The relationship between state sovereignty and state territory in the United States is more complex, interesting, and unstable than the reassuring familiarity of an American map might suggest. State borders move as a result of wandering rivers, interstate border compacts, and even newly discovered surveying errors. States and the federal government also buy and sell proprietary interests in vast tracts of public land, while effectively leasing their sovereign functions to private parties. This Article argues that those threads—mobile state borders and active markets for public land and sovereign functions—can and should be woven together to create an interstate market for sovereign territory.
The absence of a market for state borders is puzzling for many reasons: the market has a historical pedigree, would not face insurmountable legal barriers, and could help solve a variety of pressing problems. Among other things, such a market might facilitate the resolution of interstate border disputes, which remain surprisingly common. North and South Carolina, for example, are currently adjusting their border southward to correct a two hundred-year-old surveying error. This change will be costly for the thirty affected households, whose residents will have to pay new taxes, change car insurance and schools, and might well find it harder to dance the shag with tar on their heels.8 Simple Coasean bargaining suggests that if such costs outweigh the benefits of correcting the surveying error, then the Old North State should simply sell the equivalent of a quitclaim, thus leaving the border where it has always been in practice.
Other utility-enhancing deals are not hard to imagine. States facing bankruptcy could raise revenue by selling territory to wealthier neighbors— an idea that has already been floated at the international level—while others might capture gains in metropolitan areas that straddle state borders but could be more efficiently administered by a single state. One scholar has suggested that Camden and Philadelphia be joined; a side payment to or from New Jersey could help bring that about. Even holding aside the financial gains, an active interstate market for sovereign territory could encourage useful competition between states by allowing the “laboratories” to come to the people, rather than requiring the people to go to the laboratories. The next time Killington, Vermont, votes to join New Hampshire because it prefers the latter’s tax system, or Martha’s Vineyard votes overwhelmingly to leave Massachusetts in response to unfavorable redistricting in the state legislature, compensation could facilitate the moves (or forestall them, depending on which state is willing to pay). Sales of state borders could even strengthen state identity in areas where residents’ identities are more closely tied to a state other than the one in which they live. If, for example, wealthy residents of Greenwich, Connecticut—many of whom earned their fortunes in Manhattan—would prefer to be New Yorkers, why not let them buy their way out?