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States sometimes compete for new businesses by cutting taxes and loosening regulations. What is this dynamic called?
AA devolution revolution
BA venue shopping spree
CA race to the bottom
DA marble cake bargain
Answer & Solution
Correct answer: C. A race to the bottom
1. One drawback of federalism is competition between states for business investment.
2. When states compete by lowering taxes and regulations, the dynamic is called a race to the bottom.
3. The social cost can land on workers, whose safety and pay suffer as workplace rules are lifted.
4. Devolution names the transfer of power down to states, and venue shopping is an interest group tactic, so both mislabel the competition.
_Source: OpenStax American Government 3e (CC BY 4.0), Ch 3 "American Federalism", section 3.5 Advantages and Disadvantages of Federalism_
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