Real Federalism: Why It Matters, How It Could Happen

Federalism Injects Market Competition into Politics

“Federalism’s history has been the history of its demise.” So writes Michael S. Greve in a book designed nevertheless to prove that, like Mark Twain’s demise, the death of federalism has been greatly exaggerated. Federalism has been down for decades, floored by the pro-New Deal shift of the Supreme Court in 1937 and kicked repeatedly by the Court and Congress ever since. Greve, however, has found that it still has a pulse and shows some signs of getting up off the mat. Those of us who prefer freedom to government diktats should be encouraged because although federalism does not ensure freedom, freedom fares better under federalism than under a completely centralized politics.

Greve, executive director of the Center for Individual Rights, sets out first of all to explain the case for federalism, a case few Americans are familiar with. Federalism, he explains, is a means of injecting market competition into politics. “The citizens’ ability to vote with their feet and take their talents and assets elsewhere will discipline government in the same way in which consumer choice, in nonmonopolistic markets, disciplines producers,” Greve writes. As long as people have the right to leave political jurisdictions they find undesirable, states (or smaller government units) have to bear the costs of their mistakes. Organized labor, for example, might want a state to enact compulsory unionism, legislation against plant closings, and a $20 minimum wage, but the state that does so will soon find its economy withering.

The Constitution’s drafters understood the need to maintain such discipline on the states and sought to secure it by creating a central government of strictly enumerated powers. With but a few exceptions, political controversies were not to be decided in Washington, where losers have the choice of living with it or departing the country. Instead, they would be settled at the state or local level—often without government at all.

But just as Jefferson observed that it is the natural order of things for liberty to give way to authority, it also seems to be the natural order of things for federalism to give way to centralization. Those who want to employ coercion would rather fight and win once at the national (or, as is becoming increasingly possible, international) level than fight dozens or hundreds of battles in smaller units where success is less likely and if achieved, less durable. Therefore, they devised a number of arguments to attack federalism, the most successful of which has been the “race to the bottom” argument (“without central control, competition will lead to unacceptably low standards”), which the Supreme Court has latched onto in some cases.

Opponents also have played the typical statist games with language, seeking to redefine federalism so it means what they want it to mean. Greve points out that for decades the Court hid its indifference to congressional aggrandizement by claiming that federalism really means the political process in which the boundaries between federal and state authority are hammered out—“process federalism.” So the Court did not have to do anything but make sure that elections weren’t canceled.

Greve attacks “process federalism” and other phony concepts and forcefully argues that real federalism—hence the title—means that Congress must be kept within the limits of the enumerated powers of the Constitution. But after decades of abject deference to Congress and the executive branch, is there any prospect of the Supreme Court’s moving back toward real federalism?

The last decade has seen several decisions in which the Court did revive the long-dormant idea of federalism. Greve devotes much of the book to an analysis of those decisions, some of which do little more than hint at an inclination not to let Congress enact any piece of legislation it feels like, and some of which seem to presage a revitalization of real, that is, enumerated-powers, federalism. Will the Court continue to move in that direction?

Greve does not predict what will happen in the judicial realm, but seeks to explain how events could unfold to make it possible for a differently constituted Court to bring back the pre-New Deal federalism. The Court, for all its ostensible independence, does keep an eye on the political scene and is leery of making decisions that may kindle political firestorms. The Court, Greve avers, needs to feel that it has political cover before it can return to real federalism. That cover, he believes, can come from a coalition of “Leave-Us-Alone” types who differ greatly as to what they want to be left alone to do, but hold a common hatred of central Big Brotherism.

An intriguing and optimistic book.

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