If you have a small business that only operates in New York, they don't care what the law in California is, it doesn't affect them. Walmart and Amazon care, because it does. And what they want is for the law to be the same everywhere, and for that law to be the one that benefits them. So they get that law passed by the central government. Then they take over everywhere because a) all the laws are the same, so there is no opportunity for a local business to carve out a local niche, b) the laws being the same increases economies of scale and lowers compliance costs for huge companies that operate everywhere but has no advantage for companies that only operate locally, so it increases the scale advantage of being large, and c) larger entities are the ones large enough to have a voice in the central government, whereas local entities have a stronger voice in local governments, so the laws that do get passed centrally are the ones that benefit the large players over the smaller ones.
We also have really bad central policies like the federal tax laws that make it so that when companies return profits to shareholders they pay heavy taxes but companies that retain the profits or use them to buy other companies do not, which naturally promotes mergers and consolidation and hoarding cash which then becomes a lobbying piggybank for huge companies.
So your theory is that we need a large government to rein in large entities. But the large government is already owned by the large entities. It isn't reining them in, and it won't. But the smaller governments could do so locally if they weren't being preempted at the federal level -- good luck being a huge conglomerate when every state is passing laws to give their local businesses a different advantage over you.
Sure, companies can use regulatory harmonization to their advantage, but they can also use tax and labour law competition between localities to their advantage.
First, it still can be. If the US has one set of laws and the EU has another set, a conglomerate has two sets of laws to navigate. That is still much easier for them than having dozens in each place.
Second, companies do their "harmonization" game with treaties as well, which of course only works by having a sufficiently powerful central government that can be controlled to sign onto such treaties and use their power to get other governments to do the same, using many of the same problematic shenanigans that happen at the federal level to create bad federal laws.
> Sure, companies can use regulatory harmonization to their advantage, but they can also use tax and labour law competition between localities to their advantage.
But that has nothing to do with entity size, and in fact is the opposite. If one state has advantageous laws then local companies there have an advantage over companies of any size that operate elsewhere.
Meanwhile, in the real world, tax havens are tiny jurisdictions for very good and well-understood reasons and the companies operating out of them are not in any meaningful sense "local", and the downward pressure on workers' rights is much stronger when multinationals can credibly threaten to relocate to one of several other jurisidictions with relevant manufacturing industries if new labour laws are passed locally rather than by a large trading bloc. And navigating 100 sets of copyright regulations rather than two is a challenge for a startup but something Amazon has ample resources to do where there's sufficient money in it to be worth bothering.
Local regulatory innovation gives us a lot more Google Bermudas and goods exported from Special Economic Zones designed specifically to privilege their patron corporations than local search engines and consumer electronics industries.
Tax havens are nonsense created by governments that want to impose taxes that aren't actually on anything.
If you want to tax companies who employ workers where you are, impose payroll tax. If you want to tax companies who sell to your people, impose VAT. If you want to tax companies that operate facilities, impose property tax.
If you want to tax nothing, tax "profit" and then watch how the "profit" is promptly removed from your jurisdiction. Because if the profit is a result of something that is actually connected to your jurisdiction in some way then you're really just taxing that thing and calling it income tax, but if it isn't then the company has no reason not to just declare the "profit" as having happened somewhere else where the rate is lower.
And then the local business can't do that, which is why those types of taxes should cease to exist in favor of the ones that tax something that actually happens where you are.
> and the downward pressure on workers' rights is much stronger when multinationals can credibly threaten to relocate to one of several other jurisidictions with relevant manufacturing industries if new labour laws are passed locally rather than by a large trading bloc.
This, again, has nothing to do with multinationals, and is in fact the opposite.
If California has more stringent worker protections than Texas this benefits local businesses in Texas. It only benefits multinational businesses if they move to Texas, and only to the extent that they move to Texas -- and if they move their entire operation to Texas then they're a local business and not a multinational.
Meanwhile what a multinational company can do that a local one can't is hire people in Asia or South America, which is a serious problem for a local business in Texas who is trying to compete with that multinational and suddenly has a bunch of requirements imposed by legislators elected by California who neither the business, nor its local employees who lose their jobs, actually wanted.
> And navigating 100 sets of copyright regulations rather than two is a challenge for a startup but something Amazon has ample resources to do where there's sufficient money in it to be worth bothering.
Which is why central control is problematic. You should only have to comply with the laws in effect where you actually are, so that you only have to comply with 100 sets of copyright law if you physically have operations in 100 different jurisdictions.
Look at what happened when people tried to introduce Linux in the public sector in early 2000s at regional level - Microsoft promptly bought up anyone who could be bought, country by country, with discounts and (likely) bribes.
Our lives are increasingly dominated by big entities, and the political ones are often small fish compared to giant international corporations that can play smaller political entities off against each other (example: Amazon headquarters).
The idea of limiting the size of political entities has merit, but it will backfire unless you also limit the size of economic entities. (And you need to do this first or possibly somehow simultaneously, because once you reduced the size of political entities, it may no longer be possible to limit the size of the economic entities.)