How Michigan Abetted Labor Cartels and Hastened Detroit's Downfall

Paved the Way for Detroit's Demise

Trying to Turn Things Around

In 1940, Detroit was the nation's fourth largest city.   By 1950, it had the highest per capita income of any major U.S. city.  With a current population of 701,000, the city now ranks 18th in the country, behind Charlotte, N.C. (17th),  Fort Worth, Texas (16th), Austin, Texas (14th), and Jacksonville, Florida (11th), none of which was in the top 20 until 1990 or more recently.   Last week the city sought to initiate what would be the largest municipal bankruptcy in the nation's history. 

Many pundits argue (see here and here, for instance), with some force, that Detroit's redistributive economic policies are a significant cause of the city's current economic woes and resulting inability to pay its bills.  At the same time, the State of Michigan also bears some responsibility for the city's plight.   For more than half a century, the Wolverine state encouraged the formation of labor cartels, also known as unions.  By design, such cartels exercise market power and artificially raise the price of the most important input in most enterprises, that is, human labor.  By raising the cost of doing business, in Detroit and other parts of Michigan, such cartels presumably encouraged some firms to move all or part of their operations elsewhere and deterred other firms from locating in Michigan in the first place.  It is thus no surprise that, as previously discussed on this blog, states like Michigan have stagnant or declining populations, while states such as Texas, North Carolina and Florida that discourage labor cartels are booming and attracting immigration from other states.

There was a time, of course, that states had no role in setting national labor policy.  The 1935 National Labor Relations Act ("NLRA"), also known as the Wagner Act after its chief proponent, Senator Robert F. Wagner of New York, pictured above, set uniform national labor policy.  The NLRA empowered employees to form labor cartels and prevented private enterprises from firing employees who participated.  Moreover, the NLRA did more than simply facilitate “collective bargaining.”  Instead, the Act also empowered unions and firms to negotiate so-called “union security agreements.”  As previously explained on this blog, such agreements authorized firms to force their non-union employees to pay dues to the union, with the stipulation that employees who refused would be fired.  Thus, the NLRA authorized unions to fill their coffers by taxing non-union employees, thereby further increasing the effective cost of hiring such individuals, who would of course demand higher wages to offset such compelled dues.   Presumably the prospect of  obtaining such additional dues from non-union members encouraged the formation of unions in the first place, by, for instance, reducing the cost per union member of cartel formation and subsequent "collective bargaining."

The Supreme Court upheld the NLRA in 1937, claiming that forcing firms to employ union members against their will would facilitate labor peace and thus minimize disruptions to interstate commerce.  See NLRB v. Jones and Laughlin Steel, 301 U.S. 1 (1937).    On the contrary, the number of strike days doubled between 1936 and 1937, with the automobile industry, headquartered in Detroit, experiencing more than its share of labor strife.  Moreover, and as previously explained on this blog, policies like the NLRA that artificially increased wages lengthened the Great Depression by interfering with equilibrium in labor markets and encouraging unemployment.     Responding to further such strife after World War II, Congress overwhelming enacted the Taft-Hartley Act in 1947.  As previously explained on this blog,  the Act empowered states to protect non-union employees from coercive “union security agreements” by opting to become what are colloquially known as “right to work” states.  Several states, including Texas, Florida and North Carolina, have long opted for "right to work" status, with the result that labor cartels are far less prevalent in such states than in others.

Late last year, Michigan finally became a "right to work" state, at the behest of Governor Rick Snyder, also pictured above.  Before that the state, like others in the "rust belt," declined to protect non-union employees, doubling down on the sort of pro-union policies that produced the labor strife the Taft-Hartley Act was designed to mitigate.  Indeed, Michigan once went so far as to empower public employee unions to coerce non-members to provide financial support for a union's political activities, until the Supreme Court declared this practice unconstitutional.  See Abood v. Detroit Board of Education, 431 U.S. 209 (1977). 

In the short run such pro-cartel policies made perfect sense for Michigan and many of its citizens.  During the 1940s and 1950s, the “Big Three” automakers dominated the automobile industry, with no sign of effective challenge in sight. See James M. Rubenstein, Making and Selling Cars: Innovation and Change in the U.S. Automotive Industry, 188 (2001) (reporting that the Big Three's combined market share was 94 percent in 1954, 1955 and 1959).    So long as unions negotiated for similar wage increases from each such firm, each of the Big Three could simply pass along such higher costs to consumers, the vast majority of whom were citizens of other states.  Indeed, one suspects that Detroit and surrounding suburbs derived much of their 1950s and 1960s prosperity from this combination of tight oligopoly and cartel-induced above-market wages, nearly all at the expense of citizens in other states and foreign countries.  To that extent, Detroit's vaunted prosperity during the middle of the 20th Century was in part an illusion, bought at the expense of millions of other Americans who paid excessive prices for the city's main export.  Over the long run, of course, market entry, encouraged by free trade, undermined Detroit's grip on the American auto market, so much so that General Motors could not survive without an ill-advised federal bailout and Chrysler is now a subsidiary of Fiat and thus no longer an American company, let alone a Detroit firm.  It is thus no surprise that the state still suffers an unemployment rate of 8.7 percent, significantly higher than the national average.

None of this is to say that Michigan could have maintained the complete preeminence of the Big Three by becoming a "Right to Work" state in, say, the 1950s.  Some erosion of Detroit's share of automobile production was predictable no matter what.  Still, by resisting labor cartels much sooner than it did, the state could have checked the power of some unions and prevented the emergence of others.  In this way Michigan could have made Detroit and the rest of the state more hospitable to private investment and resulting economic opportunity, countering the inevitable reduction in the Big Three's share of world-wide automobile production.  Perhaps the financial ruin of the state's largest city will encourage additional efforts to remove undue regulatory burdens and resist the imposition of new ones.   Those who hope to encourage economic growth in Michigan can start by defeating proposals to raise the state's minimum wage to a rate nearly 50 percent above the federal minimum.  Otherwise, the downfall of Detroit may prove a harbinger of the entire state's economic future. 

President Obama's Strange Critique of Michigan's Right to Work Law

 Wolverine Fiercely Protecting the Right to Work (Finally)

Michigan has the nation's highest rate of unionization and one of the nation's highest rates of unemployment.  Many in the state and elsewhere believe that this correlation is not accidental, that is, that the state's union-friendly environment unduly raises wages and other labor-related costs and deters business investment and resulting employment opportunities.  See George J. Stigler, The Theory of Price, 279 (4th Ed. 1987) ("The labor union is for the labor market the equivalent of the cartel for the product market.").   (See this previous post discussing some data on the question.)  Indeed, as previously discussed on this blog, Michigan and other union-friendly states are losing population to states such as Texas, Florida, Georgia, Nevada, South Carolina and Utah, as businesses and the jobs they create migrate to states with tax and regulatory environments that are more friendly to productive economic activity. 

Just yesterday the Michigan Legislature added the Wolverine state to the growing list of states known as "right to work states."   In so doing, Michigan followed the lead of Indiana, which passed similar legislation in February of this year.  To precise, the legislature banned so-called "closed shop agreements," and "agency shop agreements."  Such provisions in collective bargaining agreements require a firm's employees to join a union (closed shop agreements) or, in the alternative, to pay dues to support the union's collective bargaining activities (agency shop agreements).  As a result of such legislation, Michigan workers may now choose to work wherever they wish, free of any compulsion to support unions they oppose.  Governor Rick Snyder signed the legislation into law last evening.

Support for Michigan's right to work legislation was not unanimous, with some on the Progressive Left decrying the legislation.  Chief among the detractors was President Obama, who flew to Detroit to denounce the pending legislation earlier this week, in a speech otherwise devoted to fiscal policy.  The Huffington Post reported the President's remarks as follows:

"And by the way, what we shouldn't do -- I've just got to say this -- what we shouldn't be doing is trying to take away your rights to bargain for better wages and working conditions," he added to loud applause from the audience. "We shouldn't be doing that. The so-called 'right-to-work' laws -- they don't have to do with economics, they have everything to do with politics. What they're really talking about is giving you the right to work for less money."

President Obama's attempted and failed intervention in Michigan politics is perplexing on several levels.  For one thing, the Taft-Hartley Act, which authorizes states to ban closed shop and agency shop agreements is the Supreme Law of the Land and expresses national policy of the subject.  As previously explained on this blog, that policy encourages states to decide for themselves whether compelled support for unions will enhance growth and economic opportunity within their borders.  As President, Mr. Obama must, according to Article II of the Constitution, "take care that [Taft-Hartley] is faithfully executed."       President Obama may well believe Taft-Hartley was a bad idea.  Moreover, he is perfectly free to introduce legislation repealing Taft-Hartley if he wishes.  Absent such a repeal, however, he should embrace the legislation and respect Michigan's choice.

Moreover, the President's account of the Michigan legislation is, simply put, false.  The legislation in no way limits "rights to bargain for better wages and working conditions."  On the contrary, the legislation leaves each and every Michigan worker perfectly free to affiliate with a union and thus bargain collectively for higher wages and better conditions.  All the legislation does is prevent unions and the firms with which they bargain from compelling individuals to subsidize a union as a condition of pursuing his or her chosen vocation.

Finally, the President's claim that "right-to-work" legislation  is about "politics" and not "economics" does not withstand even cursory scrutiny.  According to economists who have studied the question, rampant unionization of American industry during the mid-late 1930s hampered economic recovery and lengthened and deepened the Great Depression.  (See here and here for previous discussions of these data.)  To put a finer point on it, federal imposition of labor cartels distorted the allocation of the nation's resources and reduced employment, as many predicted at the time.  Millions of Americans became poorer as a result.  While coercive imposition of trade unions on American business raises the wages of some workers, other workers and, ultimately society at large,  suffer. 

Update (4:50 PM, December 12):  Over at CNN, William Bennett has penned an Op-Ed praising Michigan's choice of Right-to-Work status.  In so doing, Bennett echoes some of the arguments made above.  In particular, Bennett offers an effective rebuttal of President Obama's claim that right to work laws are all about politics and not about economics.  According to Bennett:

"[C]ontrary to President Obama's thinking, right-to-work laws are directly related to economics. Right-to-work laws give employers the freedom to hire non-union workers and negotiate contracts with more than one party. For this reason, right-to-work states are more attractive to private business than non-right-to-work, and could increase private-sector wages.  For example, on CNBC's annual list of the best states for business, nine of the top 10 states are right-to-work states. It's no coincidence that foreign automobile manufacturers often build new plants in right-to-work states like Tennessee and Alabama, rather than Detroit -- the "Motor City."  Perhaps Michigan's new right-to-work status will unlock employers from burdensome union contracts and attract new private enterprise to Detroit, which is predicted to go bankrupt by the end of this year. After all, Gov. Scott Walker's union reforms in neighboring Wisconsin helped eliminate the state's budget shortfall."

 

More Evidence that Compelled Support for Unions Thwarts Job Creation

Not so friendly to job creation and wages

Mr. Republican. Fought Trade Union Excesses and Bolstered Competitive Federalism

A recent study by the National Institute for Labor Research concludes that Right-to-Work states experience higher employment growth, enhanced economic growth and enhanced wages compared to those states that allow unionized firms to require all their employees to pay union dues, even if the employee declines to join a union. As previously explained on this blog, the Taft-Hartley Act of 1947 empowers states to become Right-to-Work states, thereby opting out of provisions in the 1935 National Labor Relations Act that originally allowed firms to compel employees, under threat of termination, to pay such dues against their wishes. Thus, the Act helps facilitate competitive federalism, whereby states offer different menus of background regulatory and tax policy in their efforts to woo industry that is free to locate in any of 50 states and numerous foreign countries. Co-authored by Ohio Senator Robert Taft (also known as "Mr. Republican"), pictured above, the statute followed a Republican landslide in 1948. Strangely, many of the Law's opponents referred to it as the "slave labor law," a bizarre appellation given the Act's effort to enhance the autonomy of individual employees and protect all employees against union excesses.   Maybe "Johnny Friendly," the fictional leader of a corrupt union, portrayed in "On the Waterfront" by Lee Cobb (pictured above) would have characterized the law in this way!

In particular, the study finds that:

1) Between 2000 and 2010, private sector employmnt in Right-to-Work states rose .3 percent, while it fell by over 5 percent in other states.

2) During the same period, real manufacturing GDP grew over 18 percent in Right-to-Work states but just over 8 percent in other states.

3) During the same period, the compensation of employees in the private sector rose 11.3 percent in Right-to-Work states, while compensation of employees in other states rose only 0.7 percent.

Of course, the study does not by itself establish that a state's embrace of Right-to-Work status will thereby, other things being equal, enhance economic growth and job creation. For one thing, right to work status may correlate with other variables that encourage economic growth, such as a political culture within a state hostile to over-regulation and burdensome taxation. (Indeed, the study finds that the average "tax freedom day" in Right-to-Work states is April 6, compared to April 14 in other states.) If so, then superior economic growth may be the result of an overall regulatory and tax environment conducive to economic growth, of which Right-to-Work status is merely one element. Moreover, large economic events unrelated to labor regulation and trade unionism that affect a few states who happen to fall into one category or the other could produce employment effects that coincidentally correlate with Right-to-Work status. The results are nonetheless interesting and reflect the sort of empirical work necessary to test competing hypotheses about the impact of Right-to-Work status.

The NLRB Attacks Competitive Federalism

Commissar for the Ministry of 787 Dreamliner Production?

The National Government is at it again, interfering with the workings of competitive federalism. That is, the general counsel of the National Labor Relations Board, Mr. Lafe Solomon (pictured above) has issued a complaint against Boeing, claiming that the firm has engaged in unfair labor practices. As a remedy, the complaint seeks an order to compell the firm to increase its production of 787 Dreamliners at facilities in the State of Washington, above and beyond current levels of production. In particular, the complaint alleges that Boeing chose to open a second production line for the 787 in South Carolina and to create numerous jobs (over 2000 according to one report) in that state in order to punish the members of The International Association of Machinists and Aerospace Workers, which called two strikes against Boeing in the past six years. (No one disputes that an eight week strike in 2008, for instance, cost Boeing $100 million per day in deferred revenue. For additional details on how the IAMAW has disrupted Boeing's operations and made its product less attractive to potential buyers, see this Op-Ed by Steve Chapman of the Chicago Tribune.) Such an allegedly punitive act, the NLRB says, violates federal labor law, even though the new facility would entail an increase in production of Boeing's 787, that is, would not move any production from Washington to South Carolina. Indeed, one former Chair of the National Labor Relations Board has opined that the complaint is unprecedented, given that Boeing is not moving existing work being done in Washington to South Carolina. Moreover, Boeing has itself exposed numerous inaccuracies in the NLRB's complaint and post-complaint statements, leaving one to wonder whether the NLRB will simply withdraw the complaint and correct the record. Finally, Boeing's answer to the NLRB's complaint points out that there were any number of reasons that motivated Boeing's decision to open a production line in South Carolina, including a desire for geographic diversity in the firm's production facilities and South Carolina's overall favorable business climate.

South Carolina, of course, is a so-called "right to work state," and employees at the new factory would not be members of the IAMAW or any other union. As previously explained on this blog, Congress, via the Taft-Hartley Act of 1947, altered American Labor Law, by empowering states to opt-out of portions of the National Labor Relations Act (NLRA) of 1935. Under the original NLRA, unions --- best characterized as labor cartels --- could use their bargaining power to force employers to to enter "closed shop" agreements. Under such agreements, an employee had no choice but to join a union and thus support the union financially if he or she wished to work for the company in question. Indeed, such agreements require firms to fire individuals who quit a union or refuse to pay their dues. Thus, by exempting unions from the antitrust laws and requiring private firms to recognize unions, federal labor law bolsters arrangements that coercively deprive individuals of their freedom of association, that is, their freedom not to join a union. This result is supremely ironic, as it turns the purpose of government on its head. For, as explained in an earlier post on this blog, the purpose of government, at least according to James Madison, is the protection of faculties of acquiring property, including occupational liberty. As Madison put it, in his 1792 Essay on Property:

"That is not a just government, nor is property secure under it, where arbitrary restrictions, exemptions, and monopolies deny to part of its citizens that free use of their faculties, and free choice of their occupations, which not only constitute their property in the general sense of the word; but are the means of acquiring property strictly so called."

A state-backed closed-shop arrangement is just such an "arbitrary restriction" that denies citizens a free use of their faculties.

The Taft-Hartley Act, by contrast, allows a state to declare itself a "Right to Work" jurisdiction, thereby outlawing "closed shop" agreements. A state that chooses this course ensures that individuals may pursue the occupation of their choice without being forced to join and financially support an organization they may dislike or, worse, believe to be contrary to their economic interest. Moreover, as a practical economic matter, union organization is less likely in right to work states, because a union that successfully organizes a particular workforce cannot be sure than any more than a bare majority of a firm's employees will financially support the union.

In our federal system, firms and individuals are free to incorporate where they wish and also free to locate their facilities where they wish. Combined with the NLRA, the Taft-Hartley Act authorizes two different frameworks for labor relations from which firms can choose when they select their locations. Presumably competition between these two frameworks, just like competition on other attributes that make for a healthy business environment, will result in firms locating their production facilities in those states that offer the overall best business climate. If, as some have argued, coercive unionization makes workers more productive and thus facilitates wealth creation, then choosing "right to work" status will deter investment in a particular state, other things being equal. (For instance, some claim that such coercion is necessary to prevent non-union employees from "free riding" on the efforts of unions to raise a firm's wages.) If, on the other hand, coercive unionization imposes more costs than benefits, then a state's choice as a "right to work state" will, other things being equal, attract capital investment and jobs. That is to say, "competition between states" will decide which of two possible institutional frameworks survives. In fact, it may be that one framework is superior for certain firms, while another is superior for others. That's the way federalism is supposed to work.

The NLRB's order, however, short circuits that process, at least in part. Under the rule sought by the NLRB, a firm that suffers at the hands of one or more costly strikes will find it difficult to open a new facility elsewhere, as a fact finder could always infer, perhaps quite reasonably, that the firm has opened the new facility in a different state at least in part "because" it wants to avoid the debilitating consequences of a future strike. And, having drawn this inference, the next logical inference will be that the firm firm opened the new facility to "punish" the union for striking, perhaps supported --- like the NLRB's current complaint --- by some offhand statements by company officials taken out of context. Indeed, the more costly the prior strike, the stronger will be the inference that any subsequent move is a form of retaliation! While the company might ultimately prevail, it will do so only after bearing significant costs in the form of litigation and uncertainty.

Aside from short-circuiting federalism, the NLRB's approach will, if validated in court, have other negative consequences as well. For one thing, the rule will encourage otherwise unwarranted strikes by unions that fear employers might be planning --- quite lawfully --- to build facilities elsewhere, even if those plans have nothing to do with organized labor. (Perhaps a firms is considering a move to a state with less onerous taxes or environmental regulation, for instance.) By striking today, a union would thereby give itself the option down the road to argue that any construction of new facilities in another state is retaliation for the recent strike. Moreover, the prospect that unions might behave in this manner, or otherwise take advantage of the NLRB's unprecedented rule, will cause companies to resist unionization more vigorously than they otherwise might, even if unionization would make sense for all concerned. Indeed, at the margin, firms might avoid closed-shop states altogether to avoid the NLRB's new rule.

Hopefully the courts will reject the NLRB's effort to short-circuit the workings of competitive federalism. Indeed, they may not even reach the issue, as Senators have already introduced legislation to clarify labor law in a way that rejects the NLRB's gambit.

Federalism at Work Protecting Economic Liberty

A recent study by Americans for Tax Reform finds that states with high taxes and pro-union labor laws are losing citizens and thus losing influence in Congress (and, it should be noted, the Electoral College.)

In particular the study finds that eight states are projected to gain at least one Congressional seat as a result of the 2010 Census, with the gains distributed as follows. Note that the states highlighted in red cast their electoral votes for George W. Bush in 2004, while those highlighted in blue cast their for John Kerry.

1) Texas (4 seats);

2) Florida (2 seats);

3) Georgia (1 seat);

4) Nevada (1 seat);

5) South Carolina (1 seat);

6) Utah (1 seat);

7) Washington (1 seat);

The same study finds the losses distributed thusly:

1) New York (2 seats);

2) Ohio (2 seats);

3) Illinois (1 seat);

4) Louisiana (1 seat);

5) Massachusetts (1 seat);

6) Michigan (1 seat);

7) Missouri (1 seat);

8) New Jersey (1 seat);

9) Pennsylvania (1 seat);

The results have obvious ramifications for the 2012 Presidential Election. In particular, the results show a net gain of six electoral votes for states that cast their votes for George W. Bush in 2004 over John Kerry. Recall that, in 2004, President Bush received 286 electoral votes --- 16 more than the 270 needed to prevail. If the same states vote for the Republican candidate in 2012, that candidate will receive 292 electoral votes. As a result, such a candidate could lose, say, Ohio (18 electoral votes in 2012), and still prevail. That is to say, the electoral map is shifting in favor of the Republicans.

The study also finds that, among the states gaining seats, the average top tax rate on personal income is 2.8 percent, while the average top rate in states losing seats is just over 6 percent. Moreover, 7/8s of the states that gained seats have passed so-called "right to work laws." Such laws, authorized by the Taft-Hartley Act of 1947 (passed over President Truman's veto) prevent Unions and employers from negotiating collective bargaining agreements that require employees to join or financially support a union as a condition of employment with the employer in question. States that decline to adopt so-called "right to work laws" are known as "closed shop states."

For proponents of economic liberty, the message of the study is clear, namely, states with low taxes on high income earners and a favorable climate for business create economic opportunities and thus attract in-migration, while states with high taxes on the well-to-do and unfavorable business climates stultify economic growth and induce out-migration. These proponents would also view such migrations as part and parcel of a well-functioning system of federalism whereby states compete with one another for productive citizens and capital. Such competition, they would argue, deters states from adopting unduly onerous regulations and taxes at the behest of special interests, thereby providing a bulwark against economic oppression.

Proponents of high taxes and closed shops might interpret this data in a different way, however. These analysts might see these data as reflecting a "race to the bottom," that is, destructive competition between the states for high income individuals and businesses hostile to unions. Under this view, states compete with each other by lowering taxes and relaxing protection for workers, thereby undermining the ability of each state to generate sufficient tax revenue to support essential functions as well as the ability to ensure fair wages and working conditions for labor. Adherents to this view would presumably decry the system of federalism that allows this competition to take place and, for instance, advocate repeal of that portion of the Taft-Hartley Act that authorizes states to pass right to work laws.

My own sense is that any "race to the bottom" characterization of these data is strained. I have no doubt that such races can occur. For instance, absent federal regulation, individual states may adopt lax anti-pollution regulation if pollution produced by industrial activity crosses state lines. (Imagine, for instance, a factory in one state that emits pollutants into a river that then flows through several other states.) In such cases, no individual state captures the full costs and benefits of the legislation it passes because of negative externalities flowing from the activity in question. In these settings, it is appropriate for the national government to step in and impose a uniform solution. When it comes to income tax rates and right to work laws, however, any supposed externalities are far less apparent. With respect to these policies, then, states seem to operate more or less as "single owners" of the costs and benefits of legislation they impose. For instance, if a state raises taxes and spends the proceeds on police protection or sanitation, the state's own citizens will benefit and property values will rise. (While other expenditures, e.g., on education, may produce some spillovers, as educated citizens might move elsewhere, the appropriate response to such spillovers would seem to be some national expenditures on education, funded via national taxation, instead of giving individual states the ability to tax and spend without consequence.) Moreover, if "closed shop" laws make industries and workers more productive, then states will adopt such laws as a means of attracting labor and capital. Finally, the size of population flows seems large enough to suggest that working class individuals, that is, individuals supposedly helped by laws allowing closed shops and high taxes on the wealthy, and not just those in the upper income brackets, are moving to low-tax, right to work states.

It should be noted that the "federalism" mentioned here is not of a constitutional dimension, at least according to the jurisprudence of the Supreme Court. Under current Supreme Court case law, Congress could, if it wished, eliminate right to work laws altogether, allowing unions and employers to negotiate "closed shop" arrangements in any state. Indeed, that was the state of the law between passage of the National Labor Relations Act in 1935 and its amendment via the Taft-Hartley Act. (Though it should be noted that, in 1935, the Supreme Court still enforced limitations on Congress's Commerce power, thereby limiting the scope of the NLRA to business of the sort that, if crippled by a strike, would place a direct burden on interstate commerce.) Moreover, Congress could, if it wished, provide citizens in high tax states with tax federal credits that compensate citizens in high tax states for the tax premium they pay compared to their fellow citizens who live in other states. (Indeed, under the current tax code, taxpayers can generally deduct any state taxes they pay from their gross income, and this rule functions as a federal subsidy of sorts for high tax states.) Still, Congress has chosen NOT to take these steps, thereby facilitating competition among the states for labor and capital, competition that deters oppresive taxation and fosters labor and other laws friendly to wealth and job creation. In so doing, Congress seems sensitive to the admonition of James Wilson, perhaps the most under-appreciated of the Founding Fathers, pictured at the top of this post. According to Wilson, describing the appropriate boundaries between state and federal power at the Pennsylvania Ratifying Convention:
"Whatever object of government is confined in its operations and effects, within the bounds of a particular state, should be considered as belonging to the government of that state; whatever object of government extends, in its operation or effects, beyond the bounds of a particular state, should be considered as belonging to the government of the United States."
Fortunately Senator Robert Taft, pictured after Wilson above, and other supporters of the Taft-Hartley Act, agreed with Wilson.