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What Do Americans Voting with Their Feet Prefer? Better Public Services or More Cash?

In his new book, Average is Over, Tyler Cowen makes a number of observations about the intersection of technology and society, and explains how these shifts will impact our society. Specifically, Cowen argues that being average is over. Echoing forecasts by Charles Murray, Cowen explains how the middle class will continue to shrink as technology can replace many more of their routine jobs. Those with certain skills and abilities, or can learn to work with technolgoy, will continue to flourish more. Those who do not adapt, Cowen argues, will earn less, and learn to deal with less (and that is not necessarily a bad thing, he contends). One manifestation of this shift will be that people with less means will, to use Ilya Somin’s framework, vote with their feet, and move to places where living is less expensive, and a lower salary will go further.

Cowen identifies (my adopted home state) Texas as a bellwether for this mass migration. The population of Texas, in recent years, has exploded. But why? According to most progressive measures, Texas is hardly a place people would want to live:

Why is Texas so popular? For a long time the state has had one of America’s highest murder rates and it has a high property crime rate. The weather is warm but it is not a calm warm-weather state, given the storms and tornados. Sometimes it is too warm, such as during the thirty-five straight days over a hundred degrees in July and August 2011 in the Dallas– Fort Worth area; worse yet, that wasn’t a record. Texas is skimpy on welfare benefits and Medicaid coverage, and 27 percent of the state has no health insurance coverage. Texas has one of America’s poorest performing educational systems, at least as measured by high school graduation rates, which in Texas are below 70 percent.

I should note that Texas has not expanded Medicaid under Obamacare, thereby putting Texans between 100% and 133% of the poverty line out of luck. Further, Texas has erected similar barriers to HHS promoting Obamacare.  Kathleen Sebelius said as much during her recent testimony.

Ms. Sebelius said that state laws and other barriers had made it difficult for some Texans to take advantage of the new insurance options. State officials in Texas, which has the highest uninsured rate of any state, rejected the expansion of Medicaid and declined to establish their own health insurance marketplace. So far, according to the latest data from the federal government, 295,000 people in Texas have selected private plans through the federal marketplace.

And yes. Texas is hot as hell. It is unbearable four months out of the year.

But what does Texas have? Job growth and low cost of living:

What Texas does have is very cheap housing and a decent record of job creation (you don’t have to credit this to any particular Texas governor, any more than you should blame governors for the high murder rate). In other words, if you live in Texas, your locale will offer C-grade public services but you may have more cash in your pocket than if you lived somewhere else. You have a better chance of finding a job and will surely find cheaper housing.

In particular in (my adopted home city of) Houston, the lack of formalized zoning has made the cost of building housing significantly lower.

The cheap housing doesn’t just come from Texas’s having a lot of land; there is another factor, namely that zoning in Texas is relatively weak. For instance, Houston doesn’t have traditional zoning. You might find an office tower, a used-record store, and a whorehouse all right next to your home. Houstonians live with that, and since home prices are reasonable the relatively wealthy can insulate themselves from the less pleasant consequences of mixed-use neighborhoods. In any case, the absence of zoning makes the homes cheaper. I don’t expect that trend to spread to all of America because suburban homeowner associations are politically powerful. Zoning may become relaxed in more parts of the country, but in the meantime people are voting with their feet and moving to Texas.

Yet, this tees up the important question. What do Americans prefer when choosing a place to live? Better public services or more cash? Cowen argues that it is the latter.

I’ll return to that, but, whether or not we make other real estate reforms across the country, there is a more fundamental, apparently  apparently obvious, and yet still underappreciated lesson: People really like extra cash in their pocket. They like that cash in their pocket more than our politicians wish were the case. You might think this desire is noble, à la Ayn Rand, or you might think it is selfishly unethical. In any case, I’d like to explore what this love for the “filthy lucre”— which isn’t going away— means for our future.

Since there is considerable net in-migration to Texas, I conclude that a lot of Americans would rather have some more cash than better public services. The other states experiencing significant in-migration are in the South and the less expensive parts of the West. For the most part, those are affordable states with decent job creation records, subpar public services on the whole, and cheap housing. Not everyone wants that bundle, as you will see if you poll the wealthy upper-middle-class residents of Brookline, Massachusetts or my own neighborhood in northern Virginia. Nonetheless, on the whole, we as a nation are moving in that direction.

When people have more money in their pockets, they can decide what they want to buy. This, it seems, outweighs a desire to rely on government services.

To Cowen, America will eventually have to look more like Texas.

The other states experiencing significant in-migration are in the South and the less expensive parts of the West. For the most part, those are affordable states with decent job creation records, subpar public services on the whole, and cheap housing. Not everyone wants that bundle, as you will see if you poll the wealthy upper-middle-class residents of Brookline, Massachusetts or my own neighborhood in northern Virginia. Nonetheless, on the whole, we as a nation are moving in that direction.

Many Americans will end up living in areas with cheaper housing and lower-quality public services, if only to give themselves more cash in their pocket. Some of those areas might be a bit ugly to the eyes, again as a trade-off for lower costs. As cross-country moving proceeds, and changes what we are, the United States as a whole will end up looking more like Texas.

This conclusion (which I don’t think Cowen fully proves here, but I’ll assume for purposes of this discussion) offers striking implications for the developments of Red State and Blue State America (very roughly speaking). As Blue States continue to expand social services, thereby limiting the free cash people have in their pockets, populations will dwindle. As Red States continue to keep government spending low, thereby leaving more free cash in the pockets of people, populations will grow. Of course, when the populations of the Blue States shrink too much, budgets will eventually have to crunch.

Alas, it is much more difficult to vote with your feet with respect to federal spending–and the Feds may soon have to bail out many local governments that spent beyond their means, and no longer have the populations to tax.

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