This isn't a post on how undemocratic the American federalist system is. (Thanks to the constitutional two-senators-per-state rule and the non-constitutional "rule" that it takes 60 of 100 senators to pass legislation, 41 senators representing 13 percent of the US population can kill legislation.) Instead, here is a link to James Surowiecki's New Yorker essay on the economic pitfalls of our 50-state model, and specifically the way it's an obstacle to getting out of the current recession.
Surowieki makes two major points. The first is that, because almost every state (including Massachusetts) has laws requiring a balanced budget, state governments are forced to cut services and raise taxes, which is precisely the opposite of what the federal government is trying to accomplish through stimulus spending:
The states’ fiscal policy, then, is procyclical: it’s amplifying the effects of the downturn, instead of mitigating them. Even as the federal government is pouring money into the economy, state governments are effectively taking it out. It’s a push-me, pull-you approach to fighting the recession.
Second, and this does bring the topic back to the Senate in a way, is that federal spending is pretty much always inefficient because it's distributed on a state-by-state basis:
Much of the tens of billions of dollars that will be spent on roads, for instance, will be funnelled through the states. As a result, a disproportionate amount of the money will be spent in rural areas (which exert disproportionate influence on state governments), leaving cities—which happen to have most of the people and most of the traffic—shortchanged. The top eighty-five metropolitan areas in the country are responsible for about three-quarters of the country’s G.D.P.
But I don't expect that any of this will change in the near future. Local governments find Washington too handy a political foil to give the federal government any more power.