Blues Learning The Hard Way

In Illinois the newspaper is learning even though the politicos are a lagging indicator.  In Connecticut the politicos are being taught a lesson.  We shall see what learning takes place.  WTNH, News8 says:

Connecticut’s state budget woes are compounding with collections from the state income tax collapsing, despite two high-end tax hikes in the past six years.

It means the current budget year, which ends in just two months, is now seriously in the red and next year’s deficit has ballooned to $2.2 billion.

It’s happening because the state of Connecticut depends too much on its wealthy residents, and wealthy residents are leaving, and the ones that are staying are making less, or are not taking their profits from the stock market until they see what happens in Washington.

The total budget is $41 billion so a $2.2 billion deficit (other reports have it a little lower) is a big deal.  Who would have thought that individuals react to tax policies?  Our only quibble with the report is that we would have changed despite in bold to because of.

Now the question is what will the political leaders and people of the Nutmeg state learn from all this?  Will they try to prevent wealthy residents from leaving like the US tries to prevent corporations from leaving?  Or will they just ride the swings described by the governor:

Governor Malloy added,  “The reality is that in Connecticut we get most of our money from very few people and that can produce some very wild swings.”

It is unclear if the Governor is getting wisdom or just trying to make a politically viable excuse.  It is up to you Connecticut.

Growth In Blue States

Blue States are capable of growth in their thinking and thinking about economic growth of their cities and states.  Here is an excellent editorial (yup, it is an editorial rather than a syndicated column) entitled “Stifling Growth In Illinois” from the Chicago Tribune:

Raising the minimum wage isn’t just a cost driver involving workers in the lower pay brackets. It forces wages up throughout the pay scale.

We know, we know. Raising the minimum wage sounds noble. But discouraging businesses from hiring entry-level workers is a particularly bad idea in a deadbeat, debt-ridden state that can’t pay its bills and leads the nation in outmigration while every Midwestern neighbor is gaining in population. One more time: Illinois desperately needs to expand its economy. To create more jobs, to grow more taxpayers. Pass another piece of legislation that disadvantages Illinois businesses, and lawmakers might as well hang a “going out of business” sign on the Capitol doors.

Sidebar: As a border state do we want Illinois badly governed or well governed?  If Illinois prospers is it good for us because, among other things, they can afford to visit?  Or is it better if all their productive citizens and organizations move elsewhere as the editorial notes with close by being more likely.  We don’t know any evidence on this issue.  It is an interesting and difficult question.  End Sidebar.

It even quotes Milton Friedman.  People and institutions in the bluish states and even deeper blue cities can think rationally when they want.  Here is to the Chicago Tribune!  May they point Illinois and Chicago in the right direction.


Understanding The Blue States

The Daily Beast has a kind and thoughtful look at the folks that would be our rulers called, “The Arrogance of Blue America” by Joel Kotkin.  It is well worth reading, really the Daily Beast has something this good, so read it all.  Here is a brief taste of what Joel has to say:

In seeking to tame their political inferiors, the blue bourgeoisie are closer to the Marie Antoinette school of political economy than any traditional notion of progressivism. They might seek to give the unwashed red masses “cake” in the form of free health care and welfare, but they don’t offer more than a future status as serfs of the cognitive aristocracy.

It is a kind look at our would be betters because, despite their behavior, they just believe in a fiction as the last sentence in the quote from Joel shows:

The argument made by the blue bourgeoisie is simple: Dense core cities, and what goes on there, is infinitely more important, and consequential, than the activities centered in the dumber suburbs and small towns.  Yet even in the ultra-blue Bay Area, the suburban Valley’s tech and STEM worker population per capita is twice that of San Francisco.

The whole article is chock full of evidence and examples.  It gives us a nice way to think of the blue bourgeoisie.  They are well meaning but wrong.  We’re not sure we accept the former entirely but Joel has offered a way to converse with such folks if they ever venture into flyover country to visit us.