October 29, 2013

Ideological Factions Should Fight In The States, Not D.C.

By: Will Freeland

The recent shutdown of the federal government is a different act of the same play: federal politics are perpetually gridlocked. Though many are quick to levy blame, few advance constructive solutions to reconcile the competing parties, competing factions, and competing ideas. What is overlooked is that our national political strife is contrasted with an underlying state culture of politics that allows many states to pass bold laws and reforms, rather than gridlock perpetuating the status quo, and allowing people, firms, and capital to sort into a state with a political and policy climate suitable to their individual disposition. One way to prevent gridlock in the future is for all political parties and ideologies to largely turn their backs on the federal government, exempting some key federal priorities that the states cannot themselves accomplish, and push domestic policymaking back to the states, as our founder’s intended.


Consider California and North Carolina. In recent years in both states, one party has come to dominate all branches of government and has been able to enshrine their agenda in state law. In California, Democratic politicians have implemented tax increases (in addition to the already-high tax rates on high-income earners) and pass a minimum wage hike. Both of these policy victories have largely frustrated federal Democrats. In North Carolina, Republicans have cut taxes, moved their income tax to a flat tax, eliminated their death tax, rejected Medicaid expansion, and passed regulatory reform—victories that continue to elude federal Republican politicians.

Or consider the recent debate between Gov. Martin O’Malley, D-Md., and Gov. Rick Perry, R-Texas, chronicled in a recent American Legislator blog post. The debate highlights two vastly different philosophies on state policy, the measure of economic health, and the path of development: a tax-and-spend strategy or a low-tax, free market strategy. Texas or Maryland citizens, firms, and investors get to vote for their feet for what strategy they believe gives them the best opportunity to thrive. The famous principle of “Tiebout Sorting” works: people, firms, and capital move to a state that maximizes their interest. This follows for social policy as much as it does economic policy. As IRS data on domestic migration demonstrates, an incredible amount of people pack up their car, a van, or a moving truck every year and give life in a new state a shot. American’s are not afraid to choose the “leave it” proposition of the “love it or leave it” mantra.

It’s also worth noting here that this sorting allows economic results to transcend ideology. Liberal-minded citizens leaving a big government state for economic opportunity in low-tax, low-regulation may not have changed their mind about taxing the rich, but they have voted with their feet for a state with an economic engine that is working. Or conservative citizens moving to a big government state for a tech job facilitated by public investments have made an implicit vote for another economic model. ALEC’s Rich States, Poor States and Tax Myth Debunked both suggest, through rigorous data analysis, that low tax, low regulation, limited government states are leading the way in job creation and positive net migration, but citizens need not take our word for it—they can set sail for the state that best serves their individual interests.

These state experiments in policy allow us to transcend the gridlock on the federal level that is created by clashing ideologies, and let them sort into states with stable systems of governance. Then researchers of all disciplines can compare the results across the state on every conceivable metric, make the case for what is working across the nation, and try to convince their fellow citizens that perhaps what’s working for another state might work for that citizen’s home state.

In a federalist political culture, free from monolithic policy control by the federal government, bold experiments—right and left—can take place in public policy. This is perhaps the greatest gift our nation’s founders have granted us and we should guard the culture of the compound republic jealously. As such, all ideological factions and individual Americans should deprioritize their grand visions for federal policy, and agree to a federal policy environment that pushes some, most, or all powers not enumerated to the federal government back to the states—where they belong.

Will Freeland is a Research Analyst at the American Legislative Exchange Council Center for State Fiscal Reform. U.S. map image courtesy of Big Stock Photo.