Sunday, December 26, 2010

Voting with my Feet

"The Looming Crisis in the States."  Captures the issues, with the required left-leaning pompousness of the NYT editors, facing the states, cities, towns, and counties.

If you reside in a Blue-State and are "True Blue", I want to point out why I think that this could be incredibly damaging to your future financial security, your children's education, your ability to leave an estate to your heirs, etc...

The Blue-States are in complete denial about their future.  Any rational examination of the data coming out of the Census would lead one to see clearly that the producing elements in American society are migrating to lower tax/smaller government/less regulation Red-States.  As the late, great Senator from New York Daniel Patrick Moynihan famously quipped:

Everybody is entitled to their own opinion... but not their own facts.

That this is happening is NOT UP FOR DEBATE.  Why it is happening might be, but not the salient fact of the matter...  So let us debate the WHY.

I grew up in Metro New York City, went to college in the South, and then headed back to NYC to go to work.  Know what happened once I started to make decent money?  I moved.  Yep, the New York State and City income taxes took 12.5% of my gross income; said the OTHER way my take home compensation would increase by about 20% if I moved to Florida.  (Guess what New York State did?  They fought me on the DATE that I moved so that they could collect the income taxes on a couple of extra months.  They extorted that money from me... and it just wasn't worth fighting with them any longer... so I just gave in and paid the extortionist.  I have made it a point to spend as little in their state ever since.)

Hmmmmmm... guess how long it took me to make that move?  Right.  I could do what I do from anywhere... why would I do it in a confiscatory tax and regulatory environment?  Why would I fund people whose political goals I found to be near treason?

This is happening in the macro sense as we speak.  People are moving from high property and income tax states and localities to low income tax states and localities.  Period.

This is also happening at the national level as jobs move to Chindia, et al... our ridiculous regulatory environment helped to assur this just as sure G-d made little green apples...

But there is another problem...

As people move from Blue to Red, they are downsizing, frugalizing, de-pressurizing.  Part of the "simplify your life" thing also cuts out the very overhead that encouraged (forced) the dual income rat race on us in the first place.  This spring my wive and I are moving to the farm full time. I plan to work managing money for a fund out of a home office & run the farm, and my wife plans to take care of the home and kids.  This is not the kind of lifestyle that supports a great deal of government.  If (as) it continues to grow as a lifestyle things like gasoline taxes, property taxes at offices, sales taxes at restaurants AND INCOME TAXES... will go down like a rock in a pond.

(Think of the irony.... the environmentalist Left, with whom I am somewhat sympathetic, have vociferously argued for a smaller carbon footprint to come from the biggest offenders - guys like me. So I move to rural Tennessee... cut back on driving and consuming... grow my own food... as a result government receipts of sales and property taxes from yours truly plummet, and if the environmentalist Left is successful in spreading this to too many others of my ilk they will be destroying budgets and funding for social programs... there are no actions without unintended consequences.  NEVER.)

Meanwhile, back in the Blue-States... tax revenues will continue to decline even as the relative demand on those revenues for services climb, forcing more of the productive citizens down to the Red States, increasing the Red States' populations and political influence... very definition of the vicious cycle you'v heard tell about.

The fly in ointment for Red States is that their pension systems are nearly as FUBAR as the Blue States...

18 comments:

Crybaby said...

Pretty cagey of the Chinese to raise interest rates on Christmas while nobody's paying attention... This will have a major impact on oil prices. If the Chinese want to get inflation and commodity prices under control they will do it.They may be raising rates the whole year.

As far as the states' pension issues are concerned, it will all be resolved in court at some point. If some federal judge out there rules that the state of California or Louisiana or whatever can reduce the payments on their pensions by 50% then that is what will happen. and if it goes to the Supreme court, the kind hearted open minded Justices like Thomas, Scalia, Roberts and Alito would be perfectly happy to see the entire state of CA or any other liberal state commit suicide over lost pensions. And don't worry - federal judges always get their pensions no matter what.

PioneerPreppy said...

The court's activist opinion on pensions will matter not one bit in the end. Even the SCOTUS opinion which stands more of a chance of being fair than all the progressive stacked lower courts at least, will matter not one Iota.

The only thing that will matter will be the money they can bring in and in the absence of growth 48 of the 50 States will eventually default on their pensions. The only question is "how long".

Greg T. Jeffers said...

Crybaby:

I think that the apex of "Court Power" has been seen, and is being choked off as I write this. Courts will have no more power to enforce what is going to happen to California state and local pensions any more than Alabama courts are going to be able to enforce a law that says these pensions of Prichard must be paid or for that matter to enforce a law that repeals the aw of gravity.

Greg T. Jeffers said...

frankly, it is faulty, and wishful, Lefty thinking that this can be managed in the Courts! Hysterical!

Dan said...

There is no point in worrying at this point. Before we cosigned on 23.7 trillion of fraudulent debts, prudence would have helped; but now- forget about it. There is no point in worrying about it for the time being. Perhaps later we can fob it off as an odious debt.

bureaucrat said...

Your last sentence speaks volumes about how the whole "low tax/less government/less spending/Tea Party" stuff is a load of crap. I would assume you love the idea of "red state" because they embrace all the things above you find so desirable. Then why do the red states have the same over-pensioned screwed up government that the blue states do? Because a lot of state government spending, like for pensions, in BOTH the red and blue states, are desired by ALL people, not just pantywaist blue-state democrats.

I've said it before and I'll say it again ... 80% of Federal spending (in normal times) goes for FIVE wildly popular programs that will never be cut: Social Security, Medicare, Medicaid, Interest and Defense. 90% of most states' spending is in FOUR wildly popular programs that will be equally hard to cut: Education, Medicaid, Human Services (the disabled) and public pension systems (teachers mostly).

Talking about running away from taxing districts means that you do not want to do your part to support: old people, sick people, sick AND poor people, paying for obligations, paying for the troops, teachers, more sick and poor people, disabled people who are often helpless, and pension systems for those lazy, awful government employees that teach your stupid kids, plow your streets in the freezing cold, provide cops to get jerks off your front lawn, and put out your house fires.

How arrogant, short-sighted, juvenile, small-minded, greedy and pathetic you all would sound if everyone fled everytime a tax for the above 80-90% of popular government spending needed to be collected. How do you look yourselves in the mirror? What a bunch of spoiled babies.

Donal Lang said...

You're spot on Greg; those of us who see the writing on the wall are abandoning the 'Big Government'version. But it is only the loss of its tax base that will force it to change its ways.

The trouble is, BG's demise isn't the managed decline that could allow some of its functions to be taken over by local communities (and done more cheaply too), it's the last roll of the dice; bailing out banks with monopoly money, the ink still wet, and trying to force taxpayers to pretend its real. In the process the death cry of government is likely to drag down everyone else; pensions, healthcare, rule of law, military protection of the state, even food production and distribution, everything with it. Going bust doesn't allow for protection of what's necessary; everything goes down.

Greg T. Jeffers said...

Donal:

That is how I see it.

Bur:

The only appeal, or lack thereof, to me in state and local government is what I pay for it. There is soooooo little benefit that that is a non-issue.

Greg T. Jeffers said...

Donal:

A big part of the "bail the banks out" was to re-inflate the stock market to stop the complete and quick collapse of the pension system.

Pensions do not have to mark bonds they intend to hold to maturity to market... but they do have to mark stocks to market... the Fed just killed the bond market to inflate the stock market to prevent Prichard from happening all over the place.

At least for an election or 2.

Dextred1 said...

Bur,

You are really just a raging Lefty. In no way can we pay for all the crap. Some red states are still in the grasps of policies of the depression area, others are still trying to fight the union’s ridiculous wage demands brought about by a JFK executive order. Many are bogged down by the demands placed by the federal government from programs like Medicaid, unemployment, school programs (no child left behind) which are never funded fully, leaving the states in a bind. The feds use these strings to push mostly a liberal social agenda. Obama Care works off same principles of medicaid, pushing as much as half the cost to states on certain functions to make the deficit gap look better. The obvious point that sovereigns should never be directed by little parasitic special interests would never even come to your mind. Do you realize that not everyone can afford Blue state taxes? Federal taxes are progressive, but most states are regressive making the state tax burdens much higher on the poor. Sales tax is 6% here no matter what, state income taxes are between 3-4% on all wage earners, and property tax is based on value at consistent rate (michigan). Plus we have the most punitive corporate tax rate in the country. Big reason synder won here was to reform the corporate tax sturcture. Point being that the state we choose has the most direct impact on the taxes we pay because we can choose our effective rates.

P.S. Bringing federal wages in line with private sector is a 48 billion dollar proposition. This was in reference to you assertion that it would only be chump change if we made feds have a competitive wage rates with the private sector employees.

"There's been many a slip twixt the cup and the lip"

bureaucrat said...

If you compare apples and oranges, and remove the retail and restaurant people from the "private sector employee pool," work that the government workers do not do, I think you'd find public and private employees aren't too far apart. Government employees get far smaller bonuses (mine was less than $1,000 on a $98K salary this year), government workers evade taxes a lot less often, and government workers don't get gifts of any consequence by law. There is lots of "invisible" compensation (and a lot more stealing) in the private sector.

Stephen B. said...

Bur said: "If you compare apples and oranges, and remove the retail and restaurant people from the "private sector employee pool,"

Good grief, WHY should we remove a million+ workers from the private worker category simply because you think it somehow warps the employment wage data that you want to look a certain way? It's a FACT that a good chuck of the US now does restaurant and retail work. That's ALL those people have left for employment. My father was a fast food operator. I was a fast food manager for several years.

Like hell all those lowly, service worker data points should just be removed because they make your government work and workers look overpaid by comparison.

There is NO apple to oranges comparison any more between "like" work in the private and the public sector in good part because the public sector beat the private sector to death.

What's next, the government gets into the restaurant and retail business too? I shudder to think of it!

Dextred1 said...

My new favorite quote

"An election is a sort of advance auction of stolen goods."

~ H.L. Mencken

bureaucrat said...

"It's a FACT that a good chuck of the US now does restaurant and retail work."

I can only assume that if you want government employees to do restaurant and retail-like work, that you, like Mish Shedlock, want our country filled with hundreds of millions of minimum wage jobs to service a few hundred ultra-trillionaires. I don't want to move government workers down to that level. I want to move minimum wage workers up to my level, like we had in the 1950s and 60s, when having a middle class meant something.

The money to do it is there -- it is being hoarded by the very wealthy who have Congressional Republicans (and Libertarians) in their back pocket. We can have good paying middle-class U.S. workers again. Japan and Germany already have it.

Anonymous said...

I hear Somolia is a good low tax, low government interference environment right now.
Same goes for the Emirates if you have the scratch.
Central America is supposed to be pretty good.
Why not get beyond the whole Red/Blue thing?
Get out and walk the streets of the Empire.
It's a brave new world out there.
Get to the third world before the third world gets here. ;-)))
Happy New Year!
Rational Librul

Stephen B. said...

That's right Bur, completely evade my point and question with useless, nonsensical static of yours.

Why bother with you, really?

bureaucrat said...

"What's next, the government gets into the restaurant and retail business too? I shudder to think of it!"

That question? Why waste my time?

Greg T. Jeffers said...

Rational:

If you have something to say, by all means... say it.

If you are merely trying to get a rise out of somebody... don't do it. This is a discussion forum for thinking folks - not a place to through proverbial rocks.

Please re-phrase your comments and I will engage you in meaningful discussion.