Russ Roberts:
It reminded me of a recent conversation I had with a very nice woman sitting next to me on a flight to California. We were talking about California’s fiscal problems and she suggested that the state should raise taxes on the rich. I pointed out that a lot of people had left California for lower-tax states like Nevada and Arizona and that raising taxes would encourage even more people to leave. Her reply was “Good riddance! Let them go!” I suggested that that might make the funding problem a little more challenging than it already was. She was eager to be free of people whose political views she found unappealing and who didn’t want to support programs she believed were important. But someone has to pay for those programs. California is in trouble …
I sometimes think the world would be a better place if you had to own a bond to vote; a bond you could get by being born in or moving to a state, but whose coupons you could only redeem for cash if you continued to live there, and whose value depended on the quality of life in the state.
In short, if you vote for things now that point the state toward ruin, you end up with coupons that have lost most of their value. A lot of people who voted in California would end up with worthless bonds if we did this.
But, of course, I’m an economist, and I view things like the conditions of the roads, the crime rate, and pollution to be a form of bond. The coupon isn’t in cash, of course, instead it’s in the stream of services you receive from decent roads, low crime, and clean air. So Californians already own those bonds. And on those counts, California isn’t doing too well.
