4 A government of limited powers
This modern form of federalism, which was adapted from the model
of ancient Greece, has been copied, with variations, all over the world, in
Switzerland, Canada, Australia, India, Germany and other countries, and
is now being laboriously evolved in Europe. The states are not sovereign
bodies, but they do exercise powers and carry out functions that in unitary
states, such as the United Kingdom, are normally allocated to the central
authority. The Constitution set up a division of power between the federal
and state governments, which initially limited the former principally to the
fields of defence, foreign affairs, the control of the currency and the control
over commerce among the states. All other powers, the residual powers, were
left to the states. This division of power has been eroded with time, so that
today the functions of the federal government have been extended beyond all
recognition, touching most of the important concerns of the citizens of the
United States. The federal government remains limited in its powers by the
Constitution. However, the greatest protection for the continued power of
the states lies in the decentralised nature of American politics. The United
States Congress could, if it wished, considerably diminish the powers of the
states, but the pressures exerted upon Senators and Members of the House
of Representatives, by their constituents and by interest groups, ensure that
the powers of the states are respected. Thus although the power of the states
relative to the federal government has been considerably reduced, they con-
tinue to be extremely important and politically powerful centres of govern-
ment activity.
The importance of the American states as legal entities is still consider-
able. At the time of the ratification of the Constitution almost every impor-
tant government function was exercised by the states. Even today most of the
civil and criminal law that governs Americans’ lives is state law. Family law,
traffic law, commercial law, even the question of whether a murderer should
face the death penalty or not, are, in the first instance, a matter for the
state legislature to decide. For example, in 1996 a referendum was held in
California that allowed the use of marijuana for medical purposes and other
states followed suit; in 1997 the state of Oregon passed its Death with Dig-
nity Act, which authorised doctors to employ euthanasia in certain circum-
stances. The Attorney General of the United States attempted to prevent the
state legislation from being implemented, but the US Supreme Court held
his actions unlawful. The states have important regulatory functions, laying
down many of the rules that business, agriculture and the trade unions must
observe. Take a very modern activity – the energy industry. There is a federal
regulatory body for the energy industry, the Federal Energy Regulatory Com-
mission, but its jurisdiction is limited to the regulation of wholesale trade in
energy and the transmission of natural gas, oil and electricity across state
lines. State agencies regulate the sale and transmission of energy within the
state, setting retail prices and enforcing service and quality standards
The states have extensive powers of taxation, and together with their local
governments spend very large sums on social welfare, education, health and