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Oppressive state policies keep cities shackled in chains – Pacific Research Institute

Oppressive state policies keep cities shackled in chains

By Kerry Jackson | December 26, 2023

Ken Griffin, founder and chairman of hedge fund company Citadel, caused a bit of a stir when he recently suggested that Miami could eventually replace New York City as the nation’s financial capital.

“​​We’ll see how big Wall Street South becomes,” said Griffin, who has moved his headquarters from Chicago to Miami. “We’re on Brickell Bay, and maybe in 50 years it will be Brickell Bay North how we refer to New York in finance.”

Griffin said he thinks that Miami, with its “incredibly vibrant economy,” is a “growing metropolis that embodies the American Dream” and “represents the future of America.” He’s apparently not the only executive who sees the opportunity. “​​Miami has become a hotspot for corporate relocations, attracting a slew of major companies from various industries,” says American Relocation Connections.

And it’s not just Miami.

“Florida saw 86% gains in corporate headquarters relocating to the state in 2022-2023, the most of any state in the country and 15% higher than the second ranked state,” according to the JAX (Jacksonville) Chamber of Commerce. Executives’ decisions to move to the state are “based on its low taxes, key business incentives, population growth” and “available talent,” which tends to migrate to where it is lightly regulated and can be best utilized. 

Meanwhile, New York City’s present and future can be fairly described as comparatively sclerotic. Though a long-time destination for the hard-working, the innovative and the ambitious, New York City has become an exporter of residents. Between April 2020 and July 2022, the city’s estimated population fell 5.3%, from 8.8 million to 8.34 million. Nearly a half-million residents – 468,000 – fled. 

Could it be that the refugees were escaping the city’s and state’s cruel pandemic policies? Over that same period, Miami-Dade County lost residents, too (as did many big cities during the COVID years). But only 1% left, the population falling from 2.7 million to 2.67 million.

Maybe people just feel more comfortable in the biggest city in the state that the Freedom in the 50 States index ranked second in overall freedom (Florida), which includes both personal and economic liberties, than they do in the biggest city in the state ranked dead last (New York).

pexels david iglesias 13356923
Miami ©David Iglesias

Ultimately, state policies impact cities, and Miami’s location in a red state is to its benefit. Blue states such as New York are dedicated to creating a political society, which tightens its grip on businesses and residents as it grows, while red states prefer the expansion of civil society, which in contrast liberates businesses and individuals.

State laws are in part why gasoline costs almost $2 per gallon more in California than in Florida. It’s why businesses have been for years steadily quitting the former and rebooting themselves in the latter. Generally speaking, the tax yoke is more suffocating in blue states, the regulatory framework more burdensome.

New York is not the only city to lose out to Miami. Amazon founder Jeff Bezos ​​has said he plans to leave Seattle for South Florida. While he says the move puts him closer to his parents, his partner Lauren Sanchez and the operations of Blue Origin, his space exploration company, it’s not unreasonable to believe there are unnamed reasons. Fortune reports that Bezos “could take some of Amazon with him.”

Maybe that’s little more than wild speculation. But the company “is looking for office space in Miami,” says Bloomberg, roughly 50,000 square feet, in a search that apparently was begun before Bezos announced he was moving to Florida.

Not to be discounted is the “significant financial upside” to “the multibillionaire’s decision” to settle in Miami, says Fortune. One South Florida reporter, basing her conclusion on “securities filings, tax lawyers and accounting experts,” argues that Bezos will likely save “billions of dollars over the long term” by bolting from Seattle.

“Florida doesn’t tax capital gains and has no state income tax. The state also has zero estate tax, compared with Washington state’s tax on all estates valued at more than $2.19 million,” Fortune adds. 

Neither Seattle nor Washington would be anyone’s definition of a refuge for freedom-seekers. The latter is ranked 37th in the Cato Institute’s Index of Personal and Economic Freedom, the former in the middle of the pack in the Pacific Research Institute’s Free Cities Index.

Read Pacific Research Institute economist Wayne Winegarden’s Free Cities Index.

Read about a proposed new private city in California.

As West Coast cities go, though, 25th out of 50 isn’t too bad. No other metro area on the Pacific Ocean was in the top half of the rankings. Nine California cities, however, are mired in the bottom half, from San Diego (31) to Oakland (50). Portland is 36th.

A toxic combination of state, county and local policies has made these cities unfriendly to enterprise, which makes them also unwelcome to individuals. California in particular has been bleeding businesses for decades, and residents for years. 2020 marked the first time in the state’s history that the state actually lost population. Net losses were also recorded in 2021 and 2022.

And, despite the governor touting California for being a state where people could live largely without government interference, Cato ranks it 48th in freedom, primarily due to crushing regulation (it is, for instance, “one of the worst states on land-use freedom” and its “labor law is anti-employment”), high taxes and generous public spending.

At the same time, and by no coincidence, the freest cities are in the freest states.

Ranked No. 1 and No. 2 in freedom are two Texas cities – Fort Worth and Austin. Texas is 17th in Cato’s freedom index. The sixth-freest city is Jacksonville in Florida, the second-freest state. Mesa is seventh, Arizona fifth. Also in the top 10 are Virginia Beach, Oklahoma City and Nashville. Of the three, only Oklahoma is outside the 12 most-free states, landing at 23rd.

In fact, none of the 10 freest cities are in states ranked lower than 24th, which is North Carolina, and is home to Raleigh and Charlotte, which are tied for fourth.

While Miami is ranked 26th in PRI’s index – and is at odds with Florida’s No. 2 position – it’s still a much more open city than New York. At 48th among the 50 cities rated for their freedom, Gotham also needs to be at odds with its state lawmakers, but in an entirely different way.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

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