Though fiscal policy was the main focus of Reaganomics,
regulatory reform was soon to follow. This effort was to be
undertaken as part of Reagan’s ideological commitment to ‘New
Federalism’. Rooted in the theories of the Public Choice School of
Economics, new federalism was inspired by the neoliberal tenets of
decentralization and individual choice. It regarded politics as a
rational enterprise devoted to winning a maximum of votes rather
than a messy strategy of governing in the public interest. Operating
under the assumption that individual citizens ‘vote with their feet’,
public choice economists argued that local governments were
much better positioned to respond to individual citizens’ demands
because of their close proximity to their ‘clients’. In other words,
smaller, decentralized government was ‘better’ in terms of market
efficiency and economic effectiveness. Moreover, new federalists
saw small governments as less likely to regulate the market – hence
their neoliberal slogan ‘less is more’.