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Jefferson, Hamilton, and Main Street

Original Analysis | SchiffGold | 24 Jul, 2026

Thomas Jefferson and Alexander Hamilton held fundamentally different beliefs about the relationship between Federal and local government. Jefferson held that the local government was the primary building block of the nation and that the federal government had the responsibility to protect rights and deal with administrative tasks such as defense and trade that would be difficult for local governments to handle. Hamilton believed that local government should be limited to a more administrative function and that the true center of gravity in government should be the federal government, which he thought would allow the state to be far more stable and effective. 250 years later, and it is clear that Hamilton has functionally won. The federal government controls aspects of life that were not even controlled by any form of government when the debate was raging between Federalists and Democratic Republicans. For the sake of liberty and stable governance, it is important that the federal government loses power both to local government and the people.

Local governments do a far better job of accessing the gifts of democracy than a federal government. The fundamental function of democracy is to translate the will of the people into policy and actions within the bounds of the laws necessary to national stability and the basic entitlements of the citizens. A local government is able to do this task with relative specificity and efficiency. Rather than voting on how infrastructure should be done across the whole country, local governments must make decisions of a much more particular nature. The people are able to express their will and preferences with regards to specific actions in a much more legible way. Consent or lack of it can be seen far more clearly and there is less room for politicians to diverge from their word. It will be difficult for the people to evaluate a president in their infrastructure promises when the whole election cycle never forced them to name a specific action, but a mayor who is elected on the promise to repair a specific bridge will have no such grace given. The informational feedback loop is far faster and more transparent. Local democracy stays focused on specific issues and is better at learning over time than national democracy.…

Alexander Hamilton Austrian Economics central banking Constitution democracy federal government Federalism founding fathers liberty local government states rights Thomas Jefferson