The Race to the Middle

William Magnuson*

How does federalism affect the quality of law? It is one of the fundamental questions of our constitutional system. Scholars of federalism generally fall into one of two camps on the question. One camp argues that regulatory competition between states leads to a “race to the bottom,” in which states adopt progressively worse laws in order to pander to powerful constituencies. The other camp, conversely, argues that regulatory competition leads to a “race to the top,” incentivizing states to adopt progressively better laws in the search for more desirable outcomes for their constituencies. Despite their apparent differences, however, both the race-to-the-bottom camp and the race-to-the-top camp share one fundamental assumption—that federalism leads to extremes. In other words, when states compete on regulatory regimes, they inevitably race to high or low levels of regulation, hoping to outdo one another by distinguishing themselves from their peers. This Article, however, argues that both of these federalism models fail to account for another powerful dynamic that pushes states, not to distinguish themselves from the crowd, but rather to fit into it. This “race to the middle” leads states to adopt regulations that are similar, or even identical, to the regulations adopted by large numbers of other states. The resulting race to the middle causes state law to gravitate toward mediocre but satisfactory regulatory outcomes, not efficient or inefficient ones. The Article demonstrates how the “race to the middle” is driven by four interrelated factors: first, the informational benefits that accrue to states that adopt wellestablished legal regimes; second, the demand by constituents, and in particular corporations, for familiar regulatory regimes; third, the network effects from interoperable regulatory regimes; and fourth, the reduced risk of federal intervention that arises when states adopt mainstream regulatory structures. The Article concludes by assessing the implications of the race to the middle for theories of federalism and democratic governance.

Continue reading in the print edition . . .

© 2020 William Magnuson. Individuals and nonprofit institutions may reproduce and distribute copies of this Article in any format at or below cost, for educational purposes, so long as each copy identifies the author, provides a citation to the Notre Dame Law Review, and includes this provision in the copyright notice.

*Associate Professor, Texas A&M University School of Law; J.D., Harvard Law School; M.A., Universit`a di Padova; A.B., Princeton University. The author wishes to thank Jonathan Macey, Rebecca Tushnet, Norman Spaulding, Jill Fisch, Andrew Tuch, Maureen Brady, Zachary Clopton, George Georgiev, Matthew Turk, Kish Parella, Jared Ellias, Yonathan Arbel, Matthew Shapiro, Robert Anderson, Lynn LoPucki, Vanessa Casado P´erez, and participants at the Yale/Stanford/Harvard Junior Faculty Forum for helpful advice and guidance.