The administration of Franklin D. Roosevelt dealt our Constitution a grave blow. When the Supreme Court rubber-stamped the New Deal, the framework of limited and enumerated federal powers — which shaped the very structure of our Constitution — was swept away. Federal power over every aspect of our lives has been expanding ever since, with no end in sight.
Conservatives understand that much. What they don’t yet understand is why this happened. That’s a problem. After all, how much good can a doctor do if he doesn’t understand what’s making the patient sick? In recent years, luminaries of constitutional history such as Richard A. Epstein and Michael Greve have made important strides in helping us understand how the progressive movement of the last hundred years has ravaged our Constitution. Some of their insights are startling.
The great internal danger to the democratic form of government is its vulnerability to capture by political elites. James Madison called them “factions”; today we call them “special interests.” The Constitution was designed to protect against them, chiefly by limiting the federal government’s power and guaranteeing strong property rights and freedom of exchange.
The Bill of Rights contains important protections. But the greatest protections the Constitution provides are the structural limitations it places on federal power. In key areas, those limitations have eroded, leading to the very expansion of federal power that opponents of the original Constitution warned about during the ratification debates.
The structure of our Constitution was meant to guarantee local self-government under the protective umbrella of limited federal power. Federal and state governments were each accorded exclusive zones of responsibility. That created a broad scope for regulatory and tax competition among state governments, a result the Framers explicitly intended.
This framework of competitive federalism created a powerful brake on the growth of government. Federal powers were specifically enumerated and strictly limited, as the Tenth Amendment specified. State governments had a more plenary “police power” in the areas of health, safety, commerce, etc., but interstate competition and the mobility of both people and capital tended to keep state government light.
The erosion of the federal structure of our Constitution over the last hundred years has come about through the dramatic expansion of two federal powers: the spending power and the commerce power. It is important to understand what was driving this transformation. Officials in uncompetitive states started to realize that they could use the federal government to secure protection from competition and to win other benefits for themselves and their special interests, as long as they were willing to give up self-government in favor of nationalized policies.
In the Child Labor Cases of the early 20th century, the Supreme Court struck down various efforts by Congress to impose a uniform child-labor standard throughout the country. All the states had child-labor laws on the books. But the precise age threshold varied from state to state: 14 in some, 16 in others, and 12 in a few. Those states with lower thresholds stood to gain a competitive advantage over states with higher thresholds, and the latter cried out for the protection of a uniform federal standard. However, because the federal interstate-commerce power was then thought not to extend to purely intrastate labor contracts, the Supreme Court struck down the various federal schemes.
The Child Labor Cases demonstrated that progressive state officials were more than ready to give up their autonomy and let the federal government control the policy, so long as the federal standard favored heavier regulation. In league with their special interests and with like-minded federal officials, these state officials succeeded over the next decades in destroying the Constitution’s limits on both the federal commerce power and the federal spending power.
The expansion of the spending and commerce powers allowed the Progressive movement to accomplish several things. Through the various schemes known as “cooperative federalism,” Congress was able to seize substantial control over state budgets and state regulation. The general purpose was to expand federal power, but more often than not the specific purpose was to protect states with uncompetitive policies. The expansion of the federal spending and commerce powers also allowed progressives to impose a variety of forced-transfer schemes, whereby government forces money to flow in the direction of special interests. These schemes, alive and well today, run the gamut from progressive taxation to cartels and monopolies erected by government for the benefit of special interests. Their common theme is government-created barriers to competition that weaken property rights and limit the freedom of exchange.
Democracy in America as we know it today is the creation of these two towers of the Progressive movement: cooperative federalism (i.e., federal control of state policies) and barriers to competition (i.e., the government-created cartels and monopolies). In the progressives’ version of democracy, the losers outnumber the winners, and the losses greatly outweigh the winnings. But the losses are diffuse whereas the winnings are concentrated. As Milton Friedman lamented, the average American is taken advantage of in lots of small ways, in order to pad the profits of concentrated special interests.