Is there a way to have a meaningful conversation about the outcomes of economic policy with someone who bought into Bernie’s Socialist utopia? Remember, many are drawn in for mainly emotional reasons, relying on a squishy sense of what’s “fair”, working backwards from the problem (they would say) of income inequality.
The problem you would face when trying to interact with them is pretty simple. They are convinced their cause is rooted in justice, and it will take something stronger than an Economics 101 class to convince them of that. Let’s face it, they would probably dismiss anything that doesn’t square with their assumptions anyway.
Can they be persuaded?
It depends on how tightly they are holding to their beliefs. But it is possible you could show them what’s happening with two states that have become the guinea pigs for a real world laboratory experiment. What happens when we take our ideas out for a test drive?
It’s like any other experiment. Test the ideas and see what works and what doesn’t. Better still, in this case, we even get to see how the two “guinea pigs” interact with each other.
Who are the test cases? We’ve got two of the best representatives for each political worldview. With apologies to New York, is any state in the union a better poster boy for the political left than California? And on the other side, would anyone dispute Texas as representative for the political right?
These states already have policies in place that resemble what each party wants to put forward on a national scale.
California has an expansive role for government. Their taxes on both businesses and individuals are high. This lines up with the “pay your fair share” belief energizing campaigns like Bernie’s.
Texas, on the other hand, has lower taxes for both individuals and businesses.
Here’s where you put the hypothesis to the test. On one side, the Progressives would argue that higher taxes would make a better and more just community. It would provide better services, and they say that people will not really object to paying a little more.
The conservatives, however, say that such taxes would hurt busineeses, and kil jobs, driving companies and workers away to other places that charge less.
Can our test cases shed any light on this question? Actually, yes. They can.
If the socialists were right, raising taxes would result in more money going to the government for services, right?
In 2014 (the last year we have numbers for) 250,000 Californians reported to the IRS that they had left California. Texas has been the top destination for nearly a decade now, with 33,626 trading the Golden State for the Lone Star State just in 2014.
What does that mean in practical terms? The quarter million people who left California that year brought $21 Billion with them. The share of it that wound up in Texas (just that year) is pegged at $2.19 Billion.
As a direct result of economic policy in both California and Texas, billions of dollars in taxable income fled from California to Texas and elsewhere. Does that help California improve their social programs? I can’t see how. But it sure does help Texas.
Isn’t that exactly what we predicted would happen on a national level? Raise taxes, and the wealthy would just take their toys and go home? (See: Gerard Depardieu)
Well, now we have statistics to back us up. Those who can flee the punitive taxes, flee them. At least in this instance, they stayed in America, instead of picking up and heading to some foreign country.
What will happen if Bernie or Hillary turn the whole nation into California? People won’t just be crossing state lines.
