In every federation, governments have an incentive to free ride off the sacrifices made by others. The standard method for overcoming compliance problems is to introduce sanctions for noncompliance. Intergovernmental retaliation is the natural sanction available within any federation, but it is costly to implement, making it ineffective at reducing the frequency of minor transgressions, the everyday aggravations of intergovernmentalism. Threats of retaliation can also quickly escalate, leading to a union of threats and holdouts, hardly a recipe for harmonious union. Now understanding the mechanics behind Madison's analysis of the flaws of the Articles of Confederation, we can begin to examine his prescription: effective sanctions. A federal constitution is as much about designing a common procedure for compliance maintenance and systemic adaptation as it is about allocating authorities.

James Madison provided the intuition for a model when he wrote: “A sanction is essential to the idea of law, as coercion is to that of government” (Madison 1999:72). The rule of law transforms society from the unproductive chaos of a Hobbesian world to the order, trust, and then fertility of a society where we are freed to interact with strangers not because the law transforms us into angels, but because to break the law hurts the perpetrator as well. The law is a coordinating force, but the rule of law is dependent on an enforcer that is capable and motivated to defend it.