Federalism and Liberalism: A German Perspective

By Ronald Meinardus

The ongoing political debate in the Philippines regarding the change of the constitution focuses on procedural matters and the aspired form of government. While proponents of the revision argue that the presidential system is potentially a hazard for the political stability of the Republic, more cynical observers suppose the whole cha-cha-move is just a ploy of an individual politician aspiring for power as a prime minister elected not by a popular but a parliamentary vote. Whatever way one sees this, the ongoing debate is - as one columnist of this paper wrote a few days ago – proof “that the present structure is not working”.

From a structural point of view, more important than the choice between the presidential and the parliamentary forms of government I find the degree of political centralization, or put differently: the extent to which the central authority has devolved political and other powers to the local and regional levels.

Regarding local autonomy, the Philippines has moved a good way ahead in political devolution. While the implementation of the Local Government Code may – as one hears – have not been as successful as originally aspired, the legal framework of Philippine local autonomy has become a benchmark far beyond the shores of this land. I remember organizing seminars and workshops on local autonomy in South Korea some years ago; my Korean partners were keen to invite Philippine resource persons and learn from them how local autonomy was promoted in this part of the world.

This instance shows that also regarding the sensitive issue of domestic political and constitutional debates it is not uncommon to look beyond ones’ own borders and learn how other societies have tackled – and in many cases solved – similar issues. Interestingly, in the ongoing constitutional debates in the Philippines my own country Germany has become an important point of reference. I can think of more than one reason for this. Without wanting to sound too patriotic, Germany does indeed posses a fine constitution that has guaranteed political stability and democratic rule in that country ever since its inception after the catastrophe of World War II in 1949. But, then, many other European (and non-European) countries have an even longer history of stable democratic rule based on a well-devised constitution. Therefore, I would suggest that the impact the “Grundgesetz” – or German fundamental law - has had on the constitutional debates in the Philippines is mainly due to the role played by the German political foundations in this country. These institutes are involved mainly in the filed of civic education aimed at promoting democracy and the rule of law. On several occasions, they have confronted their Filipino partners with the constitutional traditions and practices in the heart of Europe. As we can now see, these intellectual exercises have not been without impact.

Central to the German constitution is the notion of political decentralization and, therefore, federalism. In the following, let’s take a closer look at what this means in practice, before tracing the fundamental ideological roots of federalism.

“The Federal Republic of Germany shall be a democratic and social federal state.” This is one of the key paragraphs of the German constitution, as it establishes the principles the state is based on. The writers of the constitution deemed federalism so important that they included this provision among the few elements that are not amendable under any circumstances. Federalism has long become a part of the Germans’ political culture. Often, we refer to our country simply as “die Bundesrepublik” – the Federal Republic. This shows how central the concept of political decentralization has become for us.

In Germany, the 16 federal states have substantial authority. The citizens of the states do not only elect their own state parliaments, who then choose their own state governments headed by veritable prime ministers. Importantly, these politicians wield genuine political power. They are responsible for all affairs pertaining to culture, internal security, the media, local government and regional taxation. In addition, the “Laender” have a significant say in national affairs.

Like the Philippines, Germany has a bicameral legislature. But unlike here, the members of the Upper House are not elected on a national level. The Federal Council, as it is called, is more like the Senate in the United State, representing specific regions, in our case, the regional governments. In the legislative practice, a majority in the “Bundesrat” has the right to block all laws that directly or indirectly affect the interests of the regions. According to estimates, more than fifty percent of federal legislation is conditional on approval by the regional entities.

“Federalism” denotes a form of decentralized government, where – in legal terms - the component parts of the federation (be they states, provinces, laender or cantons) possess statehood of their own that in some cases have existed prior to formation of the federation. There are other cases, were a federal state was created by the devolution of power from a previously centralized government.

The underlying principle on which every federal constitution rests is the principle of subsidiarity. This stipulates that decision making power should rest as close as possible to those it affects. This is obviously a fundamental liberal principle which reaches far beyond the constitutional structure of the state. Freedom is the supreme principle of liberalism, which is just another term for self-determination or autonomy. If liberals speak of freedom, they first and foremost think of the freedom or the autonomy of the individual. Accordingly, liberals believe that the right to make decisions should first and foremost rest with the individual.

In a political or collective context, this is not always possible for practical reasons. For instance, we cannot decide individually on which side of the road we would like to drive our cars. Still, the autonomy of a small group leaves more freedom with its members than that of a large group as fewer fellow-members engage in the decision-making process. From a liberal standpoint, therefore, wherever collective decision-making is unavoidable, this should be exercised in the smallest possible unit. Consequently, any delegation of power from smaller to larger units should be subjected to the burden of proof that the smaller unit is unable to cope with the problem in question. In practice, this means that all those matters should be left in private hands or in the hands of the citizenry for which a need of government interference has not explicitly been proven. This is the essence of the principle of subsidiarity, which is not only a core principle of liberalism but also the essence of the concept of civil society. Applied to the organization of the state, subsidiarity will result in a decentralized form of government where only those matters are dealt with at a central level that cannot be dealt with adequately at lover levels.

One major merit of federalism lies in its capacity to accommodate diversity. When a country is subdivided in sufficiently small and autonomous subunits, different religious, ethnic or cultural groups can arrange their affairs according to their own preferences in their areas. This is the case where the boundaries of the sub-units coincide more or less with the religious, ethnic or cultural division lines permitting each group to have at least one of those units "as its own". Even where such groups or groupings neither exist nor play a significant role, a federal structure makes it easier to take into account regional peculiarities, as the local or regional government or administration can address such peculiarities.

Generally, where there exist many decision-making centers covering limited areas, more people will get what they want from those who govern them than where only one decision-making body is in charge for the whole country. In the latter case, you may reach a situation, where 51 percent of the population could dictate to 49 percent. In short: When administrative borders coincide, by and large, with ethnic or other division lines within a country, federalism can be a highly effective method of solving minority problems.

By securing room for a wide variety of solutions – or attempts at solution - federalism promotes “competition as a method of discovery” (F.A.v.Hayek). The direct opposite of a "one-solution-fits-all" approach, federalism tends to minimize the risks involved in errors of political decision-making: if such an error affects the whole country, the damage will be considerably severer than if it affects only one province. Worse, still: if the system allows for only one approach (i.e. the one covering the whole country), the probability of identifying the most conducive policy is much smaller than if different policies are applied in the various sub-units of the country. It is an age-old and empirically well-supported experience that competition produces incentives for individuals and collectives to strive for better results. This basic experience is also valid for the organization of the state. While centralist states lack this dimension, federalism may provide for such competition among the sub-division.

Basically, it is all about sharing political power and control. Sharing and checking political power is the very essence of democracy - the better the system of checks and balances in a country, the better the quality of its democracy. In a democracy, division of power should not be confined to the classical separation between the three traditional powers – legislative, executive and judiciary. In addition to this horizontal division, what may be termed a vertical division of power is crucial. To check the power of the central government, it is essential to devolve authority and rights to lower levels.

As consequence of this vertical separation of powers, federalism foresees a clearly defined allocation of responsibility at the various levels of government. In other words, each state level should hold clearly defined powers and responsibilities exclusive to it. There should be no mixing or "sharing" of power among different levels of government as this would only result in a blurring of responsibilities. The voters should always be in the position to identify the origin of a policy. They should know, for example, who to blame or who to credit for the quality of public services or the level of taxation in a given case. Without such transparency, a rational decision at elections becomes difficult. This transparency is a precondition for democratic accountability.

Last but not least, for responsibility and accountability to be genuine, the transfer of political powers must be accompanied by a transfer of fiscal powers. Devolving power to decentralized units makes sense only if the necessary taxation powers go with it. As long as the central government controls the financial strings, all "devolution" or “decentralization" is but sham devolution and sham decentralization. He who pays the piper calls the tune – this is as much a truism in politics as anywhere else.

Dr. Ronald Meinardus was the former Resident Representative of the Friedrich Naumann Foundation in the Philippines and will leave Manila late September for a new posting in the Middle East. He writes a blog at www.myliberaltimes.com