Once again, we see New York and California losing while Texas and Florida are winning.
But it’s not just people. Businesses also move, as illustrated by this chart. California and New York have the biggest dark-blue bars, representing out-migration. Florida and Texas, by contrast, are reaping the biggest rewards, as measured by the light-blue bars.
This data should not be a surprise.
But what is remarkable, however, is the source. The chart comes from a report by Tej Parikh for the U.K.-based Financial Times, a publication that normally leans to the left.
Here are some excerpts from his column.
New York and California have long propelled the American economy. But momentum in both coastal powerhouses is fading. …In the past decade, the states have faced an exodus of businesses. California and New York have, by far, the highest net outflow of domestic companies across the US since the start of 2015… New York and California hold the top spots for the number of regulatory restrictions across the US, based on data collated by George Mason University’s Mercatus Center. First-ranked California has more than three times the US average. New York and California boardrooms often complain about onerous permitting rules, licence requirements and reporting standards that raise costs, crimp innovation and slow expansion. Both states have among the highest minimum wage rates, too. A complex web of high taxes makes matters worse. …The loss of businesses and workers puts strain on California and New York’s economic model. …Both states are struggling to balance the books. New York faces an estimated cumulative three-year budget deficit of $34.3bn. California has a projected $18bn shortfall for the new fiscal year. …the continued loss of cornerstone taxpayers isn’t sustainable. In the decade between 2011 and 2021, New York lost $111bn in net adjusted gross income due to interstate migration, and California lost $102bn… As California and New York demonstrate, taxpayers can and do vote with their feet.
Wow. Not only is the FT acknowledging problems for big-government states, it’s also correctly identifying why those states are in trouble.
For instance, the article includes this graph showing that California and New York have the most red tape and rank at the bottom for tax policy.
Even more surprising, the article also includes this chart showing New York and California are among the most profligate states for social welfare spending.
The bottom line is that California and New York are on a downward trajectory.
And while it’s noteworthy that a left-leaning outlet like the Financial Times has the right diagnosis, I’m very doubtful that the politicians in either Sacramento or Albany (the respective state capitals) have the desire or ability to change direction.
So I fear the decline can’t and won’t be reversed.
