Human history is, in many ways, built upon the act of people “‘voting’ with their feet.” Migrations to find better a climate or more plentiful food. Efforts to escape oppression or war. Moving from one country or state to another to find more favorable environments for business, family, or personal achievement. Nations have risen and fallen, areas of the earth have been peopled and un-peopled, because of humans making decisions to move based on their best interests.
We have, on several occasions, discussed this concept in more modern terms:
In January, we noted a study from the Goldwater Institute showing that Arizona is enjoying an influx of interstate migrants fleeing high-tax, heavily unionized states like California, Illinois, and Michigan.
Shortly after, we posted a more comprehensive look at which states are losing and gaining population, and what each group has in common. We highly recommend exploration of the charts, data, and links in the piece, but the logline is simple: In virtually every case, the states with the fastest population growth were right-to-work states politically dominated by Republicans (and thus more likely to employ principles favored by Republicans). The states with the least population growth (rates that barely kept pace with death and outmigration) were Democrat-dominated, non-right-to-work states. People moving into the top ten states; people moving out of the bottom ten. Voting with their feet, just as humans have always done.
In May, we noted the dramatic increase in American expatriation during Barack Obama’s presidency, and in August, we took a look at what happens when people are prevented from leaving a place with a terrible government.
Finally, last week, in Stephen Moore: Virginia outperforms high-tax Maryland, we examined a specific case of outmigration from a state with unfavorable tax and business laws to a neighboring state with more favorable laws. Since this case is such a striking example of the impact that policy can have, it behooves us to continue our examination.
A statement we received from Change Maryland‘s Communications and Policy Director Jim Pettit concisely sums up the overall situation:
“Both Maryland and Virginia benefit from the federal government cash dispenser that’s embedded in the Washington region. The major difference between these two states, however, is that Virginia Gov. Bob McDonnell advances policies that are building a sustainable, private sector economy, while Maryland Gov. Martin O’Malley embraces a failed tax-and-spend approach to governing that drives out producers.”
Change Maryland did an analysis of all the tax and fee increases in Maryland since 2007, and the results are astonishing. In the midst of the Great Recession and the subsequent economic stagnation, the state of Maryland has raised taxes 24 times: Increased taxes and fees on businesses, upper-income earners, vehicle titling, and death certificates. New sales taxes. Taxes on hospitals. The erection of speed cameras. And much more.
All told, these tax and fee increases extract $2.4 billion from Maryland’s economy every year. Blair Lee sums up the frustration felt by so many in the the Great State of “Levyland”:
Government spending is a way of life here in Levyland, where tax cuts are unnatural acts and budget cuts are hate crimes.
In Levyland, government spending cures all ills. Test scores plummeting? Spend more money. Traffic congested? Spend more money. Bay polluted? Spend more money. Not enough jobs? Spend more money. Too much crime? Spend more money.
Nothing can stop it. Good times or bad times, it doesn’t matter, we just keep spending. Levyland’s governor, Martin O’Malley, says he cut spending $7 billion during his six years in office. But that’s a fib. His first budget was $30 billion, his latest budget is $35 billion. That’s a $5 billion increase, not a $7 billion cut.
The big-spenders in government—and the voters who love them—have somehow managed to convince themselves that this massive extraction of money from the private economy happens in a vacuum . . . that it has no impact upon that private economy. This is the equivalent of believing in a magic money tree that will, forever and always, be there for government to harvest in any amount it wishes. In the real world, it simply does not work that way.
In the real world, $2.4 billion in money extracted from the private economy means $2.4 billion less that will be invested, used to create jobs, and spent to increase aggregate demand. The man who was going to expand his business—hiring a number of new employees in the process—doesn’t. The woman who was finally going to hire a contractor to convert the space over the garage into a small rental property—creating a new living space for a renter and jobs for the contractors—doesn’t. Instead, government—which suffers from inefficiency, inadequate knowledge of human needs, and a constant assault from special interest groups—gets that money. Government spends it very poorly, with little oversight, and usually in ways that help politicians curry favor with certain interests and cohorts in the electorate, rather than in ways that benefit everyone.
People react to this. They change their behavior. They retrench. They alter their business model or reduce their growth in order to reduce their tax liability. And then, eventually, they begin to leave, taking their money and their businesses elsewhere. In an effort to raise more revenue, governments drive out the very people who were generating the revenue in the first place. Maryland’s loss becomes Virginia’s gain.
Throughout the 20th century, we watched people fleeing totalitarian nations where some flavor of socialism had become ascendant. They came on boats. They came in the trunks of cars. They risked life and limb on inner tubes and rickety rafts. They risked imprisonment and torture to get away from something. They voted with their feet.
All but the most ardent Marxists in the West took saw this steady stream of desperate emigration for what it was: A clear statement on the failed policies of the nations in question. Maryland, and states like it that are experiencing outmigration, are certainly not murderous, oppressive totalitarian monstrosities. But the basic principle remains the same. Human beings don’t just randomly up and move. They move for a reason.
If you were an elected official of a state experiencing such an exodus, wouldn’t you want to give a little bit of thought as to what that reason might be?