Competitive Federalism and Broadband Federalism

by Reihan Salam

Support for federalism is not best understood as reflexive support for granting state governments the right to legislate in every domain. Competitive federalism, as Michael Greve argues in The Upside-Down Constitution, is first and foremost about protecting the interests of citizens by allow for competition among state governments to restrain, if only at the margin, the tendency of governments to collude against citizens. According to Greve, a “one problem, one sovereign” approach, in which some domains should be left to solely to the federal government while others will be left solely to state governments, is an important part of America’s constitutional designSince the New Deal years, however, the United States has moved from competitive federalism towards cooperative or cartel federalism, in which intergovernmental cooperation has limited the ability of state political majorities to (among other things) pursue independent policies on the minimum drinking age, K-12 education, and insurance coverage for low-income households, among many other things. Sometimes the method through which the federal government enforces governmental cartels is more straightforwardly coercive than others. Yes, it is possible for state governments to surrender federal transportation funds and set their own drinking laws, but it’s much easier said than done. The chief effect of cooperative federalism is to increase spending in various domains through the use of matching funds that appear to reduce the cost of joint federal-state programs, yet which in doing so tempt state governments into rigid formulas that limit the potential for experimentation. Even when the federal contribution is relatively small, as in K-12 education, state officials are so wary of losing the funds that they devote considerable resources to complying with federal rules and regulations, and this compliance apparatus further limits the scope for innovation in service delivery. Similarly, the federal government will often grant states “autonomy” in implementing federal policies if they adhere to a rigid script, an approach known as “conditional preemption.” 

Some see value in the frictions and chaos caused by overlapping zones of authority. In “Saving Federalism,” Richard Epstein and Mario Loyola describe the new “National Federalist” school as follows:

For decades, proponents of state sovereignty — and of the principle of limited and enumerated powers — have argued that modern theories of “cooperative federalism” are just a veil for a vast expansion of federal power over state governments. Progressives have traditionally fought back by arguing that state autonomy is protected in a variety of ways without judicial review, making fears of a federal takeover overblown. The Supreme Court has generally agreed with them.

But progressive legal thinkers are increasingly apt to champion the view conservatives have long warned of. A symposium published in the Yale Law Journal this past spring lifted the curtain on “cooperative federalism.” Led by Yale law professor Heather Gerken, these scholars of “National Federalism” now insist that the conservatives were right — the federal government has, in fact, already taken substantial control of many state activities and possesses ample powers to extend its dominion further. As champions of centralized government, they believe that this transformation is all to the good. In the course of several hundred pages, they argue that federalism has become an indispensable tool of nationalism, improving national politics and national policymaking, integrating the national polity, and entrenching national power. Their theories offer no clear limit to the further aggrandizement of federal power.

This all comes to mind because I’ve just read Tim Lee’s recent Vox article on how a number of House Republicans are trying to prevent the Federal Communications Commission from removing state-level restrictions on the creation of municipal broadband networks. Let’s leave aside the wisdom of municipal broadband networks. Is it appropriate for the federal government to preempt state action in this domain? I think that the answer is that yes, it is appropriate. But I can also understand the case that municipalities are creatures of state government. My intuition is that we’d be better off if telecommunications policy were treated as (to the extent practicable) an exclusively federal domain. When viewed through this lens, preserving the possibility of municipal broadband networks can, as Lee explains, do some good:

As a practical matter, publicly-owned broadband is already a pretty rare phenomenon. The Chattanooga network, which is the largest publicly-owned fiber optic broadband network in the country, only serves around 160,000 households. So most of us will continue to be limited to the same two options we’ve always had: the local phone company and the local cable company.

But the efforts in Chattanooga, Lafayette, and elsewhere are valuable experiments. They’re teaching us a lot about how cities can best promote high-speed broadband networks. It’s possible that we’ll simply learn that publicly-owned broadband is a bad idea. But if one or more of these projects work out well, it could provide a model for a lot of other cities to emulate. (Of course, that’s why incumbents are so opposed to them.)

Also, the threat of possible competition from municipal networks gives cable and telephone incumbents an incentive to be on their best behavior. So even people in areas that don’t have municipal networks might benefit from having other cities build them.

I’d be curious to hear other perspectives on how the Blackburn legislation fits in our ongoing debates over federalism.