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Posts Tagged ‘federalism’
July 8th, 2010 at 3:35 pm
LeBron James and the Tiebout Hypothesis
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The first step to recovery is admitting that you have a problem. Here it goes: my name is Troy and I geek out at the intersection of sports and economics.

Today’s example — catnip for conservatives — comes from NBA superstar LeBron James’s much-anticipated announcement of where he’ll be playing next season now that he’s a free agent.

Apart from the option of staying in Cleveland (which won’t be habitable until the folks at Reason are through with it), Lebron’s two most prominent options look to be the New York Knicks or the Miami Heat. But even if both teams offer him identical contracts, his take-home pay will look dramatically different. As a New York Post blog posting notes:

If LeBron James goes to the Miami Heat instead of the Knicks, blame our dysfunctional lawmakers in Albany, who have saddled top-earning New Yorkers with the highest state and city income taxes in the nation, soon to be 12.85 percent on top of the IRS bite. There is no state income tax in Florida.

Total state taxes on a 5-year, $96 million contract? $12.34 million in New York; $0 in Florida.

If LeBron ends up in Miami (and the influence of joining Dwyane Wade and Chris Bosh in the Heat’s starting lineup shouldn’t be underemphasized), this blogger may be one of the only sports fans in America who traces the development to a rather obscure, short-lived economist from the Eisenhower era.

Charles Tiebout’s greatest contributions to economics was the “Tiebout Hypothesis” — which in essence stated that federalism matters because citizens vote with their feet. If a state wants productive people (and make no mistake, LeBron is an economic dynamo), they create the conditions that will bring them there. Thus, Florida has a recipe for fostering entrepreneurship, while New York has a recipe for disaster.

Of course, there are mitigating factors. Kobe Bryant stays in Los Angeles despite California’s confiscatory tax rates because of the prestige of playing with a successful legacy franchise like the Lakers. But for those of us with a more conventional cut to our jibs, the calculation is simpler.

If you have a business you can run from anywhere, would you rather do it at New York’ s 12.85% rate or for free in one of the nine states that don’t have income taxes (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — just in case you’re looking to flee blue state insanity).

By the way, take a look at the business climates in these states and you’ll notice which model works and which model doesn’t.

 

June 15th, 2010 at 5:53 pm
Florida Tries “Federalism” at the County Level

Political science purists would quibble with using the term federalism to describe a county government’s ability to declare itself able to act against the wishes of federal and state government…but who cares?

Certainly not the take-the-bull-by-horns types running Florida’s Okaloosa County.  With the Gulf Oil Spill threatening to damage the county’s Choctawhatchee Bay, supervisors “voted unanimously to give their emergency management team the power to take whatever action it deems necessary to prevent” that from happening.

That means the team, led by Public Safety Director Dino Villani, can take whatever action it sees fit to protect the pass without having its plans approved by state or federal authorities.

Commission chairman Wayne Harris said he and his fellow commissioners made their unanimous decision knowing full well they could be prosecuted for it.

“We made the decision legislatively to break the laws if necessary. We will do whatever it takes to protect our county’s waterways and we’re prepared to go to jail to do it,” he said.

Isn’t it instructive to see the relationship between a politician’s decisiveness and his proximity to the people most affected by the spill?  Maybe there is something to the idea that any activity that can be performed by a more decentralized entity should be.  If anything, the Obama Administration’s hunger for more centralized power over health care, the financial sector, and even the oil spill is showing the limits of so-called “comprehensive” solutions.

March 24th, 2010 at 1:54 pm
What Does Anna Nicole Smith Have to Do with Property Rights? Plenty
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As CFIF has noted before, former Hollywood “star” Anna Nicole Smith has made quite a splash in the legal world – and not by diving nude off a roof into a pool at a trial lawyers’ convention in Cancun.

The litigious executors of Smith’s estate have attempted to manipulate our judicial system, filing multiple lawsuits in multiple jurisdictions to claim private property to which they have no right.  True to our federalist system, state courts were best situated to resolve this claim.  Unfortunately, her attorneys were able to successfully game the system by playing “jackpot justice” and filing duplicative suits in federal court elsewhere.  Their legal maneuvering has been so abusive that it’s dragged on for more than 15 years, and outlived every single one of the original litigants in the case.

Fortunately, it appears the end of the road may finally be in sight.

Late last week, the Ninth Circuit Court of Appeals vindicated federalism’s division of powers and ruled in favor of private property rights.  It did so by recognizing the autonomy of state courts and preventing federal bankruptcy courts from overstepping their bounds by improperly interfering in matters properly left to local law.  This is an important step in preventing any further erosions of the concept of federalism in our court system, and vital to preventing trial lawyers and perpetual lawsuit abusers from seeking out favorable rulings by circumventing the state courts best equipped to negotiate state specific estate laws.

It’s also important to note that this ruling impacts more than just Hollywood starlets like Anna Nicole.  If the courts had ruled in favor of Smith’s estate, any family inheritance or estate matter anywhere could have been subject to such frivolous forum shopping.  Legal expert Todd Zywicki, who has long followed the case and also filed an amicus brief in the suit, wrote more on the case on the popular legal blog, The Volokh Conspiracy.  His conclusion, in plain English:

“A clear line between state law and bankruptcy court is important to keep cases like this from arising in the future.”

We should be thankful that the Federal courts have drawn that line in favor of property rights, at least for now.  Unfortunately, Smith’s executor, coincidentally named Howard K. Stern, has indicated that he intends to appeal.  Accordingly, the United States Supreme Court could still overturn the Ninth Circuit’s ruling in a fit of misjudgment.  Let’s hope the second time around, the Supreme Court gets this right, and upholds the Ninth Circuit’s protection of property rights, the rule of law and federalism.

February 13th, 2010 at 2:12 pm
Imagining Obama as Jean-Jacques Rousseau
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Over at the Weekly Standard, the Pacific Research Institute‘s Jeffrey Anderson has a very sharp piece on how President Obama’s self-designated role as philosopher king is (a) antithetical to the American system and (b) impeding his legislative agenda. A sample:

In a moment of candor, [Obama] essentially said [he embraced the philosopher-king role] to [CBS News’ Katie] Couric:

“Look, I would have loved nothing better than to simply come up with some very elegant, you know, academically approved approach to health care [that] didn’t have any kinds of legislative fingerprints on it, and just go ahead and have that passed. But that’s not how it works in our democracy. Unfortunately what we end up having to do is to do a lot of negotiations with a lot of different people.”

With the possible exception of Woodrow Wilson, can you imagine any of our prior presidents having said that?

Our democratic process, our separation of powers, and our federalist design frustrate Obama. But, far from being unfortunate, the negotiations and multiple levels of approval that they require, from a myriad of different citizens, is largely what secures our liberty—protecting it from those who would otherwise impose their own comprehensive goals from their lofty theoretical perches. The Founders were surely not Obama’s intellectual inferiors, but they were practical men. The Constitutional Convention was nothing if not high-level give-and-take, tinkering and refining. One imagines Obama showing up at Independence Hall with his own plan in hand (probably adapted from Rousseau’s in The Social Contract, with Obama cast in the role of the Legislator) and being surprised when the other delegates resisted his eloquence and, correspondingly, his proposal.

A great piece. Read the whole thing here.

February 10th, 2010 at 2:27 pm
James Madison to Chris Matthews: Still Believe in Darwinism?
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The Founding Fathers deliberately included in the Bill of Rights the Tenth Amendment, which states:

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

This notion of federalism, or “states’ rights,” was obviously a core tenet of our Constitution and one that provided the reassurance necessary for ratification.

MSNBC’s Chris Matthews, however, suggests that this vital, fundamental aspect of the Constitution is merely code for slavery, segregation or racism amongst those inconvenient Tea Partiers.  During his February 9 “Hardball” broadcast, Matthews reacted to those such as Republican Texas Governor Rick Perry and fellow Republican candidate Debra Medina who seek to reclaim greater federalist balance by angrily asking, “who is this, John Calhoun?!?!”

You recall John Calhoun, that early-18th century Vice President from South Carolina who supported slavery.  According to Matthews, advocating simple Tenth Amendment concepts is tantamount to advocating slavery, apparently.  Matthews proceeded to quote Martin Luther King, Jr. for any of his loyal viewers who failed to comprehend his oh-so-subtle Calhoun reference.

This is the same Chris Matthews, of course, who fawns over Barack Obama by describing the thrill that runs through his leg when listening to another teleprompted speech, and who childishly attempts to slur Tea Party activists by referring to them as “tea baggers.”

We’ve come a long way from states’ rights proponents James Madison and Thomas Jefferson to Chris Matthews and Keith Olbermann.  Still believe in Darwinism?

December 3rd, 2009 at 6:13 pm
SBE Council Ranks States by Business Climate
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The Small Business & Entrepreneurship (SBE) Council this week released its annual ranking of individual states by business friendliness, and the results aren’t surprising to anyone who understands the importance of lower taxes, less regulation and fewer labor burdens.

After noting the inhospitable business environment cultivated by the Obama White House and the Pelosi-Reid Congress at the national level, SBE Council chief economist Raymond Keating highlights the critical role played by individual states in fostering small business growth.  As Mr. Keating notes, “small businesses, of course, drive innovation, economic growth and job creation.  If we want to get our economy back on a solid, robust growth track, then we need pro-entrepreneur policies at the federal, state and local levels.”

The study incorporates some 36 government-related factors, including tax rates, regulatory costs, state government spending, property rights and energy costs.  And the results are not shocking.  Pro-growth states like Texas, Florida and South Dakota lead, whereas notoriously basket-case states like California and New York sink toward the bottom.

It’s often said that the states serve as policy test laboratories in our federal system, so here’s hoping that someone directing our national levels of government learn the simple lessons offered by the SBE Council’s latest report.