As a protector of individual rights, the performance of decentralized federalism is uncertain. If individuals are mobile across local governments, if new local governments can be easily established, and if local governments have full responsibilities for rights enforcement and policies, then individual rights to personal freedoms, political rights, and property rights are likely to be well protected. Nonetheless, a strong central government will be required to ensure an individual’s right to move freely, to allow new communities to incorporate, and to guarantee that each community can set and enforce its own policies. If free mobility, community formation, and community independence cannot be guaranteed by the central government, then local governments may become a source of oppression through “tyranny by a majority.” U.S. Southern states before the Civil War is one telling example. Decentralized federalism may also fail to ensure positive liberties. If protecting positive liberties requires the taxation of the more able to subsidize the less able — say to provide a subsistence income, basic shelter, or minimal education and health care — then a decentralized network of fiscally competitive local governments is not likely to succeed; this protection is likely to come only from a central government. But under decentralized federalism central government policy requires the unanimous consent of all local communities. Positive liberties are denied, now through “tyranny by a minority.”

The likely performance of decentralized federalism in fostering political participation is more encouraging. Available evidence reviewed by Dahl and Tufte (1973) from within country comparisons of political influence and political effort shows that citizens in smaller governments make a greater effort to understand, and have more success in understanding, local rather than national political issues. Further, citizen efforts to influence government is two to three times higher for local than for national governments. Political effectiveness or influence also increases as the size of government declines; Finifter (1970) shows a significant negative correlation between an index of political power and the size of government. Finally, locally elected legislatures are likely to be the most responsive to citizen preferences (Cain, et al. 1987).