I agree. I am skeptical of big government because of its adverse impact on economic efficiency and personal liberty, and so I often vote for tax-cutting candidates at the national level. But my skepticism fades away when the discussion turns to local government. Massachusetts has a tax limitation rule, which towns can override by voter referendum, which occurs here in Wellesley every few years. I almost always vote for higher local taxes. I have a taste for publicly provided goods, such as nice playgrounds and good schools, and if the town of Wellesley ever gets too inefficient or powerful, I can just move to Newton or Lexington.
Our government, under our Constitution, was established upon the principles of Federalism -- that the federal government would have limited enumerated powers and the rest would be left to the states. It not only prevented tyranny, it just made good sense. States become laboratories for democracy and experiment with different kinds of laws. One state might try one welfare reform approach, for example. Another state might try another approach. One would work and the other would not. The federal welfare reform law resulted from just this process.
Federalism also allows for the diversity that exists among the country's people. Citizens of our various states have different views as to how traditional state responsibilities should be handled. This way, states compete with each other to attract people and businesses -- and that is a good thing.
The current Administration has not been very good for believers in federalism--the No Child Left Behind Act a notable example. Let's hope that Thompson's entering the race focuses attention on the issue.