“What will the contest between State governments reveal?” – The Lonely Realist
The four largest American States by population are California, Texas, Florida and New York. Together, they host more than a third of Americans and produce more than a third of America’s GDP. As a consequence, the policies they pursue are determinative of America’s vitality and success. While Texas and Florida are bastions of Republican Party social, political and economic policy execution, California and New York are poster-States for the Democratic Party’s belief in the benefits of big government. Both evidence a paternalistic approach to governing that suppresses opposition and disagreement. Each side – and, yes, they are two opposing definitional sides of democracy – justifiably can claim that its approach is a success … at least to date. The future is less clear. Each is an experiment in the Constitution’s carving out of specified powers to the Federal government and each State’s unilateral determination of how to wield its retained powers to effect particular policy goals. Each either explicitly or implicitly exercises single-party government power to govern without moderation or compromise. Each is able to employ gerrymandering and ballot initiatives to perpetuate control of State government by holding the governorships and majorities in both houses of their legislatures. Each thereby is able to employ a partisan 21st Century approach to American Constitutional democracy. Whatever the outcome of their disparate experiments, the two sides provide clear contrasts between what can, does or should constitute good, effective government.
Texas and Florida are low-tax, minimal-regulation States. They oppose the influx of immigrants, place limitations on immigrant workers and, because their revenue base is narrow, provide limited social benefits. They oppose government efforts to address climate change and impose government restrictions on businesses that promote environmental, social or governance principles (ESG). They are anti-vax, anti-woke and anti-mandate, have adopted classroom limitations on curricula and restrictions on voting. In addition, they have enacted extreme anti-abortion laws (despite a majority in both States favoring abortion rights). While professing less government, their governments therefore freely intrude when and where paternalism suits their political agenda.
California and New York are among the highest-taxing, most highly-regulating States in America with laws that burden businesses and capital at rates far above those of their counterparts in Texas and Florida. California and New York use their high tax revenues to fund generous (lavish?) welfare and social benefits that act (in part) as incentives to attract workers, including immigrants. Although their policies liberally allow abortions, encourage free speech and grant broad voting rights, they also limit Constitutionally-protected gun rights, outlaw fracking, impose high taxes on fossil fuel use, and encourage wokism. While their governments are intrusive when it comes to business and labor practices, they profess a laissez-faire approach to social and political issues.
Texas and Florida are philosophically-friendly to business and capital and have a fundamental attraction to the concept of small-government, while California and New York are decidedly labor-, diversity- and big-government-friendly. Californians and New Yorkers have put their faith in government and accordingly are comfortable in relying on their States to set priorities and provide for their welfare and protection. The majority of Texans and Floridians are government skeptics and frequently reject even the perception of paternalism that accompanies centralized policy-making, whether at the Federal or State level. They believe that the government that governs best governs least …, except, that is, when it comes to emotionally-charged social and political agendas.
Although Texas and Florida are among America’s fastest-growing States, Florida’s population is one of America’s oldest and its working-age population is in decline. That’s a problem and one of the reasons why there are so many “hiring” signs in the State. Florida’s anti-immigration laws exacerbate its labor shortage. California and Texas, on the other hand, have among the youngest populations in America. With expanding working-age populations, they are well-positioned to support anticipated industrial growth. In California, that working-age population also will provide support for its welfare-heavy budget.
The political, tax and social policies of Florida/Texas and California/New York have several obvious, and a number of not-so-obvious, consequences. As for the obvious, the last several years have witnessed an exodus of wealthy residents from high-tax California and New York to no-income-tax Texas and Florida. This is eroding the tax bases in both California and New York with consequences that will be felt only after Federal COVID largesse has been exhausted. Not so obvious is that the high-tax flight from California and New York (and other high-tax States) has increased demand for housing and the cost of living in those fast-growing States. Housing costs in Miami now are the highest in the nation, exceeding even those in Los Angeles and New York (although both States remain near the top on a cost-of-living basis), with housing prices in both Florida and Texas rising. Miami, in fact, today is one of the least affordable cities in America with income inequality that ranks second in the nation. Because Florida provides its citizens with minimal social benefits, Florida also has America’s 4th highest health-care costs (with New York 11th and Texas and California near the middle).
The reality is that Texas and Florida are engaged in a contest with California and New York to determine which approach to democracy and capitalism will garner the greater success. Although often characterized as a philosophical, political, economic and social war between the States, the fact is that each of California, Texas, Florida and New York is a petri dish for testing what might work and what might not. While TLR believes that a better experiment would involve a balancing between Republican Party and the Democratic Party policies, offsetting paternalism with laissez-faire capitalism and social policy, what America instead is seeing is a hard-fought contest between philosophies that will result in a winner – or winners – the policies of which will spread throughout the country … with the leading politicians in each State realizing national political prominence. More hopeful is that both sets of policies will flourish in different ways, providing each State’s citizens with their desired outcomes and the nation with choices among viable alternatives.
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Finally (from a good friend)