A federal constitution distributes authority between governments. If the distribution has been made with goals in mind—rather than randomly, or to satisfy personal ambitions—its maintenance is crucial to a federation's success. Any changes to it must be managed with care. This chapter develops a thesis about what causes governments to deviate from their assigned authorities.

My central claim in this chapter is that the incentive to deviate from the division of authority is inescapably built in to the federal structure. Member governments—federal and state—may try to manipulate the division of authority to their own benefit, an activity I will refer to as opportunism or transgressions. Intergovernmental rivalry is inevitable and therefore transgressions are a normal part of any federal practice. However, careful design of the federation, mindful of this inherent tendency, can reduce the scale of the transgressions. Governments may punish one another to increase compliance with the distribution of authority, but the tools of enforcement are blunt and productivity limited when this is the only means to induce governmental agents to comply with the constitution. I will use this thesis to develop a theory of federal institutional design in later chapters. When managed, this inherent opportunism may become a benefit.

To frame the problem, consider the performance of the American federal union under the Articles of Confederation. The union was formed for mutual defense; it was believed that the colonies would be better able to defend themselves against the British (and other potential invaders) if they banded together.