Theory and practice of economic federalism

Abstract

The theory of economic federalism should especially research two aspects: the States optimum dimension and the general exchange relationships between the territorial corporations, certain costs and benefits amongst them. A series of matters are analyzed which have to do with the state federalism formation: the economic and political approaches of State functions, the criteria of regional distribution of the State functions, and those state activity development "laws". Also the balance between central and non central forces, and the loss of welfare, that can take place due to their misinterpretation. Decentralization not only of the resources, but also of the expenses and services; we will make special reference to the German State which we have expressly studied. Then a brief analysis of the Argentinean public sector is done, and of tax incidence on people, with special reference to the social class, to which the individual belongs, whose burden goes from 20% for the indigent poor, going up to a 51.8 for the average manager and less than 40% for the upper class. The 2006 state budget is studied, where the existence of centralized organisms and social security institutes is observed which do not consolidate in the national public sector, due to different juridical and institutional reasons, that makes the public expenditure difficult to control due to its quantitative significance that allows discrecionality in its use. Finally, an “Argentine State Reformation Proposal", is formalized, if it is, that one really wants to live in a federal country, with its supposed advantages.