Let's start with the trivially mean and stupid. Yes, Rep. King, I'm talking about you. Complaining publicly that the Obama girls shouldn't be going on vacation while the country is struggling. Nice job nimrod.
Now to the New York Post, and the inimitable Thomas Sowell, who stumbles his way to the innuendo that quantitative easing in the US is the same as Cyprus' haircut on bank depositors. There's only one problem with his argument: THERE IS NO INFLATION TOM!!!! When when when will these inflationistas learn how to read a chart:
Finally to the dumbest of the dumb for the day at least. Art Laffer and Stephen Moore in the WSJ on "The Red State Path to Prosperity". Hey guys, repeat after me: THE RED STATES ARE THE POOR STATES! Please please please, learn how to read a chart before you make fools of yourselves.
Here are the 10 richest states: Maryland, New Jersey, Connecticut, Alaska, Hawaii, Massachusetts, New Hampshire, Virginia, California, Delaware.
Here are the rankings for the no income tax Southern states Laffer & Moore are so proud of: Texas (25th), Florida (38th), Tennessee (44). They also brag on Louisiana (41), North Carolina (39), Oklahoma (45th) and Kansas (28th).
Illiterate and angry is no way to go through life, guys.
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So I guess the question that the red state / blue state thing raises is whether we can tax our way to prosperity. It appears that we can.
"Rich" and "poor" states are all relative. You mean to tell me that people paying $16k/yr in property tax in NJ have higher incomes than those of us paying $2k/yr in NC? Who knew? Surely you won't refute that $100k in California provides a much lower standard of living than $100k in Texas. This goes back to minimum wage--increase it to $22/hour, watch prices go through the roof, and we'll all be living in a rich state!
Dear Anonymous @ 10:29: read the linked chart. It also shows rankings adjusted for the cost of living. They really don't change very much.
Piling derp on top of derp is not going to work.
“Here are the 10 richest states: Maryland, New Jersey, Connecticut, Alaska, Hawaii, Massachusetts, New Hampshire, Virginia, California, Delaware.”
So the left coast and the right coast do rule the center. However, the richest, in the main, are also late stage welfare states. Which begs a question: how long does a state remain “rich” in late stage welfare state status? Maybe rich or maybe just the US version of Portugal, Ireland, Greece, Spain and now Cyprus.
Just saying……
In the comparisons of median household income, I have never noticed them saying the adjust for tax burden. I have a coworker in another state, and just the difference between property tax for comparable homes is enough to wipe out the difference between the state I live in and the state he lives in (14 spots ahead) and more than offsets the difference in our salaries due to location. I realize that's not particularly instructive, but just pointing out that having a higher median income doesn't mean much if it is eaten up by a higher tax burden that comes with no additional or higher quality public services.
Also, how much of the difference in median household income is due to demographics? To me, it'd be much more instructive to compare median incomes of households with two, college-educated income earners, median incomes of households with one, high-school educated income earner, etc.
If you're using median household income as a metric to tell you whether you want to live in a place or not, it seems like you should be looking at it in a way that tells you what kind of income you can expect assuming you make decent decisions and maybe what you can expect if you make bad decisions or things don't work out. Just comparing household income seems pretty worthless when there are large differences in the composition of households and large differences in the cost of living.
But Angus, there very, very clearly IS inflation: that line has been above zero for 3 years! Maybe you think it is a nice amount of inflation, but it is inflation.
Angus--if you click the link chart and sort the rows adjusting for cost of living, #5 Hawaii drops to #50 as the "poorest". #15 New York goes to #43. Virtually every "red" state actually climbs in the rankings when adjusted for cost of living--even #49 West Virginia goes to #48, beating #13 Maine and #5 Hawaii. #2 New Jersey drops between Wyoming and Texas with Nevada coming next--those are 0% income tax states. However, if you sort the table based on cost of living index, there is a strong correlation between the "rich" states and a higher cost of living. What drives up cost of living? Taxes. People in New Jersey are earning substantially more, but this doesn't translate into purchasing power or make them any "richer".
On the Laffer and Moore article, aren't the recent growth rates more important than where they are now? Also it seems to me that black Americans, for whatever reason (maybe that are just more sensible due to their history) seem to be far less interesting in pursuing higher income than are other Americans so should we not adjust for that along with PPP.
But surely even if you don't think that cost of living affects it very much, the cost of living adjusted rankings should have been used. Is there any reason not to have used them, unless you want to be the one piling derp on top of derp?
Certainly suspect that there's a bit of catch-up growth responsible in any case, as the Southern states have been poorer for quite some time.
As far as I know, people who have looked at between-state migration with at least some rigor have found that it isn't taxes, but rather housing costs that drive the move from blue to red states. Which, to be clear, is still a bad policy choice, but it has absolutely nothing to do with the nonsense Laffer and Moore are peddling.
I agree that housing costs are what drive it. I'm also a bit surprised that the difference in the housing component of that cost of living index is as small as it is, but I'll go with it.
It does seem that housing regulation is correlated with views on taxation in general, as well as other "liberal" voting patterns, see here.
Part of that is a complicated story about winning voter coalitions, I imagine.
I'd also recommend the paper Why Has Regional Income Convergence in the US Stopped?, which again blames housing policy.
Note that the rich states were rich first, and then shut their doors by shutting off the stock of housing. Not all of them deliberately meant to do so, they were influenced by other liberal goals in their housing regulations.
It is possible theoretically to have high taxes and low housing regulations, but for the most part that's rare, partially because of political coalitions, partially because individual voters have a bundle of beliefs, some of which reinforce others. (Though North Carolina historically has had a moderately high tax burden.)
Angus, take a breath. Did you just accuse Art Laffer of not knowing how to read a curve on a graph? When we start learning about the Angus Curve, that debate can take place.
You can leave the fine tuning of causality on taxes and wealth aside. There's a much bigger factor confounding your view: States with low income can't be in the game of "tax the hell out of the earners to transfer to the non-earners." Not an option when there is no wealth base. So just apply common sense. If you tax something (earnings, consumption), all else equal, you get less of it. Always. If you have less earnings and consumption, you have less wealth. Always. Wealth is only created through the free exchange of labor or goods. Well, that and the delivery of unemployment checks. But those are the only two ways to create wealth.
Pelsmin: I accuse Art Laffer of not being able to add 2+2 and get 4. I accuse him of being a derpy right-wing hack. He's not worth your respect.
My beloved Angus? You may be right about all of this (you usually are) What would your dear friend Russ think about relying on undifferentiated statistical aggregates like "household income" without stopping to ponder whether or not the underlying composition of households in each state are equivalent to one another, etc when making this kind of declaration?
You might be right, but my impression(s) from having lived in an old-rich-blue state like MA and living in a young-rich-blue state like WA is that the the ORB/YRB states have a much greater outlier on the far right in metro cores that skews the household distribution (Seattle/Boston), have more unionized/rentier income skewing (Boeing/Raytheon/Higher-Ed, etc)jobs per capita, public sector unions, and trapped legacy capital. Not sure how that's all going to work out going forward even if they are better off after doing all of the adjusting.
I can tell you that the young and educated are fleeing MA like it's on fire, and that a journeyman plumber in Kentucky with a stay at home wife probably lives in a nicer house with a bigger yard than a physician/researcher dual income couple in Seattle, Boston, SF, NYC, etc.
I don't know if Art Laffer is right or not, and I don't know whether he's a hack or not, but trying to refute him without addressing any of his points, by linking to a Wikipedia article and repeatedly falling back on the phrase "derp" when challenged is pretty hacky from where I sit.
And if I may add something constructive, I would argue that the key driving force behind the blue state's income advantage is probably population density.
Higher population and population density promote more patterns of sustainable specialization and trade, to borrow a phrase.
The fact that the blue states are wealthier doesn't necessarily mean they are making public policy decision that are good for their economies.
With that in mind, to see densely populated states like RI and NJ so low on the list when adjusted for cost of living, indicates to me that something is very unhealthy about how the market functions in those states.
Well, if you pillage and burn the other states to the ground, you will have higher per capita GDP. Damn blue bellies!
Blue states became rich (and in my belief became blue, but I have no evidence.) because they had large abnormally wealthy industries. With all this wealth around, the voters could see that they really could vote themselves stuff (by voting Democrat).
In other words, Blue didn't make them wealthy. Wealthy made them Blue.
Over long periods of time the regulation and taxes of Blue eventually kills the golden goose. Detroit, Steel, etc.
Blue states are wealthier because they have more capital - both human and physical - than red states.
Capital - first human and eventually physical - will migrate to where the return on the said capital is highest.
There are some specialized niches where blue state hubs will probably retain their comparative advantage for quite some time irrespective of how high they raise their taxes and how boated, corrupt, and inefficient their public sectors are (Silicon Valley, Wall Street, Cambridge, etc), but for enterprises on the margin and the people who work for them we'll likely continue to see migration to states where the tax and regulatory environment is more favorable
Anyone who thinks otherwise should visit Buffalo, Rochester, Cleveland, Detroit, etc, etc, etc, etc.
Regarding inflation, here are some rebuttals that there is no inflation. Some people claim that the cpi calculation has been manipulated to hide the current inflation. See http://www.shadowstats.com/alternate_data/inflation-charts . I don't know how valid these claims are. Secondly, just because current inflation is 2% doesn't mean the reference rate is zero. What if without money printing there would have been some deflation, perhaps due to increased productivity? If this should have been say 3% then currency holders have still lost 5% purchasing power annually. Is there any reason to think that without money printing inflation would be zero? Lastly, is it just a question of time? If the money is printed and spent by the government, unless that process is reversed at some point, isn't it inevitable that currency holders will lose purchasing power?
It seems like "revealed preference," in terms of which states are people moving from versus which ones are they moving to, should be considered.
My perception is that migration is mainly from places like California, New York, and Illinois to places like Texas.
Angus, don't visit http://freedominthe50states.org/ or your head will explode.
Thanks for pointing out the Sowell piece, Angus. It was good, but still one perspective is missing. When the Fed "printed" all those billions, they then effectively gave it away -- to the Uncle Sam. Uncle then spent, or further gave away, the dollars. The recipients, at some point, spent the money -- consuming resources. These resources were all produced at some effort and no productivity was put into the economy in exchange. It's theft -- as Sowell was at pains to point out. It's a very diffuse theft, since no particular victim would have standing to challenge it. Still, it's theft on a titanic scale.
Angus then shows us charts and tables and tells us the stupendous misappropriation of resources results in... nothing. Well, Mr. Professional Economist, why not? You claim the economy can feed $Trillions to parasites and there's no consequence! This is sufficiently counter-intuitive that it demands investigation. Yet all I see is name calling.
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