May 312011

Is it OK to give a Leviathan Ankle-Biter award to the United States Supreme Court?  Whether or not, I think I will.

The inspiration is this WSJ lead article from May 27:

Justices Uphold Immigrant Law : States Can Shut Firms That Hire Illegal Workers

The U.S. Chamber of Commerce called my attention to the ankle-biter part.  It doesn’t like this decision:

“The growing patchwork of state and local immigration laws is a serious obstacle to doing business across state lines,” said Robin Conrad, director of the U.S. Chamber of Commerce’s legal arm, which challenged the Arizona law. She called on Congress to outlaw “employment-related state immigration laws” like Arizona’s, as part of a broader immigration overhaul.

A patchwork of state and local laws makes it hard for a single company to dominate its niche from coast to coast.   If laws are uniform nation-wide, a dominant company needs to deal with only one set of regulations, and can then use economies of scale to run the smaller ones out of its business.   It can hire lobbyists to schmooze the regulators in Washington.   The biggest, most efficient lobbyist organization wins.

But if laws are not uniform, then there are niches for the smaller companies who can deal with local regulations.

In a patchwork of local laws and regulations, it’s hard for the winner to take all.   And  it’s harder for the U.S. government regulators to coopt and intimidate the patchwork of small competitors who can survive in that environment.

True, there is some loss of economic efficiency under such a patchwork, but there is also corresponding loss of efficiency of government control.    Leviathan doesn’t like that.

So a Leviathan Ankle-Biter Award goes to the United States Supreme Court.

I hope to soon make a similar award to those members of Congress who will resist the big corporate lobbyists who will argue for uniformity.