ABSTRACT
One of the fundamental problems of political systems is that governments strong enough to protect individual property rights are strong enough to confiscate the wealth of their citizens too (Weingast, 1995). To resolve this dilemma, from a public choice point of view constitutional rules are needed to prevent politicians from abusing their power. Checks and balances must create credible commitments for self-enforcing institutions. Federalism is an important institution of this kind.
