Perversion of the Commerce Clause makes the United States less competitive

Jim says:
I was recently riding on MARTA (the public transportation system in Atlanta, Georgia). There, over the handicap seats, was a sticker proclaiming that failure to yield these seats to a person with disabilities was a violation of a U.S. transportation law. I am as in favor of preferential seating for the handicap as the next person, but I found it yet another example of creeping federal government to cite a federal law here. Clearly MARTA is not in interstate commerce — I would suspect its westernmost track is the closest to another state and falls short of reaching Alabama by 70 or 80 miles. Why does this fall within federal control?

Until the Interstate Commerce Act of 1887, the Commerce Clause (Article 1, Section 8, Clause 3) of the U.S. Constitution was seen as limiting Congress’s power inside the states. The Interstate Commerce Act was a wedge in a locked gate, which has since been blown wide open.

This has led to homogeneity of the states, something the Founding Fathers clearly did not intend. Application of uniform social laws and practices across the states has deterred government services’ competition and placed a drag on the burden of commerce, thus making the United States less competitive in foreign trade. This occurs because we all suffer the same costs of monopolistic federal programs, which have no incentive to improve.

I contend we would be a much better nation, more competitive and more vibrant, if the 50 states were allowed to compete amongst themselves to provide government services.

Education, occupational safety, environmental laws, energy standards, and on and on would be much better for everyone if administered autonomously and independently by each state. Why? People would move to the state with the best services (by their own standards). Americans have a long history of mobility, always moving toward a better life for themselves and their families. Creeping federalism, besides forcing monopolistic purchases of services, has, in the last 50 years or so, turned us into a sedentary and lazy population.

Monopolistic services have excessive costs, which tax society as a whole. Lack of choice makes those in charge of services lackadaisical about providing efficient services, raising the price and lowering the quality.

One place to experiment is with the dreaded Department of Motor Vehicles (DMV). This is already a service provided at the state level. But what if every few years the state of Georgia put these services out to bid to other states’ DMV’s? The bid could be on price, promised services to the citizens of Georgia, and so forth. Maybe New Jersey wins and Georgia’s bureaucracy is out of a job, or maybe it has to “sharpen its pencil” and try to win a bid in another state. All citizens would clearly be better served.

That famous god of liberal worship, Franklin Roosevelt, stated that government employees should not be allowed to form unions. This premise has been violated in recent decades, leading to even more bureaucracy and poorer services. The most frequent visitor to the White House since President Obama has been in office is Andy Stern, the (recently resigned) president of the Service Employees International Union (SEIU). I suspect they have not been talking about how to provide us with better and more efficient government services or using fewer employees.

Coupling the modern interpretation of the Commerce Clause with union activism not only destroys U.S. competitiveness abroad, it imposes a hidden tax on all Americans and demoralizes the citizenry. It is time to find a better way.

Travis says:
You seem to be arguing in favor of a fundamentalist reading of the 10th Amendment: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." On legal grounds, I've got no beef. On theoretical grounds, I see the appeal. On empirical grounds, what is the real impact of federalism?

Here are some examples:

Many of the unsolicited and unwanted credit card offers that I receive originate from South Dakota because that state has loose usury laws. Who benefits from this bit of federalism and who suffers? I suppose South Dakota gets a benefit from housing corporate offices, but the damage that misleading credit card offers and predatory lending policies spans the country. I am not even clear what side of the debate a federalist would be on. If the right lies with enabling corporations to engage in disruptive behaviors, then South Dakota is exercising its right. If the right lies with protecting one's citizens from usurious practices, then South Dakota's policy conflicts with the rights of Colorado or Georgia or any other state to protect its citizens.

Gambling has spread like a cancer across our country. When a state sees its residents traveling to another jurisdiction to buy lottery tickets or place bets in casinos, legislators soon begin to make rationalizations. Sure gambling might have some downsides, they say, but if people are going to gamble anyway, we should keep the revenue in-state. Federalism encourages this type of perverse logic. (Disclosure: I feel particularly guilty about this because my undergraduate education was partially paid for by Georgia's regressive Hope Scholarship program, which uses lottery proceeds – disproportionately financed by the poor – to fund merit-based scholarships – disproportionately supporting middle class and upper-income students. I am all for merit-based scholarship programs, but if they are a real priority, then we should find a way to pay for them without selling our souls.)

Cities face similar problems in addressing homelessness. If Austin does "too good" a job of providing services to persons with mental illness in Texas or treats those without housing as real human beings, then their good deed will not go unpunished. Austin will become a draw for homeless persons in San Antonio, Dallas, and Houston. Indeed, that's exactly what happens.

One of the conservative tropes during the health care debate was, "unleash the power of the market by allowing policies to be sold across state lines." The problem is that state insurance commissions regulate the providers of health plans. If Texas has lax regulation or requires nearly nothing to be covered, then selling a policy in a state with stronger patient protections creates a conflict. One of the benefits of living in Colorado is that I don't live in Texas.

All of these are examples of pernicious forms of federalism, often referred to as "the race to the bottom." Playing on this phase, one of the Obama administration's most popular initiatives, one that even many conservatives find less loathsome, is the "Race to the Top Fund." For anyone not familiar, here's an overview. "Through Race to the Top, we [The U.S. Department of Education] are asking States to advance reforms around four specific areas:

Awards in Race to the Top will go to states that are leading the way with ambitious yet achievable plans for implementing coherent, compelling, and comprehensive education reform."(See http://www2.ed.gov/programs/racetothetop/index.html.)

Race to the Top is compelling because it differs from formula grants. States and districts do not receive funds for clearing low hurdles or by virtue of having students that meet certain criteria. Rather, states compete to build innovative approaches to solve real, complex problems. The federal government acts like a philanthropic foundation in this process. In competing for the federal funds, states are already making big changes. The Colorado legislature is considering a bill that ties K-12 tenure decisions to student test scores. Unsurprisingly, some teachers unions see this approach as encroaching on their power.

You can glibly write all this off by saying we shouldn't have a U.S. Department of Education in the first place. But I think Race to the Top is an encouraging sign, looking for ways to encourage states to fulfill their promise as laboratories of democracy rather than rewarding mediocrity. Federalism is a wonderful concept, but we have to continually look for ways to make the idea work.

Jim wraps up:
I am always suspicious of titles, good and bad, and say that while being guilty of using them myself. "Race to the bottom" and "Race to the top" are meaningless until you look at substance. What I would like to see is competition among various entities to provide us with services we deem need be provided by governments. The monopolistic, "one size fits all" creates not only lethargy among the services provided but permeates the rest of our lives. One may work for a dynamic, high energy entity, but I'll guarantee you that a lunchtime trip to the DMV (see above) will at least sap your energy for the rest of the day, if not the rest of the week. Being exposed to people in these cultures on a daily basis provides a double whammy of poor services and lousy attitudes for all.

There should be good states and bad states to live in. And it should not be based on solely the weather. Stirring up competition will, in the end, provide better services for all and keep us competitive with the rest of the world.