To ensure freedom of movement and freedom of commerce across state lines, the Constitution grants the federal government the power to regulate commerce among the states. This power, granted under the Commerce Clause, essentially established the United States as a free trade zone, where states are prohibited from enacting laws, taxes or regulations that inhibit or create unnecessary friction on economic activity between the states.
Under the Articles of Confederation, the original governing document of our republic, the 13 states tended to enact harmful populist policies designed to protect their own farmers and businesses from competition from other states. State tariffs and other protectionist measures hindered interstate commerce and contributed to a nationwide economic downturn that, in turn, led to the convening of a Constitutional Convention to remedy the problem.
It remains critical today for the federal government to preempt the states from their natural tendency to impose popular rules and regulations that affect businesses and consumers in other states or create friction for interstate commerce. The principle remains the same, though the Internet and e-commerce present new challenges and temptations the states are finding hard to resist.
Anything that happens over data networks is inherently interstate. The old analog phone network could distinguish between local and long-distance calls, but packets fly around the world at the speed of light, even if you are emailing someone in the room next door. Technology has made more of commerce interstate, such as voice communications, data exchange, e-commerce, and data hosting. Allowing the states to regulate inherently interstate commerce will simply slow commerce, the adoption of technology, and our global competitiveness.
As federalists, we need to recognize that there are legitimate roles for local, state, and federal governance, and while the states have allowed the federal government far too much regulatory control of functions that should be left to the states, regulating interstate commerce isn’t one of them.
That’s why at the Institute for Policy Innovation (IPI) we have consistently advocated federal, not state regulation of internet taxation, social media speech regulation and age verification, online privacy, VoIP regulation, and now artificial intelligence (AI). It makes no sense for there to be 51 different regulatory regimes for a business that travels across state borders at the speed of light.
It's just as much a violation of our constitutional, federalist republican system for a state to regulate AI as it is for the federal government to regulate state education. The Commerce Clause limits federal authority to interstate commerce and empowers the federal government to prevent states from burdening interstate commerce. Those of us who believe in limited government should insist on both.