December 18, 2007

Conservatives Develop Liberals' Havens

Justin Katz

From time to time, we'll discuss among ourselves a theory that certain shifts in states' political character are the results of liberals' fleeing from regions that they've ruined to regions in which conservative policies have (ahem) done precisely what one would expect them to do. As Froma Harrop recently discovered, New Hampshire is exhibit A:

The question again: Do recent elections here reflect temporary choler at the Republican leadership or a more fundamental shift? The changing demographics don't bode well for the Grand Old Party.

"There used to be places that would vote Republican no matter how bad a year it was," Scala said. "Nowadays, those reserves are really depleted."

Many of the old-time Yankees — the "genealogical Republicans" — are dying off. They are being replaced by fairly liberal retirees from other states. New Hampshire has long attracted blue-collar Republicans, angry over taxes, from Massachusetts. But they are now being outnumbered by an influx of more educated, politically progressive workers to the state's booming high-tech industries.

The trick, I guess, is to figure out what region conservatives will pick for improvement next. Sadly, I doubt that they'll consider Rhode Island to be ripe, which is unfortunate: the state would make for a fantastic proof of concept field.

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Liberals and their public sector union allies are not unlike locusts.

Once they consumed most NY, NJ and MA with their voracious appetite for taxpayers money, they started moving to Vermont - now that it is Looney Left Ben & Jerry land, they've been encroaching into NH.

They've also used their public sector union shock troops to take over the California legislature and transform that state from an idyll into a high tax hell with one of the worst business climates in the country (there are many parallels to RI, except that CA still has some fat to live off of - business that established there in the 1950's through 1970's, whereas RI has been shedding businesses since the 1960's. Like RI, citizens and businesses are leaving and illegals are moving in).

The Left is now also using public sector unionization to take over Colorado and is seeking to establish footholds the same way in several of the Southeastern / Sunbelt states.

Without a doubt the liberals and AFL-CIO understand that if they manage to insert public sector unionization into the Sunbelt, they'll reach the electoral critical mass to take over the state legislatures - just as they've done in the Northeast - and can use that to overturn the low tax / pro-economy / pro-jobs advantage enjoyed by the Sunbelt (such as "Right to Work" laws).

They also realize that if they're successful there will be no escape valve for U.S. citizens seeking relief from Northeast-style high taxes, lousy economic performance and liberal cultural imposition.

What a prospect - if the Left and AFL-CIO get their way the entire country will someday resemble Rhode Island - or France - crushing taxes for the private sector workers who pull the load; bad roads; bad schools; nightmarish "universal health care" and imposition of liberal social doctrine via a permanent Democrat majority funded and controlled by union bosses who are unaccountable both to the public and their own union members.

Heaven for Michael Moore and his ilk; hell for the rest of us.

Posted by: Tom W at December 18, 2007 3:11 PM

From the December 10th Wall Street Journal:

The (Tax) War Between the States

Page A19

A record eight million Americans moved from one state to another last year. Where is everyone going, and why? The answer has little to do with climate: California has arguably the nicest climate of any state in the nation -- yet in this decade more Americans have left the Golden State than entered it.

Migration patterns instead reveal which states have the most dynamic and desirable economies, and which are "has-been" states. The winners in this contest for the most valuable resource on the globe -- human capital -- are generally the states with the lowest tax, spending and regulatory burdens. The biggest losers are almost all congregated in the Northeast and Midwest. Liberals contend that tax rates, regulations, forced union laws and runaway government spending don't matter when it comes to creating jobs, high incomes and a higher quality of life. People tell us otherwise by voting with their feet.

The American Legislative Exchange Council has just released a study we've done that presents a 2007 Economic Competitiveness Rating of the 50 states, based on 16 economic policy variables, including taxes, regulation, right to work, the legal system, educational freedom and government debt. Over the past decade, the 10 states with the highest taxes and spending, and the most intrusive regulations, have half the population and job growth, and one-third slower growth in incomes, than the 10 most economically free states. In 2006 alone 1,500 people each day moved to the states with the highest economic competitiveness from the states with the lowest competitiveness.

Of all the policy variables we examined, two stand out as perhaps the most important in attracting jobs and capital. The first is the income tax rate. States with the highest income tax rates -- California and New York, for example -- are significantly outperformed by the nine states with no income tax, such as Texas and Florida. As a study from the Atlanta Federal Reserve Board put it: "Relative marginal tax rates have a statistically significant negative relationship with relative state growth."

The other factor for attracting jobs and capital is right-to-work laws. States that permit workers to be compelled to join unions have much lower rates of employment growth than states that don't. Many companies say they will not even consider locating a factory in a state that does not have a right-to-work law.

Our study also finds that states with antigrowth tax and spending policies don't just lose people. Noncompetitive states like New York, Michigan, Pennsylvania, Illinois and New Jersey are plagued by falling housing values, a shrinking tax base, business outmigration, capital flight and high unemployment rates, and less money for schools, roads and aging infrastructure. These factors of decline hurt the poor the most.

The Northeast is the classic case of a region suffering from self-inflicted wounds. In the year 2006, it was home to a smaller share of the U.S. population, and produced a smaller percentage of America's total value-added, than at any time in the nation's history. Why?

One big reason is that governments in the Northeast are about one-fifth more expensive than in the rest of America ($6,000 versus $5,000 of state spending per resident). An average-income family of four still saves $4,000 in lower income, property, sales taxes and fees by moving to just an average-tax state, and more like $6,000 a year by moving to, say, Florida. Since the Northeastern states tend to have highly progressive tax systems, the incentive to flee is even greater for higher-income earners.

Northeasterners complain disdainfully of the "war between the states" for jobs and businesses, and for good reason: They can't win. Southern and Western states are cherry-picking companies from the North Atlantic states. One Southern governor (who didn't want to be identified) recently told us his state had closed its economic development offices in Europe. "Why search for factories overseas when we can plunder high tax areas like Connecticut and New York?" he said.

Auto and other manufacturing jobs are still being created in America -- but in Alabama, North Carolina and even Mississippi. It has to be infuriating to Northeasterners to learn that people and businesses are "trading up" by moving out of their region to the likes of Georgia and Alabama. But they are.

The states losing population are in effect suffering from a slow-motion version of the economic sclerosis that paralyzed much of Europe in the 1980s and '90s, particularly France and Germany with their massive welfare systems. At least the European socialist nations are finally starting to change their taxing and spending ways to win back jobs.

No such luck in this country. Five of the states near the bottom of our competitiveness ratings -- Illinois, Maryland, Michigan, New Jersey and Wisconsin -- have enacted major tax increases in the last two years. Maryland and Michigan just raised business and income taxes on upper-income earners, while arguing that raising the cost of doing business will attract more businesses. More likely it will induce companies to stay away, and people to move out.

Mr. Laffer is president of Laffer Associates. Mr. Moore is senior economics writer for The Wall Street Journal editorial board.

Posted by: Tom W at December 18, 2007 3:18 PM

Both excellent posts. The only hope for America is the south and the Mountain states. Maybe-maybe-New Hampshire and Deleware.

Posted by: Mike at December 18, 2007 7:59 PM

What next? Anti-immigration laws for Americans within their own country? Are we suggesting that New Hampshire and Colorado apply ideological litmus tests to all out-of-staters who are offered jobs there?
Tom, I'm only obliging the ibvitation to join in the paranoia. In reality, Southern states doing away with right-to-work laws would only happen in a Stephen King novel.

Posted by: rhody at December 19, 2007 11:19 AM


Ah, if it were only paranoia.

Consider what the unions recently pulled in Colorado, with a complicit Democrat Governor signing an executive order (late on a Friday afternoon I believe) permitting state employees to unionize. The unions' gameplan for this leaked and is now available on the internet; and due to an FOIA request the Governor's was forced to release emails between it and the unions discussing their plot.

In some states not yet burdened with public sector unionization the unions are using "camel's nose under the tent" techniques to get compliant Democrat Governors / legislatures to allow "limited" collective bargaining (I believe their using a euphemism "meet and discuss" or something like that to disguise what they're doing).

If you watch this stuff on a regular basis you find union officials alluding to what they're trying to do - some even more explicit.

This is nothing new - unions for years have tried to "take wages out of competition" by either unionizing non-union competition, or driving it out of existence. This is because unionized entities can't compete in competitive environments - think the UAW when there was only "the Big Three" vs. today with the imports and non-union transplant factories, and one-half of UAW members are no longer employed.

The same dynamic is working between non-union / right to work states in the Sunbelt and the Northeast / Rustbelt. People and businesses are fleeing these high tax / lagging economies and heading for the more competitive Sunbelt - resulting in job losses for unionized labor. So the unions want to take the Sunbelt states out of competition.

If they are successful, within a couple of decades the entire country will resemble the Rustbelt, for capital and jobs will have even more reason to flee to Asia, India and other more competitive environs.

Posted by: Tom W at December 19, 2007 9:29 PM
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