[American federalism is often touted as a source of local
democratic engagement, political innovation, and responsive public
policy. But in practice, the American states have served as
laboratories of autocracy and inequality. ]
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FEDERALISM HAS BEEN A DISASTER FOR THE WORKING CLASS  
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Colin Gordon
December 26, 2023
Jacobin
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_ American federalism is often touted as a source of local democratic
engagement, political innovation, and responsive public policy. But in
practice, the American states have served as laboratories of autocracy
and inequality. _

Protesters fly the Gadsden Flag at a far-right march in Portland,
Oregon, on August 17, 2019., Diego Diaz/ Icon Sportswire via Getty
Images

 

Democratic capitalism poses an enduring tension or contradiction. In
given settings or historical moments, the “democratic” side of
that equation can operate to ensure that the “capitalist” side is
more palatable or equitable. Democratic aspirations might be
decisively constrained by market imperatives, or they might transcend
them. The range and viability of those alternatives, in turn, are
shaped not just by market constraints but by political institutions.
The architecture of political representation, participation, and
policymaking can amplify democratic voices or stifle them; it can
invite democratic (even systemic) alternatives or litter the path
forward with obstacles.

By almost any contemporary or historical measure, the American version
of democratic capitalism is remarkable for its firm commitment to the
“capitalist” side of that compromise and a correspondingly weak
commitment to productive democracy. The “New Deal order” and the
social movements that gave it meaning now seem like a momentary
exception in a long march of unbridled accumulation and neoliberal
rule. Modern American political history plays out like endless
variations on a “why no socialism?” riddle whose solution is at
once elusive and overdetermined. The many failures of progressive
politics, and the ease with which its few successes have been rolled
back, reflect a wide array of political obstacles, hurdles, or choke
points. One of the most important of these, underappreciated as both
cause and consequence of our limited political horizons, is
federalism.

In its idealized and abstract form, American federalism parcels out
political responsibility across tiered jurisdictions (federal, state,
local) in the pursuit of three interrelated goals. First, it promises
democratic engagement and political responsiveness by vesting
responsibility in the smallest practical unit of government, confining
the federal role to those realms (national defense, interstate
commerce) beyond the capacity of individual states or localities.
Second, federalism envisions state governments as guarantors of
liberty, protecting ordinary citizens — and especially regional
minorities — from the tyranny of national rule. And third,
federalism is routinely lauded as an opportunity for policy
competition, innovation, and diffusion across state-level
“laboratories of democracy.” Federalism, in this view, structures
political representation at a scale large enough to accomplish policy
goals but small enough to ensure a nimble response to policy
challenges and a meaningful civic connection between the government
and the governed.

On each score, American federalism is a dramatic disappointment.
Historically, it can be judged by the company it keeps. “States’
rights,” of course, served as virtuous camouflage for slavery, for
Jim Crow, and for the long (and continuing) backlash against the civil
rights movement. “If one disapproves of racism,” the political
scientist William Riker concluded bluntly in 1964, “one should
disapprove of federalism.” Every Republican president since Richard
Nixon announced a “new federalism” of some description, invariably
as a gambit for dismantling national standards and regulations,
eroding civil rights protections, or starving redistributive social
policies. While at times frustrated by the variety and fickleness of
state policies, economic interests are now deeply invested in
federalist devolution as a reliable source of “business-friendly”
labor, social, tax, and regulatory policies. Broadsides against “our
centralized, micro-managed, Washington-based bureaucracy” (Newt
Gingrich) or invocations to “drain the swamp” (Donald Trump) are
animated less by the supposed virtues of decentralization than they
are by its spoils. “People do not go to war for abstract theories of
government,” W. E. B. Du Bois observed in response to efforts to
memorialize the “states’ rights” Confederate cause. “They
fight for property and privilege.”

We are reminded of this lost promise each spring, as statehouses run
out their calendars with a catalogue of nonsense, repression, and
naked greed dressed up as legislation. This year, that sorry list
features efforts to strangle voting, LGBTQ, and reproductive rights;
to roll back basic labor protections and the last shreds of firearm
regulation; and to starve or privatize basic public goods. In one
respect, such policies are a dismal barometer of our political
polarization, and of the peculiar combination of libertarian fever
dreams and authoritarian social policies that increasingly animate
American conservatism. More fundamentally, such policies offer a stark
reminder of the dangers posed by fragmented politics and policymaking.
Decentralization breeds economic and political inequality. Devolution
of political responsibility, advertised as a means of democratizing
policy, is almost exclusively employed as a strategy for thwarting
popular goals or aspirations. State governments, far from acting as
incubators of good ideas and policy experiments, have instead become
— as the comedian Jon Stewart deftly put it in the _Daily Show_’s
coverage of statehouse politics — the meth labs of democracy.

Federalism and Democracy

How do we account for this? First and foremost, the American
configuration of federalism is narrowly concerned with the
distribution or exercise of political power and willfully blind to
that of economic power. Politics and policy, in democratic capitalist
settings, are fundamentally shaped by two constraints. A “demand”
constraint establishes deference to the growth and profitability of
private investment as a baseline or boundary for political action. The
market, as Charles Lindblom reminds us, is a prison. Public policy is
confined to securing the conditions under which capital can be
accumulated and ensuring that those conditions are not so exploitative
as to constitute a threat to the social order. These parameters of
compromise manage what Karl Polanyi dubbed “the double movement”
inherent in democratic capitalism: the capitalist impulse to commodify
everything matched (or at least accompanied) by the democratic impulse
to dampen or compensate for the cruelties of the market.

A “resource” constraint, in turn, ensures that well-heeled
economic interests will always wield more political power than the
votes they cast. Especially in a setting where the regulation of money
in politics has largely evaporated, those with money enjoy
dramatically lower barriers to influence, information, and collective
action.

Federalism exaggerates all of this. In a patchwork of
investment-anxious local and state jurisdictions, firms can much more
credibly and readily wield the threat of exit — a dynamic
underscored by the jurisdictional competition to subsidize new
investment and the perpetual hand-wringing in state legislatures over
the maintenance of a “friendly business climate.” State
legislatures, on this score, are notoriously in thrall to the demands
of local employers and labor markets, calibrating their labor and
social policies (even ensuring the wholesale exemption of some workers
from any protection) to ensure a stable and quiescent labor supply. In
subnational jurisdictions, the logic of Polanyi’s “double
movement” is distorted at both poles: state and local political
actors are at once more inclined to defer to the interests and demands
of capital and less inclined to contemplate social protections that
might prove competitive liabilities. These dynamics are even starker
in municipal settings where economic growth and property valuation is
the sine qua non of local public policy, where regulatory and taxing
powers are constrained by the “home rule” provisions of state law,
and where meaningful social protection is beyond the vision or
capacity of local policy.

In turn, states do not just replicate the nation-state at a smaller
scale or nest neatly inside it. They lack not only the will but the
ability to ameliorate market conditions, to sustain equal protection,
or to provide robust public goods and services. Policy devolution, in
other words, often means lodging political responsibility — quite
intentionally and strategically — in jurisdictions without the
capacity or inclination to meet them. American federalism (unlike all
its international peers) makes no provision for revenue sharing across
jurisdictions. The fiscal capacity of state government is relatively
weak (most states have self-imposed tax and expenditure limits) and
reliant on regressive revenue sources. For their part, local
governments are doubly disadvantaged; their ability to raise revenue
or incur debt is sharply constrained by state governments, leaving
them dependent on volatile sales and property taxes, increasingly
meager intergovernmental transfers, or predatory policing and code
enforcement. In the delegation of political authority, state and local
government is largely organized around “police power” regulation,
restraint, and punishment of private conduct. The unsurprising result,
at this intersection of narrow political horizons and limited fiscal
capacity, is a policy environment in which market deference is matched
by meager and punitive social policies.

Federalism, in practice, is hostile to productive democratic
governance. It works to the benefit of those best positioned to
exploit or leverage both jurisdictional competition and the
jurisdictional proliferation of political “veto points.” It
sustains a “checks and balances” environment for policymaking that
is almost all checks. Gridlock, inaction, and the failure to respond
to changing conditions favor the status quo. The defense of federalism
or the pursuit of decentralization, as Lisa Miller underscores, has
become a profoundly anti-statist agenda. The goal is not to find the
best venue or jurisdiction for affirmative state action but to quash
that prospect altogether. In the states, entrenched interests are
uniquely able to “craft political agendas behind the scenes, kill
off reform policies before they see the light of day, or create
seemingly neutral anti-statist political narratives.” In our
polarized states, partisan or ideological differences are widened by
the administration of policy — which increasingly reinforces
political extremism rather than dampening it.

Indeed, as recent work by Miller, Jacob Grumbach, Alex
Hertel-Fernandez, and others has documented, state legislatures have
become the sweet spot for conservative policy experiments. Growing
partisan polarization has yielded gridlock in national politics but a
steady increase in one-party “trifecta” control of state politics
(in 1992, the Democrats claimed trifecta control in sixteen states,
the Republicans just three; in 2018, the Democrat claimed eight
trifectas and the Republicans twenty-six). This has afforded national
conservative interests (including partisan groups like the Republican
Governors Association, multi-issue clearinghouses like the American
Legislative Exchange Council, and single-issue lobbies like National
Right to Life) the opportunity to capture state policymaking and to
use the states to shop even the most odious and unpopular policy
ideas. Republican statehouses play right along, not only embracing
such policies but (as in the post-_Dobbs_ abortion debate) competing
with one another to see who can come up with the most craven and
punitive version. The cynical backlash against “woke” curricula
and diversity programming, in the bargain, serves as a potent reminder
of the racial animus at the core of our fragmented politics.

 

Taken together, partisan polarization, institutional racism, and
jurisdictional venue shopping by conservative interests turn the
democratic pretensions of federalism on their head. State policy
decisions, as the struggle to expand Medicaid in laggard states
suggests, are increasingly divorced from what citizens want or need.
By any measure, state policy is increasingly unresponsive and
unaccountable. While elites navigate or manipulate the federal system
to their advantage, ordinary citizens are left in a jurisdictional and
informational fog — unable to translate local organization or
aspirations into effective political demands. The pursuit of
decentralization as a conservative political project is laid bare by
the fondness of these same state governments for preempting city or
county initiatives — on issues such as labor standards or gun
control — when they do succeed.

State politicians, for their part, understand perfectly well that
their policies fly in the face of popular representation or
aspirations. This is why their agenda is routinely accompanied by
constraints on political participation. The reign of Jim Crow rested
on terror, intimidation, and the systematic disenfranchisement of
African Americans. Indeed, across our history, the national government
has confronted tyranny in the states — not the other way around.27
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In our own time, deference to plutocrats and zealots is made possible
and permanent by stifling the voices of everyone else. As of January
this year, thirty-two states have introduced legislation that would
make it harder to register to vote, vote, or even remain on the voter
rolls. This is not about wrestling power from “big government”; it
is about pursing power in whatever jurisdiction best serves your
interests and locking it down by defanging or demobilizing the
opposition.

The notion that American federalism is (or can be) a boon to
democracy, in short, rests on a long list of elusive conditions. It
assumes that the democratic institutions of democratic capitalism are
unaffected by its capitalist interests; that states only compete above
a high and stable floor of national standards or rights; that the
racial premises of fragmented rule are all in the past; that
subnational units of government have fiscal and political capacities
commensurate with their responsibilities; that state innovation is
rigorously assessed or benchmarked; and that decentralization is
narrowly concerned with the scale of government authority and not a
thinly veiled attack on the very legitimacy of government authority.
None of these conditions hold, ensuring that federalism remains an
open institutional invitation to interests on the Right and a
fundamental institutional obstacle to those on the Left.

Federalism and Public Policy

The limits and dangers of federated rule are evident across the policy
landscape. Consider economic development. Observers, and even those
engaged in the practice, have long recognized state or municipal
competition for new investment as a pointless game of musical chairs.
States attract new businesses only by pirating them from another state
or entering a bidding war that compels them to offer such steep
subsidies that the prize for entering the fray is almost entirely
lost. Tax incentives do not conjure up jobs or investment that would
not otherwise exist; they just move them around. Amazon alone has
claimed over $6 billion in public subsidies from states and localities
since 2000 — a price tag that has not yielded one forklift or
warehouse that the company would not have provided on its own dime.
This “economic war among the states” is entirely an artifact of
federalism and its tendency to gird business power with both an exit
threat and an entrance ransom. It comes at the expense of public goods
(the biggest share of local abatements are usually revenues that would
otherwise go to schools) and often of labor standards (little effort
is made to ensure that subsidized firms pay fair wages or respect
labor rights).

Consider labor law and policy. As democratic capitalism tends to
generalize the interests of capital (what’s good for General Motors,
et cetera), it also minimizes or undermines the interests of working
people. This is true within states, where the disproportionate
political clout of employers has yielded a long and dismal history of
anti-labor repression and violence. And it is true across states,
where labor laws and labor standards vary dramatically by region and
jurisdiction. Fragmented organization and regulation nurtured
divisions among workers (most starkly along racial lines) and wide
state-to-state and regional disparities in the social wage. The
uniform, expansive, and national right to collective bargaining in the
United States lasted barely a decade — from the passage of the
Wagner Act in 1935 (which was explicitly designed to erase regional
disparities in labor law and policy) to the passage of Taft-Hartley in
1947 — which invited states to check worker power in the private
sector by passing “right-to-work” laws. Right-to-work regimes, in
turn, have dampened wages, slowed new organizing, and yielded wide
regional and state gaps in union membership: private sector union
density today ranges from 1.4 percent (South Carolina) to 14.1 percent
(Hawaii). Public sector labor law enjoyed no flirtation with national
standards and remained firmly rooted in the states, where disparate
laws have also yielded disparate protection: public sector union
density in the states ranges from 6.7 percent (South Carolina again)
to 68.4 percent (Connecticut).

Federalism fractures not just the regulation of labor relations but
the organization, structure, and solidarity of the labor movement
itself. The exceptional and debilitating fragmentation of the American
labor movement rests in large part on its roots in disparate state
settings and on the absence of any sustained peak bargaining — both
consequences of federated politics. Jurisdictional silos of
solidarity, as Joel Rogers has argued, have invited calculated
division, often pitting workers and their organizations against each
other. The class bias of American federalism, in turn, has sustained
an unrelenting regime of authoritarian rule in American workplaces,
simultaneously exploiting workers and heightening the risk of pushing
back. “Most workplace governments in the United States are
dictatorships,” Elizabeth Anderson notes, “in which bosses govern
in ways that are largely unaccountable to those who are governed. They
don’t merely govern workers; they dominate them.” And the damage
done at work spills into public life. Federalism weakens union power
and voice at the bargaining table and in politics, a fact explicitly
recognized and exploited by the attack on public sector unions in
recent years. Without a strong labor voice in politics, fragmented
anti-statism prevails, the basic elements of social protection wither,
and the political and economic gaps between the ruling class and
everyone else widen.

Consider social policy. The American safety net is designed to
undermine social citizenship and frustrate equal protection. Deference
to states — including not only control over needs standards,
eligibility, and benefit levels but sweeping occupational exemptions
— was hardwired into the New Deal welfare state. From the outset,
national standards, let alone any commitment to universality, has been
thin, and states have been inclined to exercise their considerable
discretion in ways that “divide citizenship” and “fragment
democracy.” The inevitable consequence is wide state-to-state
disparities in the responsiveness, inclusion, and generosity of our
social policies. Cash assistance for poor families is meager
everywhere: even the most generous states offer less than $700 per
month and reach fewer than half of eligible families; the stingiest
offer less than $200 per month and reach fewer than one in ten poor
families. In unemployment insurance, states set the level of benefits,
their duration, and a whole host of “non-monetary” eligibility
criteria — and state variation on all three has been widened by
conservative backlash to the “generosity” of supplemental federal
programs during the Great Recession and the COVID-19 pandemic. The
average compensation for the same spell of unemployment (a measure
that captures variation in benefits and duration) ranges from about
$8,000 in the most generous states to less than $3,000 in the
stingiest.

 

This uneven unwillingness to cushion citizens from market uncertainty
is rooted in federalism’s deference to state and local labor
markets. This not only hardens the “principle of less eligibility”
(the determination that public assistance should never compete with
private wages) but infuses social policy with the expectation or
qualification of labor force participation. Work shapes access to the
“private welfare state” of job-based benefits (especially health
insurance and pensions). It tiers access to social insurance programs
like social security. And it increasingly conditions receipt of
means-tested assistance — a punitive commitment to “workfare”
rooted in state discretion and experimentation. In turn, meager social
policies are a quite intentional consequence of self-imposed fiscal
constraints. Even when the costs are very small, state legislators are
quick to justify cuts by manufacturing anxiety over their public or
private burden. Strangling access to unemployment insurance and
workers’ compensation is premised on both forcing the jobless or
injured back into the labor force and (not incidentally) ensuring that
taxes on employers are kept low.

In every arena of policy, the logic of American federalism — evident
in its motivation and in its persistence — is irretrievably racial.
It represents a commitment to local discretion and to anti-statism
that is animated by systematic concessions to racialized labor markets
and a profoundly even commitment to equal protection. The New Deal
welfare state, as the NAACP’s Charles Hamilton Houston noted
bitterly at its passage, seemed little better than a “sieve with the
holes just big enough for the majority of Negroes to fall through.”
Since then, state discretion, either in the design and administration
of basic social programs or in the decision to adopt them at all, has
been a reliable engine of racial discrimination and racial
disparities. The legitimacy and generosity of state social policy is
tightly and inversely tethered to the share of immigrants and people
of color in the local population, or their share among program
recipients. Seven of the ten states that have not expanded Medicaid
are in the Deep South, and more than half of the non-elderly adults
left uncovered are black or Latino. For African Americans especially,
all of this creates and sustains compounding tiers of disadvantage:
residential and occupational segregation throttle access to the
private welfare state; public programs meant to narrow that disparity
— in which states enjoy wide discretion — instead widen it.

The organizational and political weaknesses of federalism were laid
bare by the COVID-19 crisis. Effective public health policy, like
civil rights, depends upon robust national standards, common purpose,
and nimble enforcement or administration. Instead, in the face of
fragmented responsibility and the callous ineptitude of the Trump
administration, states crafted their own inconsistent and
idiosyncratic policies on social distancing, school closures,
definitions of “essential” business, and “gating criteria” for
reopening state economies. “Even the basic question of where the
problem was most serious and how fast it was spreading,” Donald
Kettl underscores, “was impossible to answer because there was no
common language for charting the problem.” States tested and
reported test results (or neglected to report test results) with
bewildering variety. Delegated the task of vaccination, states adopted
an array of criteria that had them “increasingly diverging from CDC
guidance and from each other,” a Kaiser Family Foundation summary of
state plans concluded, “suggesting that access to COVID-19 vaccines
in these first months of the U.S. vaccine campaign may depend a great
deal on where one lives.”

The issue here, regarding protection from both the virus and its
economic fallout, was not federalism per se but the uncooperative,
transactional, market-deferential, and deeply partisan federalism that
now prevails in the United States. Nowhere in subnational policymaking
was there a discernible hint of the local responsiveness or
benchmarked innovation that are supposedly the virtues of
decentralized governance. Instead, state decisions were driven largely
by petty partisan standoffs over the most mundane public health
guidelines, by willful confusion and misinformation, and by growing
fiscal anxieties. As the pandemic dragged on, states proved less
innovative and less responsive, instead settling into well-worn
political and policy grooves.

In turn, the cumulative consequences of fragmented social policy left
Americans uniquely exposed to both the virus and to the COVID-related
recession. The United States “stands alone in its failure to provide
universal health insurance, general cash assistance to the poor, and
entitlement to childcare subsidies, among others,” as one
post-pandemic survey put it. “Its patchwork of social assistance
varies greatly across states, and often within states, leaving many
Americans unprotected and vulnerable in periods of economic
upheaval.” Disparate policy commitments (on public health, on labor
standards, on paid leave, on Medicaid expansion) meant health and
economic risks fell unevenly across states and populations. Federated
labor and social policies fragmented health coverage and tied it to
private employment, meaning that, when a public health crisis
precipitated a recession, health security effectively evaporated when
it was most needed. Because existing vulnerabilities — in labor
markets, in access to health care, in the social determinants of
health — were deeply racialized, so too were the ravages of the
virus.

Even where social policy innovations did make a difference, they
underscored the folly of federated risk and protection. The temporary
generosity of the CARES Act’s unemployment programs was a concession
to both the gravity of the jobs crisis and the inability of state
unemployment insurance systems to process (let alone fund) the
avalanche of claims. As the pandemic wore on, anxieties about state
labor markets grew, and in the summer of 2021, twenty-six states cut
short the supplemental federal benefits — a largely political
decision that yielded little but renewed economic insecurity. The
meager and short-lived paid leave provisions of the Families First
Coronavirus Response Act, by the same token, underscored the
inefficiency and unfairness of delegating such basic social
protections to private whim and state-by-state policy innovation. To
fulfill the Centers for Disease Control and Prevention’s national
moratorium on evictions, states and local housing programs — even
those funded with federal dollars — offered a frayed patchwork of
relief. For a fleeting moment, national policies rendered existing
social programs more generous and more universal and crafted new ones
to fill in some of the gaps. On every score, these marked an effort to
overcome fragmented state provision; on every score, states led the
push to dismantle the effort at the first opportunity.

Overcoming Federalism

The culprits in this litany of failure are many, and they include
labor market precarity, a tattered safety net, systemic racism, and
yawning gaps in public and private health provision. But a consistent
coconspirator, bearing substantial responsibility for these conditions
and for exacerbating their consequences, is American federalism. That
institutional framework, and the choices that underly it, is not (as
it is so often portrayed) a means of balancing liberty and security,
or equity and efficiency. And it is certainly not, in our historical
or current experience, a reliable mechanism for responsive and
effective public policy.

This is hardly surprising. From its inception, our federal system was
designed to protect private interests and dampen popular
representation. Aspirational excerpts from the founding debates over
state and federal responsibility cannot disguise the fact that our
political institutions were crafted first and foremost to protect
property. Going forward, the distribution of political responsibility
across jurisdictions, the broad discretion afforded state governments
under even putatively federal programs, and the reliable deference of
state legislators to local economic interests, accomplished just that.
At every turn, federalism has strengthened capital and weakened
working-class interests. Its institutional architecture has made it
easier for employers to make and win political demands; its fragmented
politics and policy have made it harder — and riskier — for
workers to do the same.

Our history is punctuated by moments — the labor upheaval of the
1930s, the civil rights movement of the 1960s — when social
movements pushed policies in another direction. Tellingly, local
organizing in those struggles consistently and explicitly fought for
national solutions to problems rooted in the innate and structural
conservatism of state and local politics. They took aim at both the
agents of exploitation (the bosses, the segregationists) and the
political fiefdoms that made that exploitation possible. Progressive
causes and progressive triumphs, as Lisa Miller underscores, have
almost always been about _overcoming_ federalism.

This same logic is central to our current moment. Conservatives in
national politics do little more than flail at the “overreach” or
“weaponization” of national political institutions. More than
ever, state politics are the refuge of scoundrels and extremists. This
is not to say that progressive gains in state politics (the recent
repeal of right-to-work laws in Michigan is a good example) are
impossible, but they are scattered and woefully insufficient to the
challenges we face. The willingness and ability of some states to
advance some progressive policies testifies not to the promise of
federalism but to the abject failure of national politics and national
solutions (a $12 or $15 minimum wage, after all, is just where we
would be if national labor standards were indexed to inflation).
State-level solutions will always be insufficient and fragile, the
gains for citizens in some states always accompanied by losses in
others and by widening state-to-state disparities.

This assessment is not meant to condemn _any_ political system that
distributes responsibility among national and subnational units of
governance; it is meant to underscore that the conditions and
thresholds for making such a system work — including high national
standards and robust local political and fiscal capacity — have
proven impossible to achieve or sustain in the American context.
“Federalism,” Aaron Wildavsky concluded bluntly in 1985, “means
inequality.” That inequality does not, as champions of federalism
would have it, reflect a diversity of democratically determined local
values and policy priorities. It is, like any other inequality, a
product of exclusion and exploitation. By design and in practice,
American federalism fragments political, economic, and social
citizenship. It allows accidents of birth to stratify opportunity and
protection. It makes it harder for democracy to rein in capitalism,
let alone wrestle it in a new direction.

Colin Gordon is a professor of history at the University of Iowa and
the author, most recently, of Citizen Brown: Race, Democracy, and
Inequality in the St. Louis Suburbs
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Republished from Catalyst: A Journal of Theory and Strategy
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