The Supremacy Clause of the US Constitution (Article VI, Clause 2) asserts the right of federal legislation to preempt state legislation. This clause makes sense in light of the Constitution’s creation of a free-trade zone. Under the Articles of Confederation, the individual states were highly protectionist, as Jonathan Hughes set forth in The Governmental Habit. The Supremacy Clause gave the federal government the power to rescind protectionist legislation.
It has long been noted that “all politics is local politics.” This strongly held sentiment is not generally friendly to free trade. More precisely, it is friendly when free trade does not hurt local interests; otherwise, it is protectionist. Thus, we see general support for the principle of free trade, accompanied by myriad instances of opposition from significant local interests, which claim that their particular circumstances warrant exceptions from the general practice of free trade. With the multiplication of such exceptions, the governmental habit of rampant protectionism grows.
Although the Supremacy Clause gives the federal government authority to override state-sponsored restrictions on interstate commerce, it does nothing to prevent the federal government from sponsoring protectionist measures. For instance, between 1938 (when the Civil Aeronautics Board was established) and 1984 (when it was abolished), the CAB did not allow a single new carrier to enter interstate air commerce. Yet this period saw rapid growth in air travel. The only possible conclusion is that the CAB created and maintained a cartel of the air carriers that were already in business in 1938. With the CAB’s abolition, the airline industry underwent dramatic reconfiguration.
The CAB and numerous similar cases of federal regulation lead one to wonder whether the Supremacy Clause promotes free trade by restricting state-sponsored protectionism or whether it transfers cartel-creating power from state legislatures to the federal legislature. Nothing in the Constitution prevents federal legislation from promoting protection over free trade. Indeed, Michael Greve explains that federal legislation has created an Upside-Down Constitution, by which he means that what was initially a system of national free trade has been transformed into a system of federally sponsored cartels.
The same issues of federal preemption of state legislation occur with respect to state preemption of local ordinances. Throughout the land, we see municipalities creating ordinances that state legislatures oppose. For instance, the Texas legislature opposes Austin’s ban on Uber and Lyft. Also in Texas, the city of Fort Stockton seeks to ban plastic bags, while the city of Denton wants to ban hydraulic fracturing (fracking). Numerous localities have sought to ban the ownership of firearms, the sale of e-cigarettes, or texting while driving. Still other localities have sought to impose rent controls, to establish minimum wages, and to restrict payday lending.
With all politics being local, nothing is surprising about these protectionist efforts. One relevant difference between federal preemption of state legislation and state preemption of local ordinances is that local governments do not have official constitutional standing. The relation between federal and state action is constitutionally specified. In contrast, localities are products of state legislation.
Still, local autonomy is a tradition within American government. Moreover, several states have conferred a form of constitutional independence by creating “home rule” cities. Either way, we can recognize that tradition and practice have enabled a great deal of local autonomy within states. Such autonomy can be beneficial by allowing local officials to promote activities their constituents desire rather than having to take direction from the state capital. It does not follow, however, that local autonomy is invariably beneficial, for local autonomy can be protectionist just as can federal legislation.
The theory of statistics offers telling insight in this respect. A woman claims she can tell whether a cup of tea was made by pouring the milk into the cup first and then adding the tea, or by doing the reverse. A perfectly accurate judgment is impossible to make. Even worse, the greater the effort that is made to avoid declaring she can tell the difference when she can’t, the more likely she will be recognized as being able to tell the difference when she can’t. Perfection is impossible. All that is possible is to select some standard and procedure and live with the result.
We face the same problem with preemption, whether federal preemption of state legislation or state preemption of local ordinances. Without the ability of higher-level governments to preempt lower-level actions, we know that a good deal of protectionism will arise under the recognition that all politics is local. At whatever level of government political power is organized, it will most likely be used to favor the local interests of those who hold political power.
It is this simple recognition that supports higher-level preemption to prevent a deeply encumbered world of restrictions imposed by people who place particularly high value on local activities. A city’s ban on plastic bags, for instance, will have little perceptible impact on key political figures within the town that banned the bags, leading to relatively few voices being raised in opposition. At the statewide level, however, opposition would surely be stronger.
For this reason, higher-level governments will generally—but not invariably—more strongly support open trade than will lower-level governments. Activism by some members of a town council might be sufficient to marshal opposition to plastic bags. To marshal opposition to free choice in elementary education, however, might require support from statewide or even national interest groups.
In short, no known system of government can preserve individual liberty and open competition. A federal or compound republic can do so better than isolated or simple republics, as Vincent Ostrom explains in The Political Theory of a Compound Republic, but that is about all that can be said. The ability of higher government to preempt actions of lower governments is necessary to maintain a liberal regime of open trade. But it will do so only imperfectly, as higher governments also replace lower-level sponsors of restriction with higher-level sponsors. There will always be room for marginal improvements here and there, but no universal measure can secure free trade once and for all. This is what it means to recognize that eternal vigilance is the price of liberty.