Have you ever pondered why our official name is "The United States of America" and not just "America"? I am relatively sure the Founding Fathers didn't pick the longer moniker just because they preferred the sound of it.
The U.S. Constitution establishes a system where both the national and state governments share some powers and are granted exclusive prevue to others. The name "United States" is a result of the Founders' desire to base the nation's balance of power on the principle of federalism.
The general understanding of Federalism is that the states are sovereign. This means that the federal government is merely an agent of the states. The states retain final authority over all their affairs, other than the seventeen enumerated powers conferred to the federal government in Article I, Section 8 of the U.S. Constitution. The Founders were first and foremost frightened of a powerful central government. It is that very thing that they had just fought a war to escape.
The Progressive Movement launched an attack on this system of government in the early 20th century. The Progressives, used fear mongering in conjunction with the threat of World War I to dramatically alter the vision of the Founders.
In 1912, the Seventeenth Amendment providing for direct popular election of the Senate rather than selection by state legislatures was approved and ratified.
The altering of the selection process, however, also altered the principal mechanism employed by the Framers to perpetuate federalism. The Framers understood that having senators serve at the pleasure of the state legislatures created an atmosphere of political self-preservation. Senators, beholden to the state legislatures for their seats and dependent on them for re-election, would be vigilant in defending state's rights against infringement by the federal government.
The progressives knew that allowing federalism to persist sounded the death knell to their designs on an omnipotent central government. The Senate would never permit the federal government to assume powers that heretofore had been the sovereign domain of the states themselves as long as the state legislatures held the power to admonish any senator that did not toe the line. Once the progressives had eliminated this hurdle, the floodgates opened and the federal government has grown to the behemoth we know today.
OK, I know most of you are thinking, I hated history when I was in school and my opinion hasn't changed. What can this possibly mean to me today?
Well, if federalism had been allowed to exist, there would be no alphabet soup of federal regulatory agencies dictating every aspect of our lives. Each state would be a petri dish of experimentation on everything from taxation, regulation, policy, and procedure. There would be no overriding central dictate. States would compete with each other to attract business and citizens. If a business or a citizen didn't like the rules in one state, they would merely move to another where the political environment was more to their liking. This is the country that the Founders designed, fifty laboratories of innovation that died along with federalism.
How many times have your heard various big government factions and unions blame the corporate establishment for the flight of jobs offshore? Never does responsibility for this loss fall upon the taxation and government regulation that increases the cost of production above a price the market will bear.
Ask anyone who attempts to negotiate the nightmarish maze of bureaucratic red tape, that is business in America, and you will hear the same story. America has become the enemy of business. Walter Wriston, former CEO of Citicorp, coined Wriston's law of capital. The law states that: "Capital will always go where it is welcome and stay where it is well treatedCapital is not just money. It's also talent and ideas." In other words, if it is impossible for a business to succeed in America because of the burdens of government, they will seek a place where they can be successful. For most of our history, America was the place where capital was welcome from around the world. That is no longer the case.
Imagine an America where instead of fleeing to another country, businesses fled from one state to another because of a better business climate. Where jobs and opportunity are not hemorrhaging offshore because the onshore business environment has become impossible. That is a country where the Founders' vision of federalism is alive and well. Where each state uniquely decides and defines the rules that best fit its circumstance. Where a state can decide to be business friendly, environmentally friendly, free market or socialist, etc. and the citizens of America can decide where to live based on how their values are reflected in the political climate of the states.
When the central government forces rules upon all the states, it extinguishes the state's ability to differentiate itself and thus attempt to make itself more attractive to various constituencies. By exercising the ability to make changes that could attract jobs and people, the states would have been individual examples of what works and what doesn't. The successful states would have been models for others to learn from and to emulate.
Isn't it a shame we have allowed the vision of federalism to die? We only need to look back to the Seventeenth Amendment to discover the source of our sliding stature in the world's economy.