Two recent stories illustrate anew the advantages of our federal system, which allows states wide variance in governance, and also allows individual Americans who feel that they cannot pursue the happiness they seek in one state to move freely to any state they choose. The beauty of this is that it helps put real limits on just how badly a given state can treat its citizens.
The reports are about two of the highest tax, lousiest business-climate states, New York and California.
Let’s start with New York. As a recent report notes, over the past decade and a half, the Empire State has led the nation in outmigration, with two people leaving for every person who moves in. But a new Marist poll indicates that the worst may just be starting.
The poll revealed that 36% of young New Yorkers — those under 30, to be exact — plan to leave the state within five years. Thirty-six percent! The primary reasons cited (by 62% of those planning to leave) are economic. Thirty percent cite the high cost of living, 19% the high taxes, and 10% the lack of decent job opportunities.
Regarding this lack of opportunity, well, suffice it to say that a recent survey done by Chief Executive Magazine shows that only California has a worse business climate than New York. And regarding the cost of living, a recent study by the Center for an Urban Future says that someone would have to earn more than $123,000 yearly to live as well in New York City as someone lives in Houston on an income of $50,000.
The second story is a posting about the aforementioned California. It reports an accelerating exodus of businesses from that dysfunctional state. It notes that California is rated by the Tax Foundation as no. 49 for business tax climate and no. 48, by the Mercatus Center, for economic freedom among the states. Not surprisingly, while in 2009 California averaged one “disinvestment event” per week (typically, a business relocating an existing facility to, or opening a new facility in, another state), by last year the average had jumped to 3.9 per week. This year, it has jumped again, to an astounding 5.4 per week.
California is already hemorrhaging people — specifically, middle-class working people. It is rapidly becoming a socioeconomically bifurcated state like Mexico, where you have the desperately poor and the ultra-rich, with little in between. The rapid movement of business investment to other states will only accelerate the Californian middle-class diaspora.
This is how federalism punishes statism: the socialist state loses its jobs and its middle-class citizens.
And that is only morally just. All forms of socialism — including the soft neosocialism of which modern liberals are so fond — are based on the twin vices of envy and sloth, both of which have been characterized, very accurately, as cardinal sins.