Follow the Science...
States Are Still the Laboratories of Democracy
Much is being made of what is coming out of Washington. Yes, it’s hard to ignore Washington when having even the most benign conversation about government, but for many Down 100 large and mid-cap firms, state government relations are a higher priority than their federal GR. What do they know that the rest of us don’t?
As the federal government chooses where to place resources, there is a balance between how to regulate and spend mandatory dollars (Social Security, Medicaid, Medicare) and discretionary spending (defense, grants, programs). Since states are the largest recipient of federal dollars, and they act as an added regulatory layer, larger incumbents can and do use the states to their advantage by creating barriers to entry, raising thresholds, or creating a patchwork of systems that startups can’t maneuver easily or quickly.
The federal government diverting funding to the states to carry this out may seem odd at first glance, but in actuality provides tremendous opportunities for startups and policymakers. Further, there are 50 states and in many cases more and better opportunities. This allows startups to look to states and local governments that are boosting spending at a rapid pace.
While certain federal-centric politicians fear state power, in the US the states have always been laboratories of democracy. Many of the most successful federal policies were born from the states. A recent example is around regulatory reduction efforts. This idea was born from research by the Mercatus Center at George Mason University. Specifically, policies that launched ‘Red Tape Reduction’ initiatives that spread across the US. In 2017, when then-President Trump began to look for ways to reduce the federal regulatory burden, his administration looked to success stories from the states. This regulatory reform agenda resulted in streamlined approval processes which proved invaluable for COVID response efforts and paved the way for the recent federal transportation law that reduces the approval times of projects.
Another example is California’s Driver’s Privacy Protection Act (DPPA). This law quickly spread to the federal level for national adoption and today all 50 states and US territories allow the legal transfer of critical driver record information used by financial institutions, insurers, and employers. This one pro-consumer and pro-business law allows for tens of billions a year in economic activity.
States are also the bedrock of building consensus that increases the likelihood of national adoption of policy. The saying ‘As goes California, so goes the Nation’ speaks to how California views itself as a political power, but more importantly to the tidal wave effect of state policy and priorities that can quickly enable the federal government to take action to protect business and consumers engaging in interstate commerce.
Sound like you? If your startup is interested in learning more about how government funding works or how to get your startup funded at the state and federal level, you should reach out. We’d love to hear about your vision and help you make it a reality.