[syshum]

Well 2 things.

First I stated smallest practical, and with that it would depend on the power we are talking about, so the smallest practical for national defense would be the federal government, the smallest practical for professional licensing may be state level, etc.

Also in that idea of federalism also include natural individual rights that can never be violated at any level of governance, including property rights like when you can open your shop...

And when we talk about American style federalism one must also recognize the checks and balances of power that over the last 100 years or does have been worn down but not eliminated. These checks need to be strengthen so no single arm of the government can end up tyrannical like your fear

I recognize the possibility of local tyranny, I think American federalism has checks in it for that. However even in the worst example of city tyranny that is far and way preferable to the alternative of an all powerful federal government