Aug 24

There have been some amusing rumblings about the ads that California and Nevada are shooting over each others bows.   So what’s the problem?  That’s what’s supposed to happen!

What a great demonstration of how competition works at some of the highest organizational levels out there — entire states.   How much better off would we be if states took their relative economic strengths seriously?

But look at some of the reverse cases.  In the Northeast, we have New York and New Jersey racing each other to the bottom as to who can impose the highest income taxes on their upper income earners.   It’s a clear blindness to the Laffer Curve if there ever was one.

It’s also a wilfull ignorance of the concept of dynamic vs. static budget analysis, that is, legislators enacting laws and regulations as if there will be no behavioral changes by the players involved.   It goes something like this:   “Say, let’s raise taxes on the “wealthy” by 10%, and we’ll budget a 10% increase in revenue from them.   There aren’t enough of them to vote it down anyway, and then we can fund some nifty new programs in our budget!”

When will states like California, New Jersey and New York open their eyes to the cause and effect of bloated budgets and high taxes (note, they’re the same thing) leading to businesses and individuals seeking more welcoming pastures?   Do they need to make such complete economic basket cases of themselves before the causality is obvious?

The shame of this is that millions of people needlessly suffer the consequences in the meantime.

What do you think?

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