Bill Hobbs writes about a particularly perverse attempted-application of the Commerce Clause in whicih some plaintiffs argue that when states use tax-incentives to lure businesses they're purposefully distorting interstate commerce for their own advantage. Apparently, the plaintiffs want the Supreme Court to rule that its unconstitutional for states to compete for business in this way; Bill has a lot more details, and the end result is that such a decision would essentially force all states to adopt identical tax structures.
One of the strengths of our federal system of government is that each individual state can act as an experiment in government -- many different possibilities can be tried, and the least successful states will become uncompetitive until they reform. Federalism is an application of competitive market principles to government, and it's for this reason that many economic capitalists are also strong supporters of "states' rights". Uniform national-level standards eliminate this competition, and thereby eliminate one of the primary engines of improvement that our founders built into our Constitution.
In truth, I think the Commerce Clause should be drastically scaled back, and that states should be given far more autonomy to make their own laws and compete with each other economically and socially. A huge step towrds this end could be taken by repealing the 17th Amendment and restoring the states' representatives to our national government: the United States Senate. If the power of state governments were more stongly protected, they would have more leeway to experiment with policy without interference from the national level; this in turn would foster competition, and lead to greater productivity, liberty, and happiness for all the citizens of our country.
Interesting comments. I linked to them in an update to the original post.
I ran across an interesting speculation a while back (can't recall where) in which someone noted that the roles of the Senate and House have been largely reversed. Gerrymandering, generated largely by state legislatures, has largely "fixed" the party affiliation of the members of the house, while senators are largely elected freely across the state.
While the analogy isn't exact, it does provide an interesting point to ponder.
Allen: I think I wrote that :)