One of the central threads of discussion in the Federal-State working group has been on the apportionment of authority between each level of government. Today I came across the following passage and it serves as food for thought.

"[T]he States can best govern our home concerns and the general government our foreign ones. I wish, therefore... never to see all offices transferred to Washington, where, further withdrawn from the eyes of the people, they may more secretly be bought and sold at market."

Thomas Jefferson, letter to Judge William Johnson, June 12, 1823

If, as Stigler has persuasively argued, regulatory institutions can be captured and public officials of good will tend to work toward the ends of the regulated, which regulatory institutions are more susceptible? Federal or state? Or does the organizational structure matter more than the level of government? Email me your arguments.

If you believe the states are better equipped to resist capture or to err less grievously when captured than their national counterparts, consider that on the one hand, there is generally more diffused power among agencies and the legislature. But, on the other hand there tend to be fewer "watchdogs" at the state level.

For Preemption:
The preemption model has enjoyed a large measure of success in deregulating network industries. Preemption of state regulation under a uniform deregulatory federal scheme resulted in large consumer welfare gains in other network industries: airlines, trucking, railroads and natural gas production. In addition, preemption allowed parochial interests and public choice pressures inherent in state regulatory schemes to be overcome. [This is not to deny that federal agencies can also be a public choice wonderland. It is just more difficult to capture them.] Preemption allowed the interests of consumers to triumph over the interests of regulated industries, which often act as the fiercest defenders of state regulation because the regulation can be turned to their advantage.