States’ Rights Wronged

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During the infancy of the United States of America, one of the main complaints of federalism is that it would take away the power of the states. Thence the Tenth Amendment of the Constitution was born, with the intent to protect those rights. But, that was over two hundred years ago—now, according to some scholars, to preserve federalism, we must take away some of that power—at any cost to those founding principles.

At a recent American Enterprise Institute for Public Policy Research (AEI), Larry E. Ribstein discussed his book The Law Market, which he coauthored with Erin A. O’Hara. Ribstein argues that federalism, with regards to interstate commerce, is great, but it has “discontents” which he hints may kill it.

Ribstein lists his “joys of federalism” as “competition among the states, a variety of state views, [and] the opportunity to experiment without knowing exactly where you’re going to get from the experiment—which is a good thing because we live in an uncertain world, and we don’t know what the answers are.” The “discontents” he lists all boil down to one problem: “We’re left with a situation where, to some extent, the states inevitably are going to impose their…separate regulation[s]…and what that means, almost inevitably, is that regulatory costs are going to get imposed outside the state while instate interest groups realize all of the regulatory benefits.”

The solution Ribstein gives to quiet this “discontent” is a bit more complicated than the problem, and it is a bit more controversial: “We’re trying to solve some of these discontents of federalism with a contractual solution, and we get rid of the messy fifty-one or fifty-four states—you only have one law. It’s the law you contract for. But, the states compete with each other to provide that law. And they experiment; you never know where that experiment’s going to lead—you get a variety of possible solutions. So, it’s all the things we like about federalism without any of the problems.”

But, other than the glaring issue of the single law, there is another potential problem. Ribstein asks, “Why would states enforce these kinds of contracts, which basically call on them to defer to other states?” His reply gives a few insights into why he believes states may give up some of their sovereignty to other states. The first is that states’ power reaches only as far as their borders. The second is, with this model, there is an increased “predictability” in the creation of legislature, and third, it promotes “competition among interest groups” to create “an equilibrium where we’re only going to get efficient restrictions.” He argues that this model will also be valuable for the interest groups that get left behind when firms leave states under today’s laws.

So, basically, all of the states will have one law they follow. Only one group will get to come up with it, and all “the states compete” to figure out which plan is best. So it’s a big “experiment” with an end result that every state has to follow, regardless of the differences in trade and production between the states. Oh, and everybody will be thrilled to go along with it. This sounds exactly what the Founding Fathers wanted, right?

“The true barriers [i.e., protections] of our liberty in country are our state governments,” Thomas Jefferson stated in 1811.

Heather Latham is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.