Arguments opposed to federalism

Federalism


•Key terms • Court cases •Major arguments • State responses to federal mandates • Federalism by the numbers • Index of articles about federalism

See also: Arguments in support of federalism

This page presents a selection of the main areas of inquiry and disagreement related to the history, theory, and practice of federalism. In the context of the United States, federalism refers to a system of government that divides power between the federal government and state governments, or between two or more state governments. For more information on federalism, click here.

Ballotpedia has tracked six arguments related to the nature of federalism, nine arguments supporting federalism, and the following 10 arguments opposing federalism:

Click the arrow (▼) in the list below to see claims under each argument.

1. Argument: The Framers were wrong to establish a federal system of government

Claim: Federalism in the United States is outdated

2. Argument: Federalism is undemocratic

3. Argument: Federalism creates harmful competition between states

4. Argument: Federalism detracts from our identity as a national community

5. Argument: Federalism is an impediment to implementing the national will

6. Argument: Federalism fosters corruption

Claim: Large corporations can more easily control state and local governments

7. Argument: Federalism only works for developing nations

Claim: The stage of economic development in the United States is not suitable for federalism

8. Argument: A strong centralized government and a unified national will is necessary to check the powers of big businesses

Click here to view arguments supporting federalism. Click here to view arguments about the nature of federalism.

If federalism is wrong or unnecessary, then why?

Argument: The Framers were wrong to establish a federal system of government

This argument posits that federalism is no longer relevant to the United States’ system of government and that a new system should be implemented.

Claim: Federalism in the United States is outdated

This claim suggests that the United States operates under a federal system because of an outdated and sub-optimal compromise between the states that was never revised in modern times.

Law professors Edward L. Rubin and Malcolm Feeley wrote in the UCLA Law Review, “In fact, federalism is America's neurosis. We have a federal system because we began with a federal system; the new nation consisted of a group of self-governing units that had to relinquish some of their existing powers to a central government. We began with a federal system because of some now uninteresting details of eighteenth century British colonial administration. We carry this system with us, like any neurosis, because it is part of our collective psychology, and we proclaim its virtues out of the universal desire for self-justification. But our political culture is essentially healthy, and we do not let our neuroses control us. Instead, we have been trying to extricate ourselves from federalism for at least the last 130 years. When federalism is raised as an argument against some national policy, we generally reject it by whatever means are necessary, including, in one case, killing its proponents.”^[1]

Rubin and Feeley continued, “What we do argue is that decentralization is the only purpose states serve, and that they do not embody any important normative principle at this juncture in our history. The Supreme Court should never invoke federalism as a reason for invalidating a federal statute or as a principle for interpreting it. Thus, we subscribe to the conclusion stated in Garcia v. San Antonio Metropolitan Transit Authority. Our rationale for this conclusion, however, is not that the states are capable of protecting themselves, as Justice Blackmun's opinion argues, but that there is no normative principle involved that is worthy of protection.”^[1]

Argument: Federalism is undemocratic

This argument contends that federalism is not compatible with democratic ideals. This idea is related to issues of judicial decision-making authority and concerns regarding industry and capitalism.

Claim: Courts participate in judicial activism when they aim to support federalist principles by blocking democratic laws

This claim suggests that when courts step in to block democratic laws on the grounds of federalist principles, it is an act of judicial activism or "legislating from the bench," because it nullifies decisions made by representatives of the people.

Law professor Michael W. McConnell wrote in a 1987 University of Chicago Law Review article, “In 'The Founders' Design,' however, Berger refuses to recognize that most of the Supreme Court's retreat from federalism has been a product of deference to democratic choice and to the tendency to avoid the more dangerous type of error, even at the cost of the less dangerous one. Indeed, he fails to acknowledge the seemingly obvious conflict between judicial restraint and the aggressive judicial enforcement of federalism principles. ‘It is to be hoped,’ Berger comments in the book's concluding chapter, ‘that the historical facts may lead the court to curtail its increasing intrusion into the States' internal affairs’ (pp. 187-88) (emphasis added). He qualifies his hope by adding that ‘those who enjoy the exercise of uncurbed power are unlikely to surrender it merely because it has been usurped’ (p. 186). These comments might be closer to the mark if they dealt with Roe v. Wade, or with federal court takeover of state prisons and hospitals, or with judicial supervision of state codes of criminal procedure. In these contexts the courts might be said to have ‘usurped’ decisionmaking authority constitutionally vested in the state governments. But how can Berger say this of decisions upholding Acts of Congress, duly passed by representatives of the people? Is there no difference between judicial aggrandizement and judicial deference to legislative authority?"^[2]

Claim: Federalism undermines the ability of the people to check the power of large corporations

This claim suggests that federalism prevents the national government from limiting big businesses, allowing them to exploit poorer states and policy inconsistencies for their gain. According to this claim, smaller governments are more susceptible to corruption, which reduces the peoples’ ability to limit the exploitative power of businesses.

Harold Laski, a professor of political theory during the early and middle 20th century, wrote in "The Obsolescence of Federalism," “The poor state is parasitic on the body politic. It offers privileges to giant capitalism to obtain its taxable capacity, offers escape from the impositions of rich states, in order to wrest from the wealthy some poor meed of compensation for its backwardness. It dare not risk offending the great industrial empires—cotton, coal, iron and steel, tobacco—lest it lose the benefits of their patronage. Their vested interests thus begin to define the limits within which the units of the federation may venture to move. And since the division of powers limits, in its turn, the authority of the federal government to intervene—the latter being a government of limited powers—it follows that the great industrial empires can, in fact, prevent the legislation necessary to implement the purposes of a democratic society.”^[3]

Laski continued, “Giant industry requires a positive state; federalism, in its American form, is geared to vital negations which contradict the implications of positivism. Giant industry requires uniformities in the field of its major influence; American federalism is the inherent foe, both in time and space, of those necessary uniformities. Giant industry, not least, requires the opposition of a unified public will to counteract its tendency to undemocratic procedure through the abuse of power; a federal system of the American kind dissipates the unity of public opinion in those fields where it is most urgently required. And, above all, it is urgent to note that giant industry, in an age of economic contraction, is able to exploit the diversities of a federal scheme, through the delays they permit in the attainment of uniformity, to reactionary ends. Thereby, they discredit the democratic process at a time when it is least able to afford that discredit. For, thereby, the confidence of the citizen body in its power to work out democratic solutions of its problems is gravely undermined.”^[3]

Laski continued, “Men who are deprived of faith by inability to attain results they greatly desire do not long remain content with the institutions under which they live. The price of democracy is the power to satisfy living demands. American federalism, in its traditional form, cannot keep pace with the tempo of the life giant capitalism has evolved. To judge it in terms of its historic success is to misconceive the criteria by which it becomes valid for the present and the future. No political system has the privilege of immortality; and there is no moment so fitting for the consideration of its remaking as that which permits of reconstruction with the prospect of a new era of creative achievement.”^[3]

Argument: Federalism creates harmful competition between states

This argument posits that the existence of federalism allows for and promotes competition between states, which is a negative outcome according to this argument. According to this argument, competition under federalism incentivizes corruption and the prioritization of weak restraints on businesses at the expense of shareholders, consumers, and other stakeholders. This argument also contends that states compete in a “race for the bottom” to create rules that appeal to corporations and will never compete to limit exploitative businesses.

Claim: Competition between states creates a “race to the bottom” in corporate law where states try to attract businesses to increase tax revenue and please interest groups at the expense of everyone else

This claim posits that competition drives states to implement rules that benefit corporate managers and big businesses at the expense of shareholders, consumers, and other stakeholders. The arrangement creates a “race to the bottom” where the states compete to pass laws that disadvantage individuals and support exploitative corporate interests, according to this argument.

Law professor Lucian Arye Bebchuk wrote, “In designing corporate law rules, states competing to attract incorporations will have an incentive to focus on the interests of managers and shareholders and to ignore the interests of third parties not involved in incorporation decisions. Therefore, whenever significant externalities are present, states will tend to provide corporate law rules that differ from the socially desirable ones in a direction that systematically disfavors such third parties. Furthermore, the analysis shows that significant externalities are present in important areas of corporate law, including the regulation of takeover bids, proxy contests, and corporate disclosure and the protection accorded to creditors and other non-shareholder constituencies. I argue that federal law should be expanded to govern - or at least set minimum standards for - all aspects of these areas of corporate law.”^[4]

Bebchuk continued, “One major source of the shortcomings of state competition is the possible divergence between the interests of managers and controlling shareholders and the interests of public shareholders. Notwithstanding market forces and the need for shareholder approval to reincorporate, there are many issues with respect to which managers may well seek, and states in turn may well provide, rules that do not maximize shareholder value but rather serve the private interests of managers and controlling shareholders. In particular, the analysis has shown that state competition is likely to produce undesirable results with respect to issues that are significantly redistributive, issues that directly affect the strength of market discipline, and issues that involve potential transfers from public shareholders to a controlling shareholder. The second major source of the shortcomings of state competition is the presence of externalities. Because states seeking to attract incorporations have an incentive to focus on the interests of shareholders and managers, they will tend to ignore the interests of other parties. As a result, state competition may well produce undesirable rules whenever significant externalities are present. Because of this externality problem, state competition cannot be relied upon to produce socially desirable rules with respect to the regulation of takeovers, proxy contests, and disclosure; it also cannot be relied upon to provide socially desirable rules with respect to the protection accorded to creditors and other non-shareholder constituencies.”^[4]

Law professor William L. Cary wrote, “At the state level there appears to have been a failure to recognize the difference between the goals of industrial capitalism and the abuses of finance capitalism - the stage in which we appear to be today. Yet there appears to be no way out of the syndrome that has developed and that permits incorporation in any jurisdiction that may provide management freedom from restrictions. North Carolina initially, and New York subsequently, attempted to adopt some provisions in an effort to regulate foreign corporations doing business in the state (so-called pseudo-foreign corporations), but their efforts have been futile and the restrictions have been largely amended out of the law. State action cannot be effective in providing a responsible corporate statute.”^[5]

Cary continued, “In summary, as long as we operate within a capitalist society and as long as confidence in management is prerequisite to its continuance, there should be a federal interest in the proper conduct of the corporation itself as much as in the market for its securities. A civilizing jurisprudence should import lifting standards; certainly there is no justification for permitting them to deteriorate. The absurdity of this race for the bottom, with Delaware in the lead - tolerated and indeed fostered by corporate counsel - should arrest the conscience of the American bar when its current reputation is in low estate.”^[5]

Law professor Lucian Arye Bebchuk wrote, “First, state competition is likely to produce such rules with respect to issues that involve a potential transfer of significant value from shareholders to managers. Such issues include self-dealing transactions, taking of corporate opportunities, and insider trading. Second, state competition is likely to fail with respect to issues that directly affect the strength of market discipline, such as the regulation of takeover bids and proxy contests. Third, state competition is likely to yield undesirable rules with respect to issues that involve potential transfers between public shareholders and controlling shareholders, such as the regulation of going-private and parent-subsidiary freeze-outs. I argue that all of these issues, some of which are and traditionally have been governed by state corporate law, should be subject to federal rules or, at least, to federal minimum standards.”^[4]

Claim: State competition can work against the adoption of other desirable policies, including welfare

This claim suggests that state competition disincentivizes welfare and other redistributive policies, because wealthier and higher-earning individuals who would primarily fund the programs would tend to migrate to areas where the cost of redistributive policies was lower.

Law professor Michael W. McConnell wrote about destructive competition for government benefits and stated, “That significant external effects of this sort provide justification for national decisions is well understood - hence federal funding of defense, interstate highways, national parks, and medical research, and federal regulation of interstate commerce, pollution, and national labor markets. It is less well understood that nationalizing decisions where the impact is predominantly local has an equal and opposite effect. The framers' awareness that ill consequences flow as much from excessive as from insufficient centralization is fundamental to their insistence on enumerating and thus limiting the powers of the federal government.”^[2]

McConnell continued, “To be sure, the results of competition among states and localities will not always be salutary. State-by-state determination of the laws of incorporation likely results in the most efficient forms of corporate organization but state-by-state determination of the law of products liability seems to have created a liability monster. This is because each state can benefit in-state plaintiffs by more generous liability rules, the costs being exported to largely out-of-state defendants; while no state can do much to protect its in-state manufacturers from suits by plaintiffs in the other states. Thus, competition among the states in this arena leads to one-sidedly pro-plaintiff rules of law. The most important example of this phenomenon is the effect of state-by-state competition on welfare and other redistributive policies. In most cases, immigration of investment and of middle-to-upper income persons is perceived as desirable, while immigration of persons dependent on public assistance is viewed as a drain on a community's finances. Yet generous welfare benefits paid by higher taxes will lead the rich to leave and the poor to come. This creates an incentive, other things being equal, against redistributive policies. Indeed, it can be shown that the level of redistribution in a decentralized system is likely to be lower even if there is virtually unanimous agreement among the citizens that higher levels would be desirable. Where redistribution is the objective, therefore, advocates should and do press for federal programs, or at least for minimum federal standards. Thus, the competition among states has an uncertain effect: often salutary but sometimes destructive. There are races to the bottom as well as races to the top. Often one's view of the allocation of authority for specific issues will depend on a prediction as to substantive outcomes rather than a general theory of federalism.”^[2]

Claim: National rules are necessary to prevent undesirable effects of state competition

This claim suggests that state competition in the area of corporate law is likely to produce insufficient and undesirable rules. This should be addressed, according to this claim, with federal rules or federal minimum standards.

Law professor Lucian Arye Bebchuk wrote, “First, state competition is likely to produce such rules with respect to issues that involve a potential transfer of significant value from shareholders to managers. Such issues include self-dealing transactions, taking of corporate opportunities, and insider trading. Second, state competition is likely to fail with respect to issues that directly affect the strength of market discipline, such as the regulation of takeover bids and proxy contests. Third, state competition is likely to yield undesirable rules with respect to issues that involve potential transfers between public shareholders and controlling shareholders, such as the regulation of going-private and parent-subsidiary freeze-outs. I argue that all of these issues, some of which are and traditionally have been governed by state corporate law, should be subject to federal rules or, at least, to federal minimum standards.”^[4]

Bebchuk wrote, “One major source of the shortcomings of state competition is the possible divergence between the interests of managers and controlling shareholders and the interests of public shareholders. Notwithstanding market forces and the need for shareholder approval to reincorporate, there are many issues with respect to which managers may well seek, and states in turn may well provide, rules that do not maximize shareholder value but rather serve the private interests of managers and controlling shareholders. In particular, the analysis has shown that state competition is likely to produce undesirable results with respect to issues that are significantly redistributive, issues that directly affect the strength of market discipline, and issues that involve potential transfers from public shareholders to a controlling shareholder. The second major source of the shortcomings of state competition is the presence of externalities. Because states seeking to attract incorporations have an incentive to focus on the interests of shareholders and managers, they will tend to ignore the interests of other parties. As a result, state competition may well produce undesirable rules whenever significant externalities are present. Because of this externality problem, state competition cannot be relied upon to produce socially desirable rules with respect to the regulation of takeovers, proxy contests, and disclosure; it also cannot be relied upon to provide socially desirable rules with respect to the protection accorded to creditors and other non-shareholder constituencies.”^[4]

Law professor Michael W. McConnell wrote about destructive competition for government benefits and stated, “That significant external effects of this sort provide justification for national decisions is well understood - hence federal funding of defense, interstate highways, national parks, and medical research, and federal regulation of interstate commerce, pollution, and national labor markets. It is less well understood that nationalizing decisions where the impact is predominantly local has an equal and opposite effect. The framers' awareness that ill consequences flow as much from excessive as from insufficient centralization is fundamental to their insistence on enumerating and thus limiting the powers of the federal government.”^[2]

McConnell continued, “To be sure, the results of competition among states and localities will not always be salutary. State-by-state determination of the laws of incorporation likely results in the most efficient forms of corporate organization but state-by-state determination of the law of products liability seems to have created a liability monster. This is because each state can benefit in-state plaintiffs by more generous liability rules, the costs being exported to largely out-of-state defendants; while no state can do much to protect its in-state manufacturers from suits by plaintiffs in the other states. Thus, competition among the states in this arena leads to one-sidedly pro-plaintiff rules of law. The most important example of this phenomenon is the effect of state-by-state competition on welfare and other redistributive policies. In most cases, immigration of investment and of middle-to-upper income persons is perceived as desirable, while immigration of persons dependent on public assistance is viewed as a drain on a community's finances. Yet generous welfare benefits paid by higher taxes will lead the rich to leave and the poor to come. This creates an incentive, other things being equal, against redistributive policies. Indeed, it can be shown that the level of redistribution in a decentralized system is likely to be lower even if there is virtually unanimous agreement among the citizens that higher levels would be desirable. Where redistribution is the objective, therefore, advocates should and do press for federal programs, or at least for minimum federal standards. Thus, the competition among states has an uncertain effect: often salutary but sometimes destructive. There are races to the bottom as well as races to the top. Often one's view of the allocation of authority for specific issues will depend on a prediction as to substantive outcomes rather than a general theory of federalism.”^[2]

Argument: Federalism detracts from our identity as a national community

This argument contends that the idea of community should focus primarily on the national community of the United States, which is diminished by federalism.

Claim: The United States has one political community, which is a national community

This claim suggests that states are ineffective at fostering a sense of community and that a true sense of political community can only be established at the national level.

Law professors Edward L. Rubin and Malcolm Feeley wrote, “In essence, therefore, federalism protects nothing but itself; it is a sort of endangered species act for political ideas. That may have a certain charm, a quality that evokes small-town America and its homespun values, although not, one hopes, the languid life of the antebellum plantation, with the wind whispering through the magnolias and the slaves singing happily in the fields. Even at its best, sappy imagery of this sort provides no valid basis for constraining national policy. If ‘we’ - the political community of the United States - decide upon a particular course of action, federalism should not constrain its implementation.”^[1]

Rubin and Feeley continued, “The answer suggested here is that ‘we’ means our national polity, because that is the real locus of public debate. Federalism, as opposed to decentralization, acts as a constraint on our ability, as a nation, to achieve the policies we want, including policies of participation, local variation, and experimentation. It may encourage some states to go further with these policies, but, more significantly, it permits other states to fall below the accepted minimum. One can only justify federalism by asserting that there is no ‘we’ - that the nation is not a political community. In that case, the variation among states, and their commitment to different normative positions, is not problematic, because there is no national standard below which they can fall, and, on average, states are as likely to reach the ‘right’ level as the national government. But our nation is indeed a political community; for better or worse, it does constitute our political sense of self and the arena in which our basic normative positions about government must be argued and resolved.”^[1]

Rubin and Feeley continued, “We argue that federalism does not secure community because our real community is a national one.”^[1]

Rubin and Feeley continued, “Federalism, unlike the more general principle of managerial decentralization, only protects the rights of states, and all, or virtually all, American states are far too large to function as affective communities. … Because of the obvious disjunction between affective communities and states, the communitarian argument for federalism tends to emphasize a different claim: that state governments are more likely to protect and foster local communities than a remote federal government. But no theoretical argument or empirical evidence supports this proposition. Indeed, for reasons previously discussed, the only reliable way to establish a program of this sort throughout the nation is to have the national government implement it. Left to their own devices, some states might foster community, while others might attempt to extirpate it. Affective community, like any other uniform policy, is more likely to be achieved through comprehensive nation-wide action.”^[1]

Rubin and Feeley continued, “This nation-wide dispersion of ethnic and cultural identities, paralleling the dispersion of economic or ideological identities, does not mean that the concept of political community is inapplicable to the United States. What it means, rather, is that the United States has one political community, and that political community is the United States. The arena in which our political consciousness takes shape and our crucial decisions are made is a national one. It is the nation as a whole that constructs our sense of self and that provides a sense of participation in a larger group. Thus, American federalism is nothing more than decentralization because the normative claim of political community is not available to it. That claim, in any meaningful sense, belongs only to the nation as a single entity. Because our political community is so vast, the individual's sense of personal participation is generally quite attenuated. But this does not transform the states, counties, or cities, into true political communities. It simply means that most Americans will not be able to find personal fulfillment by participating in the collective decision-making process that shapes their consciousness and controls their lives.”^[1]

Claim: Federalism dispels the unity of public opinion

This claim suggests that federalism negatively affects the unity of public opinion at the national level, which undermines the strength of the national community to create democratic solutions to problems.

Harold Laski wrote, “Giant industry requires a positive state; federalism, in its American form, is geared to vital negations which contradict the implications of positivism. Giant industry requires uniformities in the field of its major influence; American federalism is the inherent foe, both in time and space, of those necessary uniformities. Giant industry, not least, requires the opposition of a unified public will to counteract its tendency to undemocratic procedure through the abuse of power; a federal system of the American kind dissipates the unity of public opinion in those fields where it is most urgently required. And, above all, it is urgent to note that giant industry, in an age of economic contraction, is able to exploit the diversities of a federal scheme, through the delays they permit in the attainment of uniformity, to reactionary ends. Thereby, they discredit the democratic process at a time when it is least able to afford that discredit. For, thereby, the confidence of the citizen body in its power to work out democratic solutions of its problems is gravely undermined.”^[3]

Argument: Federalism is an impediment to implementing the national will

This argument posits that federalism grants states the power to block the federal government from implementing national policies that benefit the national community.

Claim: Federalism constrains the implementation of national policy

This claim suggests that federalism prevents national policies from being implemented for the benefit of the national community. According to this claim, a system of administrative decentralization where ultimate power rests in the national government and is delegated to the states is superior to ideas of states rights under federalism.

Law professors Edward L. Rubin and Malcolm Feeley wrote, “In essence, therefore, federalism protects nothing but itself; it is a sort of endangered species act for political ideas. That may have a certain charm, a quality that evokes small-town America and its homespun values, although not, one hopes, the languid life of the antebellum plantation, with the wind whispering through the magnolias and the slaves singing happily in the fields. Even at its best, sappy imagery of this sort provides no valid basis for constraining national policy. If ‘we’ - the political community of the United States - decide upon a particular course of action, federalism should not constrain its implementation.”^[1]

Rubin and Feeley continued, “The answer suggested here is that ‘we’ means our national polity, because that is the real locus of public debate. Federalism, as opposed to decentralization, acts as a constraint on our ability, as a nation, to achieve the policies we want, including policies of participation, local variation, and experimentation. It may encourage some states to go further with these policies, but, more significantly, it permits other states to fall below the accepted minimum. One can only justify federalism by asserting that there is no ‘we’ - that the nation is not a political community. In that case, the variation among states, and their commitment to different normative positions, is not problematic, because there is no national standard below which they can fall, and, on average, states are as likely to reach the ‘right’ level as the national government. But our nation is indeed a political community; for better or worse, it does constitute our political sense of self and the arena in which our basic normative positions about government must be argued and resolved.”^[1]

Rubin and Feeley argued that most arguments for federalism are actually arguments for decentralization. They suggested that decentralization is superior to federalism because federalism hinders the pursuit of national goals. They wrote, “Once we recognize the distinction between federalism and decentralization, we can see that many standard arguments advanced for federalism are clearly nothing more than policy arguments for decentralization. These are the claims that some nationally-defined policy is best achieved by permitting regional variation. The point is not simply that federalism is unnecessary for implementing such policies, that it represents an unnecessary use of constitutional artillery. Rather, federalism is absolutely antithetical to these policies because it allows the wrong kinds of variation. Implementing a national policy through a decentralized system means that the permitted variations will be those that contribute to achieving the designated policy. In contrast, federalism allows the states to vary as they choose, pursuing their own policies instead of the national one. This can be justified only by arguments favoring a variety of policies, not by arguments favoring the implementation of a single policy by a variety of methods. Of the standard arguments for federalism, four are really arguments that specific national policies are best implemented by decentralized decision-making; these are public participation, effectuating citizen choice through competition among jurisdictions, achieving economic efficiency through competition among jurisdictions, and encouraging experimentation. All four reflect policies that are applicable to the American political context; while questions can certainly be raised about their desirability, they are at least plausible strategies for governing our country. They are national strategies, however, linked to federalism only by confusing that concept with decentralization, and by the airy, flag-waving-in-the-breeze rhetoric that characterizes the entire subject.”^[1]

Claim: States are not capable of handling issues with a national scope

This argument contends that state governments are incapable of addressing national problems, so the federal government needs more power.

Law professor Russell Pannier wrote, “The growth of federal power at the expense of state power has been caused by the apparent inability of the states to resolve problems of national scope. Many people believe that state governments cannot meet the challenges of the business cycle, war, pollution, technology, crime and much else.”^[6]

Claim: Federalism cannot meet the national demands that capitalism creates

This claim suggests that capitalism creates national demands that federalism is not equipped to handle. According to this claim, centralization is necessary to handle the demands.

Harold Laski wrote, “Men who are deprived of faith by inability to attain results they greatly desire do not long remain content with the institutions under which they live. The price of democracy is the power to satisfy living demands. American federalism, in its traditional form, cannot keep pace with the tempo of the life giant capitalism has evolved. To judge it in terms of its historic success is to misconceive the criteria by which it becomes valid for the present and the future. No political system has the privilege of immortality; and there is no moment so fitting for the consideration of its remaking as that which permits of reconstruction with the prospect of a new era of creative achievement.”^[3]

Laski continued, “Giant industry requires a positive state; federalism, in its American form, is geared to vital negations which contradict the implications of positivism. Giant industry requires uniformities in the field of its major influence; American federalism is the inherent foe, both in time and space, of those necessary uniformities. Giant industry, not least, requires the opposition of a unified public will to counteract its tendency to undemocratic procedure through the abuse of power; a federal system of the American kind dissipates the unity of public opinion in those fields where it is most urgently required. And, above all, it is urgent to note that giant industry, in an age of economic contraction, is able to exploit the diversities of a federal scheme, through the delays they permit in the attainment of uniformity, to reactionary ends. Thereby, they discredit the democratic process at a time when it is least able to afford that discredit. For, thereby, the confidence of the citizen body in its power to work out democratic solutions of its problems is gravely undermined.”^[3]

Laski continued, “The central point of my argument is the simple one that in every major field of social regulation, the authority of which the federal government can dispose is utterly inadequate to the issues it is expected to solve. I do not think this argument is invalidated by the rise of cooperation between the federal government and the states, or between groups of states.”^[3]

Laski continued, “The poor state is parasitic on the body politic. It offers privileges to giant capitalism to obtain its taxable capacity, offers escape from the impositions of rich states, in order to wrest from the wealthy some poor meed of compensation for its backwardness. It dare not risk offending the great industrial empires—cotton, coal, iron and steel, tobacco—lest it lose the benefits of their patronage. Their vested interests thus begin to define the limits within which the units of the federation may venture to move. And since the division of powers limits, in its turn, the authority of the federal government to intervene—the latter being a government of limited powers—it follows that the great industrial empires can, in fact, prevent the legislation necessary to implement the purposes of a democratic society.”^[3]

Argument: Federalism fosters corruption

This argument posits that federalism contributes to corruption among state and local governments, which are more susceptible to capture from corporate interests.

Claim: Large corporations can more easily control state and local governments

This claim suggests that corporations can more easily influence state and local governments than the national government.

Harold Laski wrote, “My argument is the very different one: that (a) there are certain objects of administrative control now left to the states for which they are no longer suitable units of regulation. Economic centralization makes necessary at least minimum standards of uniform performance in these objects, e.g., health, education, unemployment relief; and in others, e.g., labor conditions, railroad rates, electric power, complete federal control without interference by the states; and (b) that the proper objects of federal supervision cannot any longer be dependent upon state consent. Where this dependency exists, state consent will be, in its turn, largely controlled by giant capitalism.”^[3]

Laski continued, “The poor state is parasitic on the body politic. It offers privileges to giant capitalism to obtain its taxable capacity, offers escape from the impositions of rich states, in order to wrest from the wealthy some poor meed of compensation for its backwardness. It dare not risk offending the great industrial empires—cotton, coal, iron and steel, tobacco—lest it lose the benefits of their patronage. Their vested interests thus begin to define the limits within which the units of the federation may venture to move. And since the division of powers limits, in its turn, the authority of the federal government to intervene—the latter being a government of limited powers—it follows that the great industrial empires can, in fact, prevent the legislation necessary to implement the purposes of a democratic society.”^[3]

Argument: Federalism only works for developing nations

This argument posits that federalism is suitable for developing nations in the midst of expanding capitalism. It is not, according to this argument, suitable for the stage of social and economic development the United States has reached.

Claim: The stage of economic development in the United States is not suitable for federalism

This claim suggests that the United States has reached a level of economic and social development that is no longer suitable for federalism.

Harold Laski wrote, “My plea here is for the recognition that the federal form of state is unsuitable to the stage of economic and social development that America has reached. I infer from this postulate two conclusions: first, that the present division of powers, however liberal be the Supreme Court in its technique of interpretation, is inadequate to the needs America confronts and, second, that any revision of those powers is one which must place in Washington, and Washington only, the power to amend that revision as circumstances change. I infer, in a word, that the epoch of federalism is over, and that only a decentralized system can affectively confront the problems of a new time.”^[3]

Laski continued, “To continue with the old pattern, in the age of giant capitalism, is to strike into impotence that volume of governmental power which is necessary to deal with the issues giant capitalism has raised. Federalism, I suggest, is the appropriate governmental technique for an expanding capitalism, in which the price of local habit—which means, also, local delay—admits of compensation in the total outcome. But a contracting capitalism cannot afford the luxury of federalism. It is insufficiently positive in character; it does not provide for sufficient rapidity of action; it inhibits the emergence of necessary standards of uniformity; it relies upon compacts and compromises which take insufficient account of the urgent category of time; it leaves the backward areas a restraint, at once parasitic and poisonous, on those which seek to move forward; not least, its psychological results, especially in an age of crisis, are depressing to a democracy that needs the drama of positive achievement to retain its faith.”^[3]

Argument: A strong centralized government and a unified national will is necessary to check the powers of big businesses

This argument states that big businesses have the potential power to exploit individuals and smaller units of government. This power, according to this argument, needs a centralized government and a unified public will to keep it in check.

Claim: A unified national will protects against exploitation by big businesses

This claim suggests that a unified public will is necessary to protect individuals and local governments against potential exploitation by businesses.

Harold Laski wrote, “Giant industry requires a positive state; federalism, in its American form, is geared to vital negations which contradict the implications of positivism. Giant industry requires uniformities in the field of its major influence; American federalism is the inherent foe, both in time and space, of those necessary uniformities. Giant industry, not least, requires the opposition of a unified public will to counteract its tendency to undemocratic procedure through the abuse of power; a federal system of the American kind dissipates the unity of public opinion in those fields where it is most urgently required. And, above all, it is urgent to note that giant industry, in an age of economic contraction, is able to exploit the diversities of a federal scheme, through the delays they permit in the attainment of uniformity, to reactionary ends. Thereby, they discredit the democratic process at a time when it is least able to afford that discredit. For, thereby, the confidence of the citizen body in its power to work out democratic solutions of its problems is gravely undermined.”^[3]

Laski continued, “What, at least, is certain is this: that a government the powers of which are not commensurate with its problems will not be able to cope with them. Either, therefore, it must obtain those powers, or it must yield to a form of state more able to satisfy the demands that it encounters. That is the supreme issue before the United States today; and the more closely it is scrutinized the more obviously does its resolution seem to be bound up with the obsolescence of the federal system.”^[3]

Laski continued, “It must be emphasized that the unity which giant capitalism postulates in the economic sphere postulates a corresponding unity in the conference of political powers upon the federal government. There is no other way, up to a required minimum, in which the questions of taxation, labor relations and conditions, conservation, public utilities (in the widest sense), to take examples only, can be met.”^[3]

Laski continued, “To continue with the old pattern, in the age of giant capitalism, is to strike into impotence that volume of governmental power which is necessary to deal with the issues giant capitalism has raised. Federalism, I suggest, is the appropriate governmental technique for an expanding capitalism, in which the price of local habit—which means, also, local delay—admits of compensation in the total outcome. But a contracting capitalism cannot afford the luxury of federalism. It is insufficiently positive in character; it does not provide for sufficient rapidity of action; it inhibits the emergence of necessary standards of uniformity; it relies upon compacts and compromises which take insufficient account of the urgent category of time; it leaves the backward areas a restraint, at once parasitic and poisonous, on those which seek to move forward; not least, its psychological results, especially in an age of crisis, are depressing to a democracy that needs the drama of positive achievement to retain its faith.”^[3]

Claim: Small units of government are at risk of being exploited by capitalism

This claim suggests that lower levels of government do not have the power to check big businesses.

Laski continued, “The view here urged, of course, looks toward a fundamental reconstruction of traditional American institutions. It is not impressed by the view, associated with the great name of Mr. Justice Brandeis, that the ‘curse of bigness’ will descend upon any serious departure from the historic contours of federalism. The small unit of government is impotent against the big unit of giant capitalism.”^[3]

Laski continued, “Giant capitalism has, in effect, concentrated the control of economic power in a small proportion of the American people. It has built a growing contrast between the distribution of that economic power and the capacity of the political democracy effectively to control the results of its exercise. It has transcended the political boundaries of the units in the American federation so as to make them largely ineffective as areas of independent government. … For forty-eight separate units to seek to compete with the integrated power of giant capitalism is to invite defeat in every element of social life where approximate uniformity of condition is the test of the good life.”^[3]

Claim: A centralized government protects state governments from being controlled by capitalism

This claim suggests that corporate interests and the desire to attract corporate tax revenues often control state governments.

Laski continued, “The poor state is parasitic on the body politic. It offers privileges to giant capitalism to obtain its taxable capacity, offers escape from the impositions of rich states, in order to wrest from the wealthy some poor meed of compensation for its backwardness. It dare not risk offending the great industrial empires—cotton, coal, iron and steel, tobacco—lest it lose the benefits of their patronage. Their vested interests thus begin to define the limits within which the units of the federation may venture to move. And since the division of powers limits, in its turn, the authority of the federal government to intervene—the latter being a government of limited powers—it follows that the great industrial empires can, in fact, prevent the legislation necessary to implement the purposes of a democratic society.”^[3]

Laski continued, “My argument is the very different one: that (a) there are certain objects of administrative control now left to the states for which they are no longer suitable units of regulation. Economic centralization makes necessary at least minimum standards of uniform performance in these objects, e.g., health, education, unemployment relief; and in others, e.g., labor conditions, railroad rates, electric power, complete federal control without interference by the states; and (b) that the proper objects of federal supervision cannot any longer be dependent upon state consent. Where this dependency exists, state consent will be, in its turn, largely controlled by giant capitalism.”^[3]

Laski said, “Men who are deprived of faith by inability to attain results they greatly desire do not long remain content with the institutions under which they live. The price of democracy is the power to satisfy living demands. American federalism, in its traditional form, cannot keep pace with the tempo of the life giant capitalism has evolved. To judge it in terms of its historic success is to misconceive the criteria by which it becomes valid for the present and the future. No political system has the privilege of immortality; and there is no moment so fitting for the consideration of its remaking as that which permits of reconstruction with the prospect of a new era of creative achievement.”^[3]

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Footnotes

↑ ^1.0 ^1.1 ^1.2 ^1.3 ^1.4 ^1.5 ^1.6 ^1.7 ^1.8 ^1.9 BerkeleyLaw University of California, "Federalism: Some Notes on a National Neurosis," April 1994
↑ ^2.0 ^2.1 ^2.2 ^2.3 ^2.4 Cite error: Invalid <ref> tag; no text was provided for refs named evaluating
↑ ^3.00 ^3.01 ^3.02 ^3.03 ^3.04 ^3.05 ^3.06 ^3.07 ^3.08 ^3.09 ^3.10 ^3.11 ^3.12 ^3.13 ^3.14 ^3.15 ^3.16 ^3.17 ^3.18 ^3.19 ^3.20 Research Gate, "The Obsolescence of Federalism," January 2005
↑ ^4.0 ^4.1 ^4.2 ^4.3 ^4.4 HeinOnline, "Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law," May 1992
↑ ^5.0 ^5.1 JSTOR, "Federalism and Corporate Law: Reflections upon Delaware," March 1974
↑ William Mitchell Law Review, "Justifying Federalism," 1990

[neurosis-1] 1.0 ^1.1 ^1.2 ^1.3 ^1.4 ^1.5 ^1.6 ^1.7 ^1.8 ^1.9 BerkeleyLaw University of California, "Federalism: Some Notes on a National Neurosis," April 1994

[evaluating-2] 2.0 ^2.1 ^2.2 ^2.3 ^2.4 Cite error: Invalid <ref> tag; no text was provided for refs named evaluating

[obsolescence-3] 3.00 ^3.01 ^3.02 ^3.03 ^3.04 ^3.05 ^3.06 ^3.07 ^3.08 ^3.09 ^3.10 ^3.11 ^3.12 ^3.13 ^3.14 ^3.15 ^3.16 ^3.17 ^3.18 ^3.19 ^3.20 Research Gate, "The Obsolescence of Federalism," January 2005

[federalcompetition-4] 4.0 ^4.1 ^4.2 ^4.3 ^4.4 HeinOnline, "Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law," May 1992

[corporatelaw-5] 5.0 ^5.1 JSTOR, "Federalism and Corporate Law: Reflections upon Delaware," March 1974

[justifying-6] William Mitchell Law Review, "Justifying Federalism," 1990

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