“All politics is local”

– Thomas “Tip” O’Neill, Speaker of the U.S. House of Representatives from 1977-1987

Oh really?    Increasingly, it seems like Washington didn’t get the memo.

In Arizona, an overwhelming majority of citizens have had their legislative directives overturned by a federal judge that towed the Obama administration’s political line.   According to an April Rasmussen poll,  70% of Arizonans (but far fewer journalists) supported their law which would have permitted local police to seek immigration status documentation in their course of work.   Note that having to provide your car registration to the police upon being pulled over for “reasonable cause” is already a widely accepted practice; being able to prove that you’re in this country legally doesn’t seem like a big stretch from there.

But this is just one of a number of increasingly high-profile interventions by the federal government into the affairs of an individual state.   In California, a federal judge recently overturned Proposition 8, which banned same-sex marriages and was supported by a majority of the public in a 2008 vote.   And in Mississippi, as federal stimulus money is being crammed down the throat of the state legislature, the Wall Street Journal reported this from Governor Haley Barbour:

Mr. Barbour says the bill will force his state “to rewrite its current year [fiscal 2011] budget. Preliminary estimates of the Mississippi Department of Finance and Administration show that we will now have to spend between $50-100 million of state funds—funds that must be taken away from public safety, human services, mental health and other state priorities and given to education—in order for an additional $98 million of federal funds to be granted to education. There is no justification for the federal government hijacking state budgets, but that is exactly what Congress has done.”

A common thread

I received a phone solicitation the other day from a group that was launching a program to promote State’s Rights.   The solicitor told me that in several days of calling, I was only the third person he had encountered who knew about our Constitution’s 10th Amendment, which simply states:

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.

I believe this observation is exactly what lies behind the federal government’s accelerating power-grab.   After all, anything can be stolen from you if you don’t know it’s yours.   As voters, we’ve tolerated these federal intrusions so frequently that the feds are simply becoming more brazen.   But the effects of the federal government increasingly muscling their way in on the activities of the states are both numerous and profound.

First, they are in effect destroying the research labs from which new, more effective public policies can be discovered.   The states are supposed to be the testing grounds for various policy experiments, with the ultimate vote on their success being the immigration to or from particular states themselves.   For example, many of the changes applied to our federal welfare programs were born out of similar changes first made in Wisconsin.

With various possible solutions in play, it becomes easy to see which are truly working:  just follow the moving vans. States like New York, California and Michigan, with their bloated bureaucracies, impediments to business creation and expansion, all paid for with punishing tax rates, have seen their populations fall.   Joel Kotkin has an excellent piece in the recent City Journal describing California’s self-directed destruction.  By contrast, states with economically friendly legislatures, like Texas, have seen their populations rise.

Second, when federal policy overlaps, trumps, or obfuscates state policy, the resulting legal and/or implementation confusion produces a drag on economic growth, with the notable exceptions of the legal and lobbying professions.   Attempting to navigate the legislative confusion raises everyone’s costs, which ultimately show up at the retail level.   In turn, the lobbying furthers the cynicism amongst voters that the system is rigged, and disparages the very term of our supposed “free market, capitalist” system:  the resulting “crony capitalism” is anything but.

Third, federal solutions, by their sheer physical disconnection to the local circumstances, have a chilling effect on local involvement.   As the public becomes aware that larger, external programs exist for “problems” in their immediate area, they are afforded the ability to think less and less about those problems, under the assumption that these programs are actually effective.   So a trend is fostered where “cookie-cutter” solutions emerge and people and situations are shoe-horned into the supposed solution.

Illegal immigration, due to its effect on the labor pool, adds its own special economic issues.   Given that labor is often such an important input in production, if labor is artificially cheap, then the resulting goods are artificially cheap as well.  This inevitably leads to misallocation of resources, and economic pain when reality is thrust back into sight.     Cheaper produce, for example, might be one result of illegal immigrant labor.  But is additional consumption based on excess capital stemming from a distorted market sustainable in the long run?    Or consider the housing market:  At the margin, were many houses actually cheaper than they should have been, leading additional people to buy them who never should have?

But lastly, one must consider the distinct possibility that believers in an omnipotent federal government, in their insatiable thirst for power, are incapable of enacting laws that cut themselves out of the picture.  Witness the outright hostility to Health Savings Accounts, a proven solution that simply can not get traction from the top.

One Possible Answer

The formerly little-known legislative action of “nullification” is increasingly creeping into the poli-economic commentary.   Part of this may be due to Thomas E. Wood’s recent book of the same name.  As Woods and others have noted, “voting the bums out” tends not to happen too often at the federal level, and those elected sometimes change their stripes.   Arizona’s case seems certain to wind up in the Supreme Court.   One would think they have a slam-dunk case, but with other seemingly slam-dunks (think Kelo) going the other way, you never know.

Given that it is the states that grant the federal government their power, it stands to reason that they should have veto power on whatever outlandish, un-Consitutional power-grabs the feds might attempt.   And as Woods notes, Thomas Jefferson himself actively promoted the idea.   It’s an old idea whose time has come.

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