At the Originalism Blog, Mike Ramsey discusses the justifications for federalism and how they connect with the protection of individual liberty. He writes about how the enactors of the Constitution mainly supported limited federal powers on the ground that the states would be closer to the people and would more reflect their local values. By contrast, he notes that most defenses of federalism today focus on competition between the states and how that places a check on the states from behaving improperly.
I agree with Mike about this, but I should also note that at least some of the people at the time of the framing appreciated something like the competition between the states rationale. In my article, Reconciling Textualism and Federalism, 93 Nw. U. L. Rev. 819 (1999), I write that “at least some of the Founders believed that competition between local governments would deter them from behaving oppressively.” I then cite to an Antifederalist, A Maryland Farmer, who wrote: “In small independent States contiguous to each other, the people run away and leave despotism, to reek its vengeance on itself; and thus it is that moderation becomes with them, the law of self-preservation.” See 5 THE COMPLETE ANTI-FEDERALIST, supra note 69, at 5.1.53. 93:819 (1999). A Maryland Farmer is normally thought to have been the nonsigning member of the Philadelphia Convention, John Francis Mercer.
Thus, at least some people at the time of the Framing understood the benefits of competition between the states. In those days, however, relocation from one state to another was relatively rare (although some important framers had done it, such as both Gouverneur Morris and Benjamin Franklin) and therefore it might have seemed like a less important argument.
It is interesting to reflect on how changes in technology interact with constitutional arguments. That there is more communication and trade between people of different states today is often thought to suggest that more national authority is justified now than at the time of the Framing. And, depending on the version that one adopts of this argument, that may be true. But the change in technology also suggests that competition between the states is now a stronger argument for federalism than it used to be.