility within even the largest companies has exacerbated this trend. Firms enter and leave the Fortune 500 with increasing speed. More and more workers will live in an economic environment like that of Hollywood or Silicon Valley, with constant job shifts, changes in alliances between companies and the growth of job-hopping "gypsies." Although hard times could slow new business formation, historically recessions have served as incubators of innovation and entrepreneurship.

Much of the most dynamic and meaningful change takes place under the radar of both big business and government. The shift to greater localism can be seen in the growth of local, unaffiliated community churches, regional festivals and farmers markets. Bowling clubs and old men's clubs may be fading, but volunteerism has spiked among millennials and seems likely to surge among baby boomers. In 2008 some 61 million Americans volunteered, representing over a quarter of the population over 16.

No other major country exhibits this kind of localized, undirected activism. Such vital grassroots may become even more important as the country becomes more diverse. In the coming decades we will have to accommodate an expanding range of locally preferred lifestyles, environments, ethnic populations and politics. One size determined by mandarins in Washington increasingly will not fit all. South Dakotans and San Franciscans will prefer to address similar problems in different ways. Within the limits of constitutional rights, we should let them try their hand and let everyone else learn from their success (or failure).

Ultimately, we do not want to recreate the expansive mandarin state so evident in many foreign countries. Instead, we should focus more on family, community, neighborhoods, local jurisdictions and voluntary associations--what Thomas Jefferson called our "little republics"--as the most effective engines driving toward a better future.

This article originally appeared at Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.