"Federalism" defines the relationship between the States and the Feds. The States thought they were sovereign countries before the Constitution, and in most ways they are. States punish their own crimes, run their own schools, regulate their own businesses -- the list is too long to belabor. States can regulate anything and everything, except what the Constitution has carved out for the federal government. One carve-out is huge: it encompasses anything that touches on commerce that crosses state lines, which in the modern world can be almost anything. But just because there is a federal interest in interstate commerce does not mean the States have no power. Especially when federal inaction leaves a void, the States can fill it.
This used to be called States' rights. The trouble with speaking of "rights" is that they are meaningless in the abstract. The right -- to do what, exactly? States' rights got a bad name because as first articulated by John C. Calhoun before the Civil War, the Southern States baldly advocated for the "right" to own slaves. Likewise, during Jim Crow, States wanted the "right" to segregate some citizens into an inferior class. But it doesn't sound so bad when States assert a right to clean water, safe streets, and affordable health care for their citizens. It all depends on what it is you claim the "right" to do.
Yale Law School Dean Heather K. Gerken has been arguing for "progressive" or "new" federalism" See . But federalism isn't new, and adding "progressive" just reduces it to a partisan tool for local communities suing the Trump administration. See . These communities have turned the red-state Republicans' playbook in attacking Obamacare back against them, a nice example of being hoisted on one's own petard. That the Heritage Foundation is miffed by it makes it even sweeter. . But it's still just the same old federalism. There's a better way to look at federalism than as a mere weapon of the Resistance.
Buckminster Fuller once wisely observed that, "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." Build it better and they will come -- but you actually have to build it; you can't just talk about it. The States are where to try out new models small scale, to see if they work well enough to garner a following. That's why Justice Louis Brandeis called the States the "laboratories of democracy." So instead of progressive federalism, let's embrace a pragmatic federalism that takes seriously that there is no one way the world must be, that stubborn certitude leads, in the extreme, to violence, and that the goal of democracy is not to chase abstract "principles" but to craft workable compromises that alleviate real problems. Those emerge best from real world experiments.
In pragmatic federalism, States take the lead. In 1973, Colorado and Washington first legalized marijuana use. Last election, voters made Michigan the 10th State to legalize recreational, and Utah and Missouri the 20th and 21st to legalize medical marijuana use. . Only two states still make possession a crime. It's been a slow 45-year process, but there's no going back now. The federal government, as usual, lags behind.
Likewise, the recent Supreme Court rulings on same-sex marriage haven't become another flash-point like Roe v. Wade because by then, 38 States had recognized same-sex marriages and, more importantly, most people in all but two States approved of them having done so. See That was also slow coming, but once a critical mass of public opinion coalesced, it evolved rapidly.
On the other hand, backward-looking State experiments tend to fail. The old States' rights of the secessionists and segregationists were regressive, seeking to maintain a status quo or to reinstate an earlier history. Alabama and West Virginia are trying another regressive experiment, having just passed State constitutional amendments denying abortion rights. . I don't think many will follow them (Roe blocks them for now anyway), but let them see for themselves how lonely it can get. They should remember Prohibition, yet another regressive experiment that failed spectacularly. There are still about 200 "dry" counties in the US, but the people seem to drink there as much as they do anyplace else.
Premature federal action that chokes off experimentation can also be counterproductive. The real problem with Obamacare was nothing about the program itself. It was that, after being modeled on Massachusetts' Romneycare, Obamacare cut Romneycare's experiment short, preventing it from being the model for other States to observe, study, improve upon, and ultimately buy into. But on the other hand, once key features of Obamacare were actually experienced, they proved popular. That will make it all the easier for States to preserve them should federal Obamacare fail. . Pragmatic federalism works that way too.
Blockchain technologies provide a new opportunity for State experimentation. The Securities and Exchange Commission is trying to regulate cryptocoins and coin exchanges nationally with position papers and enforcement actions, which is rather clumsy. See . This comes just as blockchain fever seems to have broken, being hyped less and less on earnings calls as people realize how little they understand it. . Blockchain-enabled instruments and transactions are a truly new thing, and the statutes governing the SEC were never intended for them. It will be a long time before Congress passes blockchain-specific legislation, and Congress will never be able to act fast enough. Technology always evolves faster than applicable laws can be passed, and blockchain is morphing faster than most. For all those reasons, the SEC's efforts will remain imperfect and always late.
But the States -- particularly New York and California -- are better positioned to enact regulations tailored to the realities of these new financial tools. Being where much of tech and finance is located, those States can act faster and more precisely than Congress or the SEC. Most blockchain applications still involve private securities offerings already subject to State Blue Sky laws and commercial applications that naturally fall under State control. Remember that today you can't buy a car that doesn't conform to California's more stringent emission control standards, no matter where you live. In the same way, companies dealing in cryptocurrencies are required to obtain a New York Bit-License if they want to do business in New York, as everyone does. See . The laws of the largest markets inevitably spill benefits over everyone else. See
We who thought of the States as the kids' table were wrong. There's adult work being done there, and more to be done as long-term federal gridlock sets in.