The analogy I always use with college audiences is dorms. Imagine you've got ten dorms on a campus and a student population divided up into the usual coalitions: stoners, partiers, jocks, and so forth on one side, and study geeks, exchange students and - no offense - nerdy Mennonites on the other. A purely democratic system where all students get to decide dorm policy could result in the tyranny of 51 percent of the students over 49 percent of the students. The party-hardy crowd could pass a policy permitting loud music and keg parties at all hours of the night. Or if the more academically rigorous coalition won, they could ban "fun" of any kind, ever. Similarly, if the administration imposed its own policy from above, you could have a system that makes no one happy.
But, if you allowed each individual dorm to vote for its own policies, you could have a system where some dorms operate like scholarly monasteries and other dorms are more fun than a pool party at James Caan's house. Theoretically, 100 percent of the students could live the way they want. Maximized human happiness!
The virtue of a federalist, republican form of government is that the more you push these decisions down to the level where people actually have to live with their consequences, the more likely it is they will be a) involved and interested in the decision-making process, and b) happy with the result. Federalism is also morally superior because it requires the consent of the governed at the most basic level. Sure, your side can lose an argument, but it's easier to change things locally than nationally. And, at the end of the day, if you don't get your way, there's always the highway. It's easier to move to the next state than it is to move to Canada.
The problem with the last half-century of public policy is that liberals have abused the moral stature of the civil rights struggle to use the federal government to impose their worldview - not just on racial issues but on any old issue they pleased. But now, all of a sudden, because they can't have their way at the federal level anymore, the incandescently brilliant logic of federalism has become apparent: Liberals in blue states can live . like liberals! Wahoo! (Whereas, according to liberals, conservatives could never have been sincere when they talked about states' rights; surely, they meant only to "restore Jim Crow" or some such.)
The bad news, alas, is that conservative support for federalism has waned at exactly the moment they could have enshrined the ideal in policy. Just this week, the Bush administration argued against California's medical marijuana law. Bush is also moving ahead toward a constitutional prohibition on gay marriage. After decades of arguments that Washington should stay out of education, Bush has made it his signature domestic issue.
It's not that the White House doesn't have good arguments for its policies. But it is impossible to restore federalism unless you start by allowing states to make decisions you dislike. Otherwise, it's not federalism, it's opportunism.