Ferg's Fiscal Insight
Apr. 9th, 2012: - johnlocke.org Manage Subscriptions

The Best Form of Accountability: Migration
By Fergus Hodgson

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On many occasions, people have asked me how much government is ideal. For those who believe in classical liberal, limited government, a more specific question might be, at what point have government officials departed from their legitimate role?

Pro-liberty people, myself included, are likely to respond with natural rights theory and the distinction between negative and positive liberties. Before your eyes glaze over, though, there is an alternative answer I suspect is more compelling to a broader audience: what people want.

While you might assume that means direct democracy, I'm referring to migration. Where open migration exists -- such as between the states -- people tend to choose the jurisdiction and form of government that best suits their preferences. And migration is what economists call a revealed preference, stemming from the notion that the best way to measure consumer preferences is to observe their purchasing behavior. This contrasts with stated preferences, where people simply say what they prefer, akin to voting.

In the case of migration, the evidence from the states is compelling: migration affirms the hunger for freedom. A comprehensive ranking of freedom from the Mercatus Center provides one such example. (North Carolina came in at 18th.)

Over the 2000 to 2009 period, the difference between a state ranked in the bottom third, such as Connecticut at 38th, and a state in the top third, such as Iowa at 13th, translated to higher positive migration equal to 5.9 percent of population. In other words, over-governed states tend to have lost 3 percent of their population through domestic migration, while freer states tend to have added 3 percent to their population.

In so far as federalism remains in the United States, people are voting with their feet, and they're willing to uproot themselves for less state government. The least free states, New York, New Jersey, and California, all lost sizeable portions of their populations during the last decade -- 9 percent in the case of New York.

Regarding the degree of freedom, no state in the union appears to have gone too far, so as to dissuade people from going there. In fact, New Hampshire, the freest state according to the ranking, has attracted an organized movement of liberty-minded individuals, along with an overall trend of inwards migration.

There is a test on the horizon for how much freedom will bring prosperity and attract immigrants and investment. Last week, I published on the Special Development Regions of Honduras.

The idea is to wipe the slate clean of governmental failure and allow for a fresh start in specific parts of the country. These largely autonomous regions will take proven approaches from around the world to write their own laws, have their own courts, and even handle their own immigration policies. The leaders of each region will also compete with the others to attract constituents and investors.

I will continue to watch that development. Back here in the United States, though, the migrant departure is a form of disapproval that should be met with concern. On the national level, net migration with Mexico is now at zero, along with plummeting apprehensions on the border -- an indication that the United States no longer offers the land of opportunity for many.

Elmer Ups the Stakes in Treasurer's Race

Last week I noted the underperformance of the sitting state treasurer, Janet Cowell. Her primary competitor, Ron Elmer, has been quick to point out the waste in the department, including $337 million to investment fund managers. Now he has put his money where his mouth is:

"If I haven't eliminated $50 Million of investment management fees from the State Pension after one year in office, I will work for free until I do."

Notes

  • At the John Locke Foundation's recent candidate briefing, I gave the fiscal presentation. Click here to watch the video (10 minutes).
  • There will be a Constitutional Candidate Forum, hosted by Founders' Truth and Constitutionalist Gathering Place, on April 28, from 1 to 5 p.m. at the Lighthouse Convention Center, Raleigh. Go here for more details.

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