The question of whether “federalism” as handed down to us by those who founded this country, seems odd. We have not seen any practical application of it for years.

“Restoring the Constitution” is a phrase that is catching on with people as the influence of the tea party has grown. So is “federalism,” as people lament a national government that seems to have become out of control and is spiraling our nation into a downfall. But many also wonder what, exactly, do these concepts mean?

Many have dropped the term “conservative” altogether, because there is really very little left to “conserve” these days. Taxes, regulation and spending are out of control and the other institutions that have supported our liberties are either being abused or are in decline. Is it any surprise that the conservative message falls on deaf ears? The U.S. is on the fast track towards a country that is heavily controlled and lacking in liberty. We need a different paradigm to put our nation back on track. That is where the term “restoration” comes to mind. The United States has lost sight of the things that have made it among the most free and prosperous country in the history of the world.

To “restore the Constitution,” we would have to review at the things the government can and cannot do according to our founding document. Article I, Section 8 lists the 17 powers specifically enumerated to the federal government. All of these things are important and the government’s function in these areas was suppose to be strong, in order to protect the liberties of every American. Some of the things allowed include standard weights and measures, coining money, post offices and post roads, the protection of intellectual property and a national defense. Beyond these and a few other very specific items, there was not much for which the federal government was responsible when the country was founded.

So how did new medicines get regulated? How would certain industries be licensed? What about the many other things done today by the federal government, who would do them? This is where we get to the idea of “federalism.” You see how it was designed to work clearly in the Tenth Amendment of the Constitution: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” That word, reserved, speaks of exclusivity. This was not a preferential view of public policy (“it would be best if the states and people took care of these things”), but a mandate (if it is not listed in the U.S. Constitution, it is for the states and the people).

The vast majority of regulations that exist through our state governments came into place from states watching the works of one another. With the many states, our country had a vibrant laboratory with new ideas being brought to the surface and each state emulated those laws that worked best. This system worked very well. As the rest of Western civilization largely limped through the 19th Century with stagnant economies and governments in excess, the U.S. was a vibrant powerhouse that focused on industry and innovation. Government did not get in the way, but largely cleared the way for progress.

The ideas behind this system are both simple and profound. The state governments had virtually unlimited powers, but limited amounts of money. It could not “print money” to fund its programs, because only the federal government had the power to do such. On the other hand, the federal government only had 17 powers and it had no reason to use inflation as a vehicle to fund its programs. This contributed to the value of the U.S. dollar remaining constant from the era of the founding until the early part of the 20th century (during the New Deal we began to devalue our currency to pay for “extra Constitutional” or unconstitutional government programs).

Money was not the only restraint put on the states, but also good old fashion competition. If any one state became too excessive in its regulations, taxation, generosity in social spending, or in any other way, people could (and would) vote with their feet to go to places with more fiscally responsible environments. During the early 19th century, the Whig Party’s “internal improvements” program (very similar to earmarks today) had a devastating effect on state budgets around the country and led to significant migrations nation wide because of the high taxes that followed. In no time every state, except for Massachusetts, had prohibitions against such programs placed in their constitutions. Since people could leave states because of policies that were economically harmful, all states tended to demonstrate much more restraint in their spending and regulations, which led to greater prosperity for the nation as a whole. There was a competitive political and economic environment around the states, with all of the governments holding the others accountable because of the possible loss of residents and the taxes they pay.

Federalism works. It is in decline today only because of the appetite and ambition of the federal government. The national failures seen through out the federal government today — inflationary monetary policies, unemployment out of control, and a debt growing exponentially — are all very eloquent arguments for restoring both the Constitution and federalism.