On last week's episode of "The Young Guns," as we discussed the dire circumstances besetting California, I delivered an altogether unpleasant announcement: that the Golden State's public sector pathologies (and their effects on the state's economy) have forced this native son to begin the process of becoming a resident of another state within the next few years. And based on the news, it looks like I'm not alone.
Here's Joel Kotkin, in a must-read interview from the weekend edition of the Wall Street Journal:
Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving. According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families.
And here's Art Laffer and Stephen Moore, also in the Journal, describing the findings of their new report on tax policy for the American Legislative Exchange Council:
Every year for the past 40, the states without income taxes had faster output growth (measured on a decadal basis) than the states with the highest income taxes. In 1980, for example, there were 10 zero-income-tax states. Over the decade leading up to 1980, those states grew 32.3 percentage points faster than the 10 states with the highest tax rates. Job growth was also much higher in the zero-tax states. The states with the nine highest income tax rates had no net job growth at all, and seven of those nine managed to lose jobs.
Then there's the question of in-migration from state to state—or how people vote with their feet. As common sense would dictate, people try to move from anti-growth states and cities to more welcoming climates...
The transfer of economic power and political influence from high-tax states toward low-tax, right-to-work ones is one of America's most momentous demographic changes in decades. Liberal utopias are losing the race for capital. The rich, the middle-class, the ambitious and others are leaving workers' paradises such as Hartford, Buffalo and Providence for Jacksonville, San Antonio and Knoxville...
Illinois, Oregon and California are state practitioners of Obamanomics. All have passed soak-the-rich laws like the Buffett Rule (plus economically harmful regulations, like California's cap-and-trade scheme), and all face big deficits because their economies continue to sink. Illinois has lost one resident every 10 minutes since hiking tax rates in January. California has 10.9% unemployment, having lost 4.8% of its jobs over the past decade.
I don't think this point can be made forcefully enough. Our political and economic polarization isn't just the product of national aggregates. The vast majority of our states are self-segregating by public policy. In essence, federalism has made possible what amounts to a cold war between the states. And places like California are increasingly sending signals to people like your author -- young, upwardly mobile but not affluent, and about to embark on their first major series of expenditures related to home and family -- that they don't care if we join the opposition.
A word of warning to states like California, New York, and Illinois: in an era where the barriers to exiting a state are at an all-time low -- and the mobility of work is at an all-time high -- you will be but one competitor in a market of 50. Don't be surprised when your failings are met by a decline in market share. And yes, nostalgic attachments and inducements like California's serene climate may slow the exodus, but they won't reverse it. Life, after all, is more than just sun through the palm trees -- California, like most beauties, will find it's not able to live on its looks forever.
One note in conclusion. The varying approaches of these states may be less significant than the psychology underpinning them. California, for instance, attempts to hang on to people like me by promoting itself as a lifestyle choice (albeit a luxury one). My future home state of Tennessee (one of those non-income tax states, by the way) counts on the fact that the lifestyle I'm most concerned about is the one that will eventually belong to my unborn children. That difference in outlook may tell us more about the philosophical chasm between the two places than any examination of economic policy ever could.