“With Congress producing so little legislation, governors’ offices have become attractive targets”

September 30th, 2014

The Times reports on an inadvertently leaked set of documents from the Republicans Governor Association showing all of the corporations contributing money into the state governors.  They write this sentence, but I think it proves a very different, and even more important point than who donates to whom:

With Congress producing so little legislation, governors’ offices have become attractive targets…

Yes! That’s a good thing. I’ve written for some time that one of the few ways to eliminate rent-seeking in Washington is to eliminate the ability of Congress to pass laws. If Congress can’t pass laws–either through the doctrine of enumerated powers, or as it were gridlock–there is less incentives to rent-seek on the federal level. This shifted dynamic forces companies to instead rent seek at the local level. This is also good, as it is much tougher to rent-seek 50 state houses and legislatures, than a few members in Washington. Changing policy at the local level is better on most levels. These laws can only affect a single state at a time.

This, in part, is one way to understand the impact of the 17th Amendment and the direct election of Senators–it made rent seeking much easier. As I explain in a new article that is forthcoming in the NYU Journal of Law & Liberty (any day now), the 17th Amendment shifted the locus of rent seeking from state houses to Washington :

When the federal government assumes various aspects of the police power once reserved for the states—thereby diminishing our vertical federalism—rent seeking becomes much easier. It takes much less time, effort, and money to lobby and petition a single government in Washington that can easily impose nationwide rules, than to lobby in 50 state capitols to achieve rules that can have an impact within one state’s borders. In this way federalism increases the cost of rent-seeking. It makes capture more difficult, and diminishes the impact of special interest legislation.[1] Federalism also permits states to engage as laboratories of democracy, to experiment in different forms of government.[2]

[1] Professor Todd Zywicki has made similar arguments about the 17th Amendment. By taking the state legislatures out of the public choice equation, special interests will find it more worthwhile to petition Senators in Washington who can impose one-size-fits-all rules nationwide. See Todd Zywicki, Repeal the Seventeenth Amendment, National Review Online (Nov. 15, 2010), http://www.nationalreview.com/articles/252825/repeal-seventeenth-amendment-todd-zywicki. In contrast, Professor David Schleicher argues that the 17th Amendment improved public choice politics, as it removed the state legislatures from the corrupting influences of rent seeking. See David Schleicher, The Seventeenth Amendment and Federalism in an Age of National Political Parties, 65 Hastings L.J. 1043 (2014).

[2] New State Ice Co. v. Liebmann, 285 U.S. 262 (1932) (Brandeis, J., dissenting).