Opinion: Daily Journal

Making a Federal Case of It

The obvious problem with the cause often identified as “states’ rights” is that it has sometimes been used to defend odious practices such as slavery and segregation. There’s an even more basic problem, however, and it lies in the wording of the phrase itself. Governments can have (or lack) powers. But they can’t have rights.

The proper relationship between states and the federal government is back in the news because of two recent decisions from Washington that involve North Carolina. In a decision released February 25, a 6-3 majority of the U.S. Supreme Court ruled that North Carolina State Board of Dental Examiners violated federal antitrust laws by ordering unlicensed service providers to stop whitening teeth. A day later, the Federal Communications Commission voted 3-2 to nullify state laws in North Carolina and Tennessee that place fiscal and procedural conditions on cities seeking to expand their municipally owned telecommunications systems in competition with private companies.

In both cases, the federal government has overturned a decision made by a duly elected or appointed state agency on grounds of consumer benefit. Contrary to what you may have heard, there is absolutely nothing novel about this. Starting in the 1970s, for example, the Federal Trade Commission has issued many such rulings, arguing that under our federal system of government states do not have unlimited leeway to suppress competition. In one set of cases FTC voided state restrictions on advertising professional services because ads help new entrants compete with existing providers.

Modern conservatives place a high value on federalism. We believe that fiscal and policy decisions ought to be made as close to local communities as necessary. The federal government ought not to go beyond the powers enumerated in the Constitution, leaving many more responsibilities up to states to shoulder under their general police powers. States, in turn, ought to devolve as much as power as possible to counties, municipalities, school districts, and other localities.

When different governments are free to pursue different approaches to solving public problems, we all gain from the resulting increase in information about what works best. Furthermore, to the extent that governments continue their differing approaches because their citizens have different values, the resulting diversity allows households and businesses to sort themselves accordingly, choosing communities whose policies best fit their own needs and preferences.

But federalism isn’t the only value in the system. Another is justice. States and localities do not have unbridled authority to encroach on the individual rights of American citizens. Governments aren’t free to search and seize our possessions whenever they like, take our property without compensation, tax us in arbitrary or unfair ways, or classify and regulate us by the color of our skins or the character of our opinions.

When it comes to economic freedom — our rights as individuals to form business associations, choose careers and professions, and purchase the goods and services we want in whatever manner we wish — the federal government can and should intervene when states or localities abuse their regulatory powers. So kudos to the Supreme Court for its dental-services decisions.

I can’t offer similar praise to the commissioners of the FCC, however. They didn’t strike down state laws that blocked one private provider from competing with another. Instead, they struck down laws designed to keep localities from abusing their own governmental powers — their tax exemptions, access to low-cost capital, and eminent domain — to deliver a commercial service in competition with private firms. Surely states are the proper level of government to ensure that such abuses don’t occur.

A healthy federal system offers multiple pathways to resolving conflicts. In the telecom case, I’m hopeful that Congress will exercise its authority to rein in the FCC, whose lawful authority is entirely determined by the policy choices of legislators. In the meantime, North Carolinians can take the opportunity to ponder the virtues and limits of federalism. It’s not a tool for protecting “states’ rights.” It’s a tool for protecting your rights, and mine.

Just remember that it’s not the only tool in the box.

John Hood is chairman of the John Locke Foundation. Follow him @JohnHoodNC.