'I hate it when people vote with their feet'

‘I hate it when people vote with their feet’

About 10 years ago, Mobile County landed one of the last large pre-recession “smokestack” projects. Competing against multiple states, the state and the county ultimately gave a lot of money in anticipation of “29,000 jobs during construction, and 2,700 jobs paying an average of $50,000 to $65,000 annually once the plant is operational in 2010.” One of the more controversial aspects of the corporate welfare was the amount paid by Alabama and Mobile County ($1 BILLION) as compared to the benefit accrued. Many of the skilled construction jobs were filled not by locals but by a nomadic group of people who traveled from places like North Carolina and Virginia, lived in campers for several months, and left to go to the next big construction job. Our corporate welfare went not to Alabamians but to people from all over the south who sought employment by “voting with their feet.”

Our legislature is electing not to spend $85 MILLION on adequately funding Medicaid. They are going to begin holding hearings on the budget they just passed next week, focusing on finding out why healthcare is so expensive, where the waste and fraud is, and finding out how to “fix the program.”

State Rep. Paul Lee, R-Dothan, said he believed a part of the Medicaid issue might be that the system does more “handing out” than “handing up.”

“We have children in need and elderly in need. …We need to start encouraging those that are able and willing to go to work rather than sitting and waiting for a check to come in,” he said.

“We can fix Medicaid in 24 hours if we could make our own rules (versus federal regulations) and do it the way it should be done.”

The first person to suggest that states should be given much greater leeway to “fix programs” was Ronald Reagan. Pointing to the migration of blacks to the north during World War II and to the migration to the energy belt in the 1970s, he suggested that America was not composed of static folks tied to a community, but was instead a moveable army of workers and others who would move from their current state to another if services were inadequate. Like the construction workers were drawn to Alabama. Or perhaps like poor, sick folks might leave Alabama

Do poor, sick people move from a low-service local to a high-service one? Do wealthy folks move to areas with low taxes? Are we finally entering a Reaganesque utopia to which the Ayn Rand capitalists will move after we eliminate Medicaid funding, creating a little Somalia  right here?

As it turns out, the great migration of poor sick people to blue states after Obamacare never happened. Folks it seems are content to stay put and use the Emergency Department near their family rather than move to an expansion state. The exception are the chronically homeless, as it turns out that up to 40% are rather nomadic  and identify service availability as a reason to relocate. This is about 40,000 people nationwide.

What about the converse? Are wealthy entrepreneurs leaving for the promise of lower state taxes? Despite what the moving company “data” reveals, the truth is nope. In a very well done study by the Center of Budget and Policy Priorities using IRS data which combined income and address change information, it turns out:

  • 70% of folks never leave the state in  which they were born
  • The income tax status of the state does not correlate with the movement of people in or out in general
  • If anything, poor people are MORE likely to move to a low tax state, which probably correlates with lower housing costs
  • Old people are more likely to move away from snow

People move for two reasons, jobs and family. Well, warm weather as well for old folks.

Reagan’s belief was based on a theory by Charles Tiebout, a rather obscure economist, as well as personal observations about blacks moving north and and Houston’s energy-sector driven growth. Tiebout’s theory was based on faulty assumptions, and Reagan’s observations were not really contextual (the reason for the black diaspora was a little more complex).

Folks that vote with their feet, it seems, are nomadic. They come to either work on large construction projects or to seek out services to substitute for their lack of a permanent residence. It is probably more realistic to fully fund services such as Medicaid rather than fight the federal government and hope for an influx of wealthy Ayn Rand followers. I do not think this will come out in the hearings.

 

 

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