In his 1996 State of the Union address, Bill Clinton famously declared that "the era of big government is over." Grounded in an ideological (or more cynically, poll-driven) aversion to a large federal bureaucracy, this statement also represented a summation of the conventional wisdom. Advances in information technology and the growth of the Internet would drive devolution, the systematic "return" of authority and decision-making from Washington to state and local governments.

The conventional wisdom of the devolving power of the Internet lives on today. The theory is that state governments, with increased capacity to administer and manage policies thanks to the reduced expense of information technology, can now administer programs that would have been overwhelming in the past.

Other continents are experiencing a different type of devolution. Separatist movements from the Basque region of Spain to the bloody Congo of Central Africa are tearing at nations along religious and ethnic lines. The Internet, it is said, contributes to the breakup of the power of governments by weakening citizens' sense of national identity as it unites people with common backgrounds or interests who are divided by accidents of political geography.

The lesson of e-crime
The recent "denial of service" attacks on prominent Web sites including Yahoo! and eBay and the federal response they prompted help to refute that thesis, however. As the reaction to these attacks show, as it matures the Internet is more likely to consolidate than splinter political power. Local, state and even national governments are incapable of regulating behavior that spans jurisdictions. Thus a higher power must pick up the slack.

Why does e-crime invariably prompt a federal response even though most law enforcement in the United States is carried out at the local and state level?

Critics of the Clinton administration's proposed "cyberforce" to fight information warfare and rules that would require manufactures to make eavesdropping-friendly home computers say that Internet crime is merely a convenient and exaggerated pretext for bringing Big Brother to the Internet. Perhaps, but the Web is hospitable to a range of criminals including devious hackers, scam artists, data thieves and pedophiles precisely because it can shield them from law-enforcement authorities. Because transactions are conducted across borders, frequently anonymous and difficult to trace, the federal government is better positioned to track and prosecute all types of Internet criminals.

The recent assertion of federal authority in response to the hacker attacks is only the most visible federal Internet crime-fighting activity. Many agencies are staking their claim. For example, the FBI has proposed a Federal Intrusion Detection Network (FIDNet), which would facilitate tracking of Internet usage to prevent attacks similar to those recently publicized. Already the FBI's Innocent Images program targets online pedophiles and child-pornography traffickers. The Securities and Exchange Commission (SEC) is cracking down on "pump-and-dump" schemes in which purchasers of cheap stock make profits by spreading false rumors on the Internet to inflate their portfolios value. A group of Georgetown Law students were recently snared running such a scam. Even the Food and Drug Administration is online, pursuing sellers of medication that do not require validated prescriptions for Web sales. These criminals, like other con artists and flim-flam men who use the Internet to elude state and local authorities, are best countered by the federal government.

The logic of "federalization" does not end at our national borders. Noting the spread of international criminal networks that utilize the Internet, Attorney General Janet Reno called for coordination among international law enforcement agencies and prosecutors through a proposed initiative called LawNet. The United Nations, the favorite bogeyman of those who warn against government expansion, has launched "Innocence in Danger," an initiative targeting international trade in child pornography. The Echelon Project, a network of national intelligence agencies that has recently received unwelcome publicity in Europe, shocked many who were skeptical of large-scale international coordination. Using Echelon, the U.S. National Security Agency (NSA) screens thousands of communications, including e-mail, in an effort to identify international terrorists before they strike.

The consequences of governmental shift
The erosion of political boundaries by technological development is part of an historical pattern that has over the years reshaped the United States government. The rise of railroads and interstate commerce brought about the first major assertion of federal power. The Interstate Commerce Act of 1887 was passed to bring order to the chaotic climate of the burgeoning industrial economy. Electronic commerce may require a similar response. If the Internet economy takes off as promised, the reduction in sales-tax revenue for states and localities could be crippling. One solution, a federally administered national Internet tax system, is getting less and less far-fetched every day. Even Virginia Gov. Jim Gilmore (R), chairman of the President's Commission on Electronic Commerce and champion of the current moratorium on Internet taxes, has acknowledged the possibility of Internet taxes in the future. To avoid complicated state-by-state taxation of e-commerce, Uncle Sam would have to intercede. In marked contrast to the promised "devolution revolution," Congress could redistribute this revenue to the states to suit federal policy interests.

The consequences of authority's upward migration could be considerably more disquieting outside the United States. As policy responsibilities shift to national and international bodies, remaining governments will struggle to justify their existence -- with potentially devastating consequences. Local governments will continue to meet people's need for policing, sanitation and transportation thus preserving their relevance, argues Alan Ehrenhalt, editor of Governing magazine. Regional and national governments, however, will have less clearly defined functions. The danger is that appeals to narrow, xenophobic views might prove an expeditious way to hang on to power.

Is this a real danger? Perhaps not in the United States for a couple of reasons. First, demagogues have never been terribly successful at the national or even regional levels. Second, Americans long ago transferred their primary allegiance to the nation from particular states. Thus the transfer of more authority to the federal government is notable but not jarring. In other contexts, however, neither point holds. It can hardly be regarded as coincidence that Joerg Haider's Freedom Party rose to participation in the governing coalition of Austria just as the EU was acquiring more meaningful power. The Internet can only serve to heighten the tension brought about by cession of political authority to transnational bodies at a time when people are reconnecting with their ethnic and cultural heritages. Thus such "Haider problems" are not likely to be infrequent anomolies but common features of the coming political age.