Over at Forbes William Baldwin calculates a “FeedMe index” for each of the 50 states (illustrated above) and deduces from it that New York, California, New Mexico, West Virginia, Mississippi, and Arkansas are circling the drain:
The hazard with overburdened states is that the departure of jobs could someday turn into a rout. Just this is happening in Puerto Rico. Its productive citizens are leaving for the mainland. They are sticking a dwindling population of private-sector workers with the burdens of supporting the government’s clients and paying off the government’s debt.
Sunny, silicon-rich California is a long way from Puerto Rico’s fate, but the costs of keeping the government fed are on an ominous upward trend. A decade ago the top individual income tax bracket decreed by the solons of Sacramento was 9.3%; today, it’s 13.3%. The nice pensions for state and local workers in California are $189 billion short of adequate funding, according to an analysis by Moody’s. That pension debt comes to $13,500 for every private-sector job.
I have a number of issues with Mr. Baldwin’s hypothesis, the gravest is that his formulation assumes that Elon Musk is not a client of the state.
I’ll offer an alternative hypothesis: as long as states can a) attract subsidies from the federal government and b) are destinations, particularly for the wealthy, they can maintain lifestyles that would sink other states. California is a destination in my terms because of its climate and its Silicon Valley remains a mecca for high tech developers. New York is a destination because of the attractions of New York City and because of Wall Street.
As long as those remain the case I think the Golden State and the Empire State have little to fear.
It also explains why Illinois, despite its much lower “FeedMe index” will continue to struggle. Illinois is not a destination for reasons other than work and forcing employers to flee is not a winning strategy for the Prairie State.