Hey, Big Spender

To the editor:
William Voegeli picks on California at a moment when it’s down because of the economic collapse and praises Texas at a moment when oil prices are double what they were just a few years ago [“The Big-Spending, High-Taxing, Lousy-Services Paradigm,” Autumn 2009]. And he fails to mention that Californians make over $11,000 more per capita than Texans do. Considering that Californians pay only about $1,000 extra in taxes, that’s quite a deal!

Wilmington, DE

To the editor:
Couldn’t it be that California has more generous transfer payments to government dependents and thus attracts more nonproductive citizens from other states, to its detriment? Some might say that this provides an incentive for more states to adopt Texas-like policies, but from a national perspective, isn’t it a zero-sum game? If all states adopted Texas policies, Texas would be worse off, as it could no longer fob off its unfortunates on other states while attracting the most productive citizens. Is Texas not, to some extent, a free rider—in the sense that it’s not taking responsibility for its own unfortunates, while it pursues harsh social policies, safe in the knowledge that other states will pick up the pieces?

Will Truth
London, United Kingdom

William Voegeli responds:
There’s little prospect that Will Truth’s thought experiment, in which all 50 states have the same regulatory, tax, and spending policies, will ever come to pass. One thing that uniform state policies would represent is a national consensus, of the sort that in 1996 led a Democratic president to sign into law a Republican initiative to “end welfare as we know it.” Texas’s policies are far closer to that consensus than California’s.

Chris from Wilmington is partly right. According to the Census Bureau, the median income for households of all sizes for 2006–08 was $57,988 in California, which is $11,135 more than the Texas median of $46,853. In 2007, California’s per-capita revenues from all taxes and “current charges”—bus fares, trash fees, public university tuition, etc.—were $6,134. In Texas, they were $4,447. That’s a difference of $1,687 per person, or $6,748 for a family of four. In 2008, the median income for a family of four was $79,477 in California and $66,381 in Texas—a difference of $13,096.

This sounds like “quite a deal” to Chris—after all, the California family does still have more money to spend, even after all the charges. It’s all the more puzzling, then, that Texas’s population grew twice as fast as the rest of the country’s between 1992 and 2007 (before the current recession started), while California’s grew at the same rate as the rest of the country’s, despite an enormous influx of immigrants, legal and illegal. My article put forward one possible explanation: California’s quality of life, of which the quality of public services is a large part, has declined so much that large and growing numbers of families are happy to forgo the state’s income premium in order to live outside it. A second, compatible, explanation is that what’s left of the California income premium after taxes and fees is absorbed by higher housing costs, owing to the artificial scarcity created by California’s land-use regulations, which economist Edward Glaeser describes as among the most restrictive in the country.


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