The principle of federalism is the way to power fragmentation. Through federalism, national governments have power over the whole country, while local functions are devolved to their respective governments. The system enables both the federal government and the local structures to exercise policy-making powers on issues affecting their respective areas of jurisdiction. The United States is an example of the two-tier government whose effectiveness has seen the local state governments concentrate their policy-making efforts on the issues that affect the local population, while the federal government makes national policies including handling the country’ s interactions with other partners in the international circles.
Political analysts have noted that federal governments in most countries do not have the powers to dictate to the local government, except where it is stated clearly in the constitution. As such, the powers of most national governments are limited to collecting taxes, minting currency and declaring war as a way to guarantee the whole country of security from international security threats. In line with the expanded roles of the federal government, national authorities can only regulate interstate trade but lack the authority to regulate business activities taking place within a state.
Most court interpretations of the limits of federal and state powers are basically inclined to give national governments supremacy over state governments as far as it is essential and proper. This interpretation enables national governments to use slightly more power than those specifically indicated in the Constitution as long as those powers are exercised in good faith. As such, federalism enables States to exercise authorities that are not clearly within the scope of the federal government or outlawed the Constitution.
In the US, for example, the Constitution gives the national government powers to levy taxes, but state governments can also exercise the powers within their areas of control for purposes of supporting their local development programs.
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