The Competition of the States

I post this image here not directly to comment on the problem that is federal spending and debt (and be sure, it is probably the greatest threat to national sovereignty that this country faces, despite the shill protestations of the war hawks who are ever-ready to consternate us with threats of terrorists). I instead want to point out a shift of the relations between the states and national government around the early 20th century. It is notably around this time that national spending begins to soar.

What does this have to do with federalism? Frank Chodorov wrote in his book The Income Tax: The Root of all Evil that the income tax is what has allowed the national government to become the behemoth that it is today. The main point of the argument is that before the 16th amendment, the US government was not able to do much because it did not have many revenues. Relying on excise taxes can only get you so far. Once the income tax was instituted through an amendment (this, incidentally enough, was not the first time that an income tax was imposed on the country), the direction of this country fundamentally changed. Rather than being a generally free market economy that espoused the principles of classical liberalism, the US would morph into an essentially fascist country (allusions to Hitler can be ignored, as this country started to look much like Mussolini's Italy in the few decades after the income tax was instituted). Since that time, the military has greatly increased, taxation has increased, regulation has increased, and the size and scope of the national government has increased. As a result, economic production is down, we are much less safe (due to resentment from our global presence), and the prospect for increased standard of living in the future is greatly diminished.

The competition between the states and national government, it could be argued, is what guaranteed a small government and personal liberty during the 19th century. Since it has been eliminated, the check on the growth of government has been all but eliminated. This is not a new argument. Frank Chodorov made it decades ago, and Tom Woods recently made it in his book Nullification. The question now is how to restore this lost competition and regain our liberty that we have been robbed of.