Hayek argued in the 1940s for Interstate Federalism in order to preserve liberal economic policies. Tiebout's argument was that federalism simulated in politics what market competition achieved in the economy. Does Globalization result in the theoretical path laid out by Hayek and Tiebout and lead to increased competition between nations in terms of public policy? The evidence seems to support the conjecture that globalization does generate a "race to the top" in terms of public policy. Download racing_to_the_top.pdf .