Business historian John Steele Gordon recently offered a commentary (February 1, 2011) on the nationally syndicated public radio program, “Marketplace,” concerning the American states and their relative capacity to declare bankruptcy. His focus occasioned an analysis of what he argued were the underlying conditions created by American federalism that made such declarations very difficult. Whatever the merits of his views on the possibilities of state bankruptcy, and these are quite likely why he was perceived as sufficiently expert to appear on the show, his argument revealed he did not understand United States federalism. While that fact is lamentable, it is still more regrettable that his perspective endures and continues to be believed by many Americans despite its historical and factual inaccuracy.
Gordon offered three fallacious claims. First he argued the “states created the federal government, not the other way around.” In fact, each state created popular conventions to consider the proposed national framework and it was those gatherings, and not state legislatures, that ratified the new Constitution. The distinguished historian, Pauline Maier, details the fascinating politics of these bodies in an excellent new book, Ratification: The People Debate the Constitution: 1787-1788. Second, Gordon asserted “the American states are sovereign, except as they voluntarily surrendered aspects of sovereignty to the federal government.” This argument, too, is false. Sovereignty in the United States inheres in neither the states nor the federal government, but in the nation’s citizenry. The American regime rests on popular sovereignty. As a practical matter, the federal government may claim it represents that sovereign most closely and so it represents that national aggregation of citizens supremely between elections. But the United States government is not sovereign; the people who elect and sustain it are.
Similarly, neither Alabama nor New Mexico nor any other state, can lay claim to such standing as none is supremely sovereign vis-a vis its own citizens, as these are citizens of the United States first and thereafter residents of their various states. This fact is made plain when state claims contravene the democratically determined will of the nation and are therefore set aside, or when a citizen of any state decides they need to obtain a passport to declare citizenship. Finally, as many before, Gordon equates state governments’ authority to serve their citizens with sovereignty. Governments may possess authority, but that fact alone does not, and need not, imply sovereignty. Such is certainly the case for states in the United States.
All of the above arguments are well known, so why do contentions such as those offered by Gordon endure? One possible reason may be that the business historian and others mistake the Founders’ interest in ensuring subnational governments the capacity to serve the needs of a disparate and diverse population with the conferral of sovereignty. One may have a federal system without such delegation and still permit very substantial decentralization of both national and state-level public services. Another reason for the endurance of these false arguments may lie in a misunderstanding of why the Founders created a federal republic in the first instance. While the Framers were certainly aware of the strengths and weaknesses of decentralized governance for administrative organization and services delivery, federalism was created for larger political reasons. The Founders argued that each level of government—state and federal—would be positioned well to guard against the possible development of tyranny in either. The states could petition the nation to secure against federally sanctioned despotism and the nation could certainly exercise power to prevent or overcome state-level threats to citizen liberties.
In fact, as it is easier to galvanize a local population to tyrannical action than to mobilize a much broader national citizenry to such acts, the nation historically has more often checked state excesses than the reverse. Nonetheless, it is surely possible for the states to check despotic national action. And it was this mutual political capacity to act to ensure freedom, along with the obvious advantages states enjoyed in responding to the localized needs of their populations, that the Founders found most powerfully attractive about federalism. Nonetheless, even with these arguments, it remains unclear why this mythology concerning state sovereignty continues to surround American federalism. Perhaps it is simply too alluring for would-be pundits not to make such claims, however erroneously, out of ignorance or when such statements suit their ideological or emotional predilections. Whatever the reasons, this argument continues to mislead thousands of Americans concerning the nature of their regime 150 years following a bloody civil war fought in part to reaffirm the nation’s original claims to popular sovereignty. Gordon is heir to a long, if profoundly misleading and lamentable, tradition.