Interstate Protectionism and the Dormant Commerce Clause

All 50 states ban the direct sales of motor vehicles from manufacturers to consumers. The politics of this regrettable policy are clear: auto dealers are powerful political players in every state, while only a few states actually have manufacturing facilities. Banning direct manufacturer sales benefits dealers while hurting manufacturers and consumers.

State governments continue to insert themselves into the contractual relationships between car manufacturers and dealers, typically to the ostensible benefit of the latter. The New Hampshire Senate recently passed a bill regulating the terms and conditions of dealer contracts with manufacturers, prohibiting manufacturers from requiring dealers to alter the appearance of their showrooms, for instance. (Disturbingly, the state director of Americans for Prosperity in New Hampshire supports the bill.) The bill is actually unlikely to change any “balance of power” between automakers and auto dealers. Automakers will simply respond by vetting potential dealerships far more closely and perhaps charging higher franchise fees. The onus of this response is likely to fall more on new dealerships than on incumbents. So the real losers from the bill are going to be potential entrants into the car dealer industry and, of course, consumers.

These are not the only examples of “state protectionism,” in which state governments adopt laws meant to reduce competition from out-of-state businesses for the benefit of local incumbents. Some states still prohibit certain out-of-state direct-to-consumer wine shipments. Regulatory barriers can accomplish the same ends. States have widely varying regulations on insurance products, making regulatory compliance a huge barrier for a company trying to market a standard policy in multiple states. For a long time, major life insurance companies lobbied Congress to adopt a national life insurance regulatory regime, pre-empting state laws. They were opposed by local life insurance agents, for whom knowledge of and compliance with distinctive state regulations were a significant source of competitive advantage. In the end, no national legislation materialized, but Congress authorized the formation of an interstate compact, essentially a contract among consenting states that sets up a single insurance regulator. More than 40 states have joined the Interstate Insurance Product Regulation Commission, which regulates life insurance and annuities.

Such state protectionism potentially runs afoul of the so-called “dormant commerce clause” of the U.S. Constitution. The commerce clause allows Congress to regulate trade among the several states. By implication, then, states are presumptively prohibited from burdening interstate trade, unless authorized by Congress. Unfortunately, courts have been reluctant to scrutinize state economic regulations that have an essentially protectionist character, although especially blatant discrimination against out-of-state imports has been overturned.

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*Theorizing Medieval Geopolitics*

Theorizing Medieval Geopolitics: War and World Order in the Age of the Crusades by Andrew A. Latham (Routledge, 2012) offers a constructivist interpretation of late-medieval European states and warfare. Latham describes his approach as offering an “explanation-what” or “property” theory rather than an “explanation-why” or causal theory. He is interested in clarifying the nature of the medieval “corporate-sovereign state” and the ways in which medieval European societies conceived of and legitimized war. Rather than studying the late-medieval period merely as a staging ground for the development of the modern state, as Hendrik Spruyt does in his interesting book The Sovereign State and Its Competitors, Latham explores the logic internal to the late-medieval system, perceiving the transition from high-medieval feudalism to early-modern absolutism as a gradual one. (He therefore rejects what he calls “the Westphalian rupture” and explicitly endorses both the stateness and non-feudality of pre-Westphalian polities, whether city-states, empires, or kingdoms.)

Constructivism in international relations refers to a broad research paradigm emphasizing the roles of shared international culture, ideas, and values in constraining state actors. It rejects both the “power politics” theorizing of neorealism and the materialism of Marxism. Of course, in one sense the late-medieval period is a “most likely” case for constructivism, as one could hardly deny the role of ideas in buttressing the power of the Catholic Church or provoking the Crusades. But apparently some have tried. Latham successfully shows that realist views prioritizing interests over ideology in explaining the Crusades (e.g., opportunities for looting) are inconsistent with current historical knowledge.

At other points, though, Latham’s obdurate refusal to consider the role of interests annoyed me. In explaining why the medieval kingdom came to prevail over the city-state, the principality, the bishopric, and the city-league, his account boils down to the claim that medieval political philosophy viewed the kingdom as “more legitimate” (90-91). Technological change plays no role in the explanation, and power politics is only begrudgingly and indirectly acknowledged (96).

Latham could also be clearer about the role that his ontology of war can play in general causal theories of international relations. Defining war as an “institution” composed of “deeply embedded intersubjective beliefs” (48) does nothing to bridge the distance between this kind of project and rationalist approaches to war. Why aren’t “norms” (or if one prefers, “deeply embedded intersubjective beliefs”) best thought of as variables in a utility function? (Realists would still not be happy with this, of course.)

The first 50 or so pages of the book bog down heavily in the IR literature. For someone like me largely uninterested in the paradigm bun-fights, the more interesting part of the book comes later. I learned something about the demise of feudalism (it was remarkably early, 13th century at the latest) and something about how Thomist and other late-medieval political philosophy differed from the prior Augustinian tradition (more optimistic about the state’s ability to promote the common good). Medieval historians are unlikely to find much new here, but for political scientists, Latham’s book does a service in synthesizing the up-to-date historiographic literature on the diplomacy and warfare of the period.

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