Politics
Political Polarization Could Lead to Emancipation
When there’s no agreement on policy at the national level, the states can—and will—step in.
Only one thing we know for sure about the upcoming presidential election: Whoever wins in November, half the country is going to be outraged. Perhaps beyond outraged—incensed to the point of violence and threats of secession.
Such extreme polarization troubles believers in harmony—which should be all of us. However, in the course of human events, there are times when the terms of harmony need to be renegotiated.
In fact, there’s an upside to polarization. A silver lining—even a pot of gold—if we think through the constitutional angles.
Let me explain.
Polarization at the national level brings policy paralysis, as the two sides, red and blue, so mistrust each other that they can’t agree on anything. Consider: Next year, a hypothetical re-elected President Joe Biden announces some new policy, foreign or domestic. Immediately, the red half of the country derides it as a dastardly plot by the senile figurehead of the woken. Similarly, what Democrat will support anything from a hypothetical re-elected bad orange felon?
Yes, presidents of both parties can seek to take bold executive action, and yet here the Congress, the courts, the deep state, the 50 states, the media, the mob, and possibly the U.S. military, will get a “vote” and perhaps a veto.
Amidst all this suspicion and mobilization, the basic purposes of the federal government will be called into question. Maybe we’re so divided that it’s just not possible for the feds to do much of anything—certainly not anything new. Consider various signature Biden policies: green energy, electric vehicles, transgenderism, and open-bordersism. And, oh yes, that Gaza pier. Each is hitting a wall of opposition in red (and purple) zones, such that Biden’s reelection prospects are diminishing.
But ask yourself: If Trump wins, would MAGA play any better in blue? We seem to be on a seesaw of recriminations and…criminations.
In fact, this paralyzing hostility is already being “priced in” to national policy, as common support for res publica, the public thing, decays. A 2023 Pew poll found that just 16 percent of Americans have confidence in the federal government. That percentage is a fifth of what it was in the 1950s and a third of what it was in the early 2000s.
This era of bad feelings has had fiscal consequences: In 2023 federal revenues stood at just 16.2 percent of GDP, below the average for the last five decades, especially in a non-recession year—even as the deficit and debt continue to pile up. (Federal spending is more popular than federal taxing.) Oren Cass, familiar to TAC readers, argues we should raise taxes to get federal revenues up to 19 percent of GDP.
But what if Americans, across the spectrum, recoil at the thought of rendering more to Caesar, be he blue or red? Republican opposition to tax increases is well documented, and Democratic opposition to anything with Trump’s name on it is also well documented. This is not the basis for a successful budget deal.
Maybe, in its bones, the country senses that the proud tower of Washington, D.C. is too proud. Republicans loathe the deep state, including the lawfarers at the FBI, while Democrats despise the Alito-fied Supreme Court and whatever might emerge from the Trumpy Project 2025.
In such a precariously top-heavy situation, the wise course is planned deconfliction. That is, carefully remove some jenga blocks from the stack—make the federal government less powerful—to lessen the potential harm that Biden or Trump (depending on your point of view) could wreak.
In fact, both sides, red and blue, would benefit if the federal government could not be wielded as a hammer against its political foes. Does Oregon want to be part of any Trump “drill, baby, drill” energy plan? Will Massachusetts enlist in Republican transgender policy? No more than Arkansas or Wyoming will embrace Biden prescriptions on, well, anything.
We hold this truth to be self-evident: In a diverse country of 340 million, there’s no national consensus on a host of issues—so why pretend otherwise? Why phony up a lame national policy that merely wet-blankets heaving tides and animal spirits?
The recognition of difference, after all, is the beginning of constructive experimentation among the states and other jurisdictions. Different variables are needed, of course, to compare and contrast the results.
So polarization can actually be good if it brings with it the emancipation of policy creativity: the liberty of opportunity.
Interestingly, the MAGA man himself has anticipated this direction. Defying Republican orthodoxy on abortion, he has advanced a popularist platform—let each state decide its abortion policy. To be sure, this semi-faire approach angers Right to Lifers, but it has the wisdom of realism. You want trouble in America? Try prosecuting an abortion doctor in Portland—either Portland.
This is federalism, also known as states’ rights. It’s exactly what the Founders had in mind, and it also grooves with the thinking of one of the great liberals of Supreme Court history, Justice Louis Brandeis, who maintained the states should be the “laboratories of democracy.”
So what if this neo-Calhounian idea of states’ rights were to spread? In fact, it already has: Blue states have spearheaded progressive victories that Trump, as president, and the GOP barely touched; 24 states let the good times roll on marijuana. Yet revealingly as to Uncle Sam’s impotence, marijuana is still illegal under federal law; one Congressional report politely refers to this disjuncture as a “policy gap.” These days, the Bidenized Justice Department looks the other way as people puff—would a Republican attorney general really start looking to prosecute tokers?
In fact, the left as well as the right love to celebrate state-based acts of #resistance to federal power. Democrats recall that back in the day, California Governor Gavin Newsom sued the Trump administration more than 100 times—and no doubt stands ready to do it all over again.
Meanwhile, Republicans savor the success of Florida Governor Ron DeSantis, who became a star in opposition to Biden’s feds. Today, a whopping 49 percent of K-12 students are now enjoying some form of school choice; as a result, many Sunshine State public schools are closing or consolidating. This trend, viewed with alarm by Team DEI, is causing genuine economic, as well as political, losses to the unionized left—and commensurate gains for private schoolers, home schoolers, and entrepreneurs.
Yes, a laboratory of democracy is also a laboratory of prosperity. So investors should be paying close attention to these policy trends, eyeing opportunity as it sprouts up from liberty.
For example, this June 5 headline: “Texas Stock Exchange: A potential game-changer for investors, economy in Dallas.” This TXSE assays to be a rival to the NYSE—the New York Stock Exchange.
For sure, the NYSE is prodigious, valued at $28 trillion. And yet the backers of the TXSE are well-funded as well, including Citadel, run by Ken Griffin, a Republican, and BlackRock, run by Larry Fink, a Democrat.
Yet now Griffin and Fink are looking past their partisan differences, jointly focused instead on building an investment hub in a state with a pro-business climate, no Alvin Bragg, and zero income tax—in contrast to Manhattan, where the combined state and city top tax rate is an anti-Lafferite 14.7 percent.
This is the new political economy of MAGA: polarization > differentiation > state-based maximization. BlackRock will remain in Manhattan, where it has become a sort of BlueRock, solicitous of Democratic priorities. Yet at the same time Fink & Co. are helping to spawn a RedRock in Texas. (Nobody should think that capitalism lacks for flexibility; it can be blue, it can be red, it can be any color the customer wants.)
It’s possible to foresee the TXSE leveraging its geographic location in lucrative ways. For instance, the TXSE could seek a carveout from the strictures of the Securities and Exchange Commission (SEC). How so? Maybe by looking to the Southwest Airlines precedent. Founded in Texas in 1967, the airline declared itself exempt from the dirigiste hand of the federal Civil Aeronautics Board (CAB) because it only operated only intrastate, not interstate. Litigation followed, and Southwest won. Only in 1980, when the dead-handed CAB itself was finally interred, did Southwest go national.
In the meantime, the SEC grows more imperious, as bureaucracies are wont to do. Pushing on new frontiers of red-taping and green hectoring, the agency now monitors companies’ carbon dioxide. But that’s not enough: The SEC is also power-grabbing a consolidated audit trail (CAT), which gives it surveillance powers rivaling those of the National Security Agency and the Centers for Disease Control. In the words of one plaintiff, “The unconstitutional CAT is the largest government-mandated mass collection of personal financial data in American history. Without any statutory authorization from Congress, SEC is forcing brokers, exchanges, clearing agencies and alternative trading systems to capture and send detailed information on every investor’s trades in U.S. markets to a centralized database, which SEC and private regulators can access forever (but whose security they cannot ensure).”
Of course, there’s more than one opinion on this new reg. CAT will likely play better in Vermont than it will in Idaho.
So we should be able to say to Blue: If you like your SEC, you can keep it. But if you don’t, go to Texas and the TXSE. Let state-based laboratories prove up the right regulatory formula, confident that if there’s a teachable moment of damage done, at least it will be compartmentalized.
There’s more: We could make a list of political passions that are also economic and investment projects, including cryptocurrency, medical innovation, and desalination.
Arrayed against this polymorphism is the federal monolith. But let’s ask: Does the record of the federal government—led by red, or led by blue—fill the reasonable person with confidence that the central state knows what it’s doing? And if there’s four more years of either Biden, or Trump, the centrifugality on the federal government will be, well, unhinging.
So why not draw inspiration from Nevada, that profitable pioneer in state-based subsidiarity? Back in 1931, when there were more tumbleweeds than residents, Nevada flouted federal gambling inhibitions, opening the door to casinos. The rest is glittering enterprise-zone history.
To be sure, sins of chance are not for everyone. Happily, there are plenty of other ways to think about economic development. And yet many of them—financial, pharmaceutical, geological—would require some sort of exemption from Uncle Sam’s lowest bureaucratic denominator.
Here’s the bottom line: The same polarization that stops the feds from acting at the national level could also stop the feds from squelching a state that’s innovating. Indeed, net national wellbeing would be increased as the negative energy of Procrustean enforcement was replaced by the positive vibes of Apollonian achievement. We’d actually get along better if we weren’t so much in each other’s business.
Probably nobody has ever thought of Trump as a harmonizer, and yet, however inadvertently, MAGA could be the torque that tinkers the nation, and the states, into a better, lower-pressure, arrangement. More sustainable, one might say.
When Leviathan slumbers, the citizens, and their fresh visions, can rise and shine.
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