Voodoo Economics Handbook, 14th Edition

Also known as Rich States, Poor States by Arthur Laffer, Stephen Moore and John Jonathan Williams. From an email announcing the new edition:

The new edition finds that even through the pandemic, states with policies such as low or no income taxes and worker freedom are more economically competitive and better positioned for wage growth, job creation and domestic in-migration compared to states with higher taxes and government spending. The new rankings also reveal that, as proven by new 2020 Census data, Americans “vote with their feet” by moving from high-tax to low-tax states.


From the same section.

The Economic Outlook Ranking is a forecast based on a state’s current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less — especially on income transfer programs — and states that tax less — particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more

From last year’s edition:

The empirical evidence and analysis in this edition of Rich States, Poor States illustrate which policies encourage greater economic opportunity and which are obstacles to growth. The evidence is clear that competitive tax rates, thoughtful regulations, and responsible spending lead to more opportunities for all Americans. State economies grow and flourish when lawmakers trust people, not government, to create long-term prosperity.

There is no discussion of empirics in this issue, just as there was none last year. Maybe that’s because there is no robust evidence that the Economic Outlook Ranking — with Utah and Florida at the top and Vermont and New York last —  means anything.

In my own analysis (discussed in this post), using data through the 12th edition of Rich States, Poor States, I found the ranking has essentially no predictive power for subsequent growth, as measured by employment (dlempl) or real GDP (dlrgdp). This is shown in the table. The variable rsps is the ranking provided by Rich States, Poor States, with lower values indicating a purportedly better business environment.

ldensity Log population density
wet Precipitation (less precipitation = higher values)
mild Temperature extremes (less extreme = higher values)
distance Proximity to water (closer = higher values)

These variables are from Kolko et al. (2013), as provided by Professor Neumark.

Notice that the RSPS rank is not significant, regardless of specification.

One might argue that the impact should be assessed over a longer horizon; however, using a 3 year horizon, neither employment and GDP growth exhibit a robust relationship with the Rich States, Poor States ranking.

You can conduct your own analysis with the data here (Stata .dta file), although I have not included 2019-2020 data on employment and GDP, nor have I included the latest two rankings from Rich States, Poor States. However, I am quite confident that you will fail to find a robust relationship between the ALEC-Laffer index and growth.

More on Stephen Moore here. On Arthur Laffer here. On Stephen Moore and Arthur Laffer here and here.

79 thoughts on “Voodoo Economics Handbook, 14th Edition

  1. 2slugbaits

    Well, looking at my state I see that some of their 15 key variables are flat out wrong. The top marginal personal income tax that they used is way, way, way off the mark. It’s so far off that I have to assume it’s a typo.

  2. Barkley Rosser

    Ooooh, coool! You use rainfall and not as an instrumental variable!!! 🙂

  3. Moses Herzog

    I’ll take bad ALECs for $800 Alex. No, really, what do you think, I’m a smart-aleck??

  4. pgl

    Maybe they could use Princeton Steve’s anecdotal approach in lieu of actual evidence!

    1. Dr. Dysmalist

      But isn’t that, in effect, what they’re doing? Our host and intrepid explorer read it for us (no way I’m going there, nuh-uh; never get out of the boat), and reports, “There is no discussion of empirics in this issue, just as there was none last year.” So basically, they’re just performing their version of Kopits’s “I believe … ” in lieu of actual data, or data + model, or (heaven forfend!) data + theory + model, or even the opinion of someone who truly knows what they’re talking about, etc.

      This is by design. I don’t think it’s intended to have any actual rigor because there is no rigorous treatment that will support their preconceptions“conclusions,” and they know it. They’re just trying to serve their masters at ALEC.

      We all know that ALEC isn’t a think tank or even a lobbying house. It’s a front for reactionarypseudo libertarian billionaires who want to haul in more billions as fast as possible. To that end, the billionaires use ALEC to purchase whores sympathetic individuals to produce and publish documents such as this one for the sole purpose of providing cover for reactionary state and federal legislators to introduce and pass reactionary (Alec-drafted) bills that would accomplish the billionaire’s goal.

      That publication exists solely to allow those politicians to use it as a justification for their legislative shenanigans. That’s why a debunking like this is valuable.

  5. ltr


    May 11, 2021

    What a blue state really gets wrong
    By Paul Krugman

    I’ve always found Ron Brownstein, political analyst for The Atlantic, well worth reading. But I didn’t expect him to come out with “Rock Me on the Water,” a portrait of Los Angeles in 1974 — a time and place he argues were pivotal in creating our cultural landscape. I have no idea whether he’s right, and it hardly matters: the book is great fun.

    Me being who I am, however, while reading the book I found myself thinking about … the relationship between California’s culture and its economy. What made the golden age of L.A. culture possible, and how have things changed since then?

    There clearly was a remarkable collection of artists of various kinds in L.A. from the mid-60s into the 70s. There was, in particular, a cohesive musical scene — famous or soon-to-be-famous musicians who were constantly in and out of each other’s houses — documented in the movie “Echo in the Canyon.” The music they created remains a source of inspiration and comfort to this day.

    If you know much about contemporary L.A., however, these stories raise an immediate question: How, exactly, were not-yet-established artists able to afford houses there?

    The answer is that back then California real estate was much, much cheaper than it is now. Here’s the price of houses in Los Angeles County adjusted for inflation since 1975, together with the same number for Dallas County (of which more shortly):


    You can check out any time you like, but you can’t afford to come back.

    Real L.A. housing prices have tripled since the days Brownstein celebrates. Affordable housing doesn’t by itself create a cultural efflorescence, but it’s probably a necessary condition.

    The phenomenon of high real estate prices undermining cultural vibrancy is hardly unique to L.A.; it has happened many times in many places. It’s reportedly happening in Berlin as we speak.

    But culture isn’t the only or, arguably, the main issue. What about making it possible for ordinary people to live decent lives?

    So let’s talk about politics, housing and the California economy.

    Once upon a time California was a hotbed of conservatism. But rising ethnic diversity and the growing alienation of highly educated voters from an anti-intellectual G.O.P. eventually led not just to Democratic dominance, but to progressive dominance. If President Biden’s agenda succeeds, we’ll probably look to Jerry Brown’s reign as California governor — with large tax increases for the wealthy and an expansion of social programs — as the proving ground for Democrats’ left turn.

    When Brown raised taxes in 2012, conservatives predicted disaster, some going so far as to declare that the state was committing “economic suicide.” In fact, job growth boomed, while revenues soared; Governor Gavin Newsom just announced that the state will run a $75 billion (!!!) budget surplus.

    California also enthusiastically implemented Obamacare, cutting the uninsured population by more than half.

    But despite what looks like prosperity, population growth in the formerly dynamic state has stalled. Why?

    Well, it turns out not to be affluent, highly educated residents fleeing those “job-killing taxes.” People like that are still moving in. Instead, lower-income and lower-education residents are leaving, probably because housing is so unaffordable.

    It didn’t have to be that way. Texas has a rapidly growing population, the way California used to. But as the chart above shows, Texas housing prices haven’t risen much at all in real terms. And the reason is obvious: Texas doesn’t have California-type restrictions that effectively prevent the construction of much new housing. And that, um, liberal housing policy, not low taxes, is the big explanation of Texas’s relative success.

    Which brings me to the bottom line here. What California’s example shows is that tax rates on the rich have much less adverse effect on incentives than conservatives would like you to believe. But while blue states can do fine while raising money from the rich, they do a lot of harm by preventing the construction of new housing for ordinary people.

    1. noneconomist

      California RE, personal note.
      When we moved to SoCal in 1956, my parents bought a home in Riverside County (E of LA) for $9,600 (1100 sf) after selling one in NE Ohio for (as I recollect) $8,500. Eleven years later, they sold the SoCal house for $17,000.
      Looking at both homes on Zillow and other online sites, both have undergone renovation and upgrading.
      Big difference? The “Zestimate” on the SoCal home is $443,000 while the one in NE Ohio is $75,000.
      Also remembered: first New Year’s Day in SoCal, the temp was close to 90. At the time, I was foolish enough to miss the sled and snowy hill I was forced to leave behind.

    2. Dilbert dogcart

      California has some of the latest land in the world. Called the Great Central Valleys. The places where people want to live is not so flat. The SF Bay Area, LA Basin and San Diego. They have been built out and the folks there kind a like it to remain the way it is. Palo Alto rebelled at the developer controlled city council and stopped high rise development. As I remember the BofA building is the only tall building in town. Rich folks control their environment. Most all of the peninsula city’s are the same. See Atherton. Try to open a business in Atherton.
      As I remember Krugman made a splash in economics using geography.

    1. pgl

      One has to wonder what utter dummies waste their money on these absurd pieces of writing.

    2. EConned

      Ego – it’s yet another edition of the “Menzie Chinn Ego Hour” and readers have been treated to back-to-back episodes!

      1. Menzie Chinn Post author

        EConned: I’m sorry, please elaborate on how citing regression coefficients constitutes an expression of ego. Or positing the difference between identities and functions for that matter. It seems to me you have an issue with mistakes being called out.

          1. Menzie Chinn Post author

            Econned: Seriously, you haven’t indicated how citing a set of regression coefficients is a manifestation of ego. Inquiring minds want to know.

          2. Barkley Rosser


            Others have made the point, but the ALEC stuff has nothing backing it.. Menzie’s test may be fairly simple, but it is actual econometric testing of what they claim, and they have nothing there.

            Of course, he could make it fancier, such as following current fads and test for endogeneity by using rainfall as an instrumental variable. But in fact this is probably not really necessary.

          3. EConned

            Seriously, it’s your routine attacks on pointless b.s…. Like when you penned this blog posts about a text that you couldn’t care less about UNLESS you could find a way to disparage authors who you already don’t respect. The same goes for routinely creating blog posts to call out replies from commenters. These type of posts are very rarely ever about serious debate or discussion. It’s all about you using this small platform to inflate your ego.

          4. EConned

            Barkley Rosser:
            Exactly! You make my point for me. Despite the fact that there is nothing to back this “research”, Menzie sees an opportunity to disparage authors he has a strong distaste for. Else, why the title of the blog post? Why the links to Econbrowser archives on the authors? It’s ego.

        1. Moses Herzog

          Is this the guy that had his own blog and compared you to a cat or something (some animal??) a few years back?? Wow, I mean that guy was epically wacko, I almost forgot about him. You could make a pretty strong argument he was more nuts than anyone here in the comment section, which if we are gazing at the bottom of that barrel is pretty bad. Menzie, You remember the guy I’m talking about?? You busted him on some math errors and then he claimed he was looking at your web page history or something?? That guy was a piece of work.

        2. Barkley Rosser


          The problem is that there are a lot of people out there who think this series and these people are serious and should be taken seriously. Their stuff gets cited and quoted a lot. So the fact that it is based on nothing and that claims made by them appear to be outright false when somebody actually carries out a serious econometric test of their claims is worthy of doing, It shows that these people should not be taken seriously and their statements are lies that should be ignored rather than repeated and spread as they are.

          Even if somehow this is serving Menzie’s ego, it is a worthwhile activity to expose liars and frauds whose lies influence public discourse and policy. Do you really support saying nothing and letting these liars and fraudsters get away with their bs? What is the matter with you?

      2. ltr

        Ego – it’s yet another edition … and readers have been treated to back-to-back episodes!

        [ Beyond the nastiness, what is so interesting about this comment is the irrationality.

        The episodes however are excellent. ]

          1. pgl

            And yet this kind of intellectual garbage is peddled by Lawrence Kudlow who was one the main “economic advisers” to the former President. Now if you objected to the incessant BS from the White House back then – let us know where.

          2. EConned

            Calling out Menzie for this b.s. blog post (wherein he admits the post was in poor faith by acknowledging he did not even attempt to analyze the updated data – not that it would even matter) is in no way the same as me attempting to “defend [Rich States, Poor States] as serious”.

            Comments such as yours and the associated lack of reading comprehension and/or logic are the biggest issues with attempting to have meaningful dialogue on blogs and social media.

          3. baffling

            i see econned, the rules don’t apply to you. a flawed report by a partisan hack, used to justify policy action by conservatives at the national level, affecting millions of people, is not allowed to be called the garbage that it is. you seem to be upset unless the discussion is only one sided. they call people with that mindset snowflakes.

            econned, you want to call shelton eminent and the alec study serious. no wonder nobody on social media wants to have a serious discussion with you. you probably think the capital insurrection was just a bunch of friendly tourists visiting the capital.

          4. EConned

            Your oversized clown nose and shoes are obstructing the view of your screen. You’ve yet again proven my point as an example of what’s wrong with dialogue these days. Less it’s the nose and the shoes, there’s no way you aren’t doing this on purpose and it’s pathetic.

          5. Baffling

            Econned thinks we should not call out the original trangression, which is the flawed alec report. But we should call out prof chinn for commenting on the flawed report. That is the right wing echo chamber in a nutshell. Stunning! Shelton is eminent and alec is serious, and nobody is allowed to disagree.

          6. EConned

            “Right winged”? You (and others) must get over the ridiculous notion that everyone on a side must agree with everything from that side. Or if someone disagree with one side they are on the other side. This is Trumpism and it’s bad. It’s idiotic and ignorant. Menzie admits he didn’t analyze the new data. He merely reupped an old analysis because he dislikes the authors. He would not share this research *if* it were credible. And, because you don’t comprehend the written word well, I will AGAIN make two points clear to you. 1) I don’t consider Shelton anything despite your suggestion – based on a respected dictionary she unquestionably should be considered “eminent” 2) I’ll say it again although I don’t see why it should matter to you this time because it hasn’t already – I don’t think this study is serious. 3) of course people can disagree but it is you who gets bent out of shape when others disagree with Menzie or yourself. Now put the clown regalia away.

          7. Baffling

            So econned is allowed to disparage prof chinn because he disagrees with his blog, but prof chinn is not allowed to disparage a pos report because………..just because econned doesnt think he should. Got it. Quite asymmetrical point of view econned. We call that being a hypocrite, not that you really care.

          8. EConned

            Baffling – your obfuscating. Again. It isn’t that Menzie “is not allowed to disparage a pos report because………..just because econned doesnt think he should.” I’ve stated the issues with Menzie’s approach but instead you’ve repeatedly misattributed and obscured the discussion. We call that obfuscation, not that you really care.

          9. Menzie Chinn Post author

            EConned: You wrote:

            Seriously, it’s your routine attacks on pointless b.s…. Like when you penned this blog posts about a text that you couldn’t care less about UNLESS you could find a way to disparage authors who you already don’t respect. The same goes for routinely creating blog posts to call out replies from commenters. These type of posts are very rarely ever about serious debate or discussion. It’s all about you using this small platform to inflate your ego.

            In point of fact, I assigned my econometrics students to analyze the ALEC RSPS rankings in terms of their predictive power (in comparison to other indicators). So I *do* care about the text, contra your assertion.

          10. baffling

            once again, econned demonstrates he is permitted to be critical, but prof chinn is not permitted to criticize on his own blog.
            econned, why don’t you criticize the pos report that started this blog post? that should be where you level your criticism, if you had any integrity. but you conveniently leave that pos report alone. why are you so silent on the original sin?
            econned, you’re standing on sand here. best leave before the ocean washes you away.

      3. pgl

        Does your E stand for Ego the Conman? Look – start your own blog, which of course everyone will just ignore.

      4. Ivan

        EConned; it is actually extremely important to call out BS if it comes from influential people who are considered oracles in certain national news organization. If you spew out some BS attacking a guy you don’t like, that is of no consequence to the world or more than (at most) a handful of people. However, the authors of that book are considered economic Gods by millions of GOPsmacked fools in this country. Pointing out easy arguments and huge weaknesses in their musings is an important service to society. You jerking of your hurt little ego on the other hand – not so much.

        1. pgl

          I agree entirely. But of course why on earth are clowns like Stephen Moore and Art Laffer are taken seriously by anyone (besides the village idiot named Donald Trump)?

          1. Ivan

            I have been puzzled by that myself. Why are idiots spewing out lies (Krugman calls them zombie lies) being taken serious and have their words blasted out to the masses again and again. One of the reasons is that long before Trump began calling any fact he didn’t like for “fake news”, we had a concerted effort by the right and Fox to discredit expertise/experts. The right wings narratives kept crashing into facts and expertise, so rather than changing their narratives they broke down the trust of the masses in facts as presented by experts. For those who are not scientifically literate and educated it is a big challenge to figure out the truth (and who knows what they are talking about). Trump is just a tragic example of where that brings society. Averaging over 10 documented lies per day, yet there are lots of people who will tell you that if Trumps said soo, it must be true. SAD

    3. macroduck

      If you go to Amazon and look for “Rich State, Poor State”, you’ll be offered lots of other books with similar sounding titles rather than this one. I gave up after the first hundred or so. Type in “Capital” and Pickett’s “Capital in the 21sr Century is the first book in the list. “Rich State, Por State” is not so much for public consumption as for currying favor with wealthy masters. So yeah, to make money, but in a sinecure sort of way. It’s a shout into the echo chamber.

      1. pgl

        I went to Ebay and found a copy one could buy for a mere $2.67. Overpriced still especially since shipping costs are $3.99. I guess the authors would blame unions for driving up wages for those shipping costs!

    4. Moses Herzog

      @ Lee
      Because someone has to standup and say what is happening at ALEC wrong and immoral. If someone involved in Economics and policy doesn’t say it, who will?? Asking Menzie “why bother” is like telling the guy who’s a career plumber not to bring his flexible snake to clean out jammed pipes, because “why bother”.

  6. ltr


    May 17, 2021

    Nearly one-fourth of U.S. adults worse off financially amid pandemic: Fed survey
    “This increase occurred broadly across segments of the population, and likely reflects financial distress resulting from the pandemic,” the Fed said.

    WASHINGTON — Almost one-fourth of U.S. adults said that they were worse off financially in 2020 compared to a year earlier, reflecting the economic fallout and distress resulting from the COVID-19 pandemic, a Federal Reserve survey * showed Monday.

    That was up from 14 percent in 2019 and the highest share since the survey began collecting this information in 2014, according to the Fed’s most recent Survey of Household Economics and Decisionmaking, conducted in November 2020.

    “This increase occurred broadly across segments of the population, and likely reflects financial distress resulting from the pandemic,” the Fed said.

    Despite an increase in setbacks due to the pandemic, most Americans were still managing financially at the end of 2020, with three quarters of adults saying they were either “doing okay” financially or “living comfortably”, the survey showed.

    However, not all groups have fared similarly through the pandemic, and persistent disparities in well-being across education and race remained, the Fed noted.

    For example, less than two-thirds of Black and Hispanic adults were doing at least okay financially in 2020, compared with 80 percent of White adults and 84 percent of Asian adults. The gap in financial well-being between White adults and Black and Hispanic adults has grown by 4 percentage points since 2017.

    Meanwhile, 89 percent of adults with at least a bachelor’s degree were much more likely to report doing at least okay financially, compared with 45 percent for those with less than a high school degree. This gap increased to 44 percentage points in 2020 from 34 percentage points in 2019….

    * https://www.federalreserve.gov/publications/files/2020-report-economic-well-being-us-households-202105.pdf

  7. pgl

    For those interested in making sure multinationals pay their fair share of taxes to places like the US and Europe, Pillar II has an idea called a global minimum tax. It is full of certain international tax complexities, which this paper covers.


    Biden supports these effects and the OECD is not that US tax revenues could rise substantially. Now you will see a lot of whining about this from the multinationals. After all companies like Google, Facebook, and Apple think making them pay taxes is evil socialism.

  8. pgl

    The National Review is the go to place for right wingers who wish to write racist BS. Here Mike Pence kisses up to sheer Zionism:


    You see Biden’s weakness is the cause of the bloodshed between Israeli Jews and Palestinians. After all under Donald Trump the rights of Palestinians to basically live had to be crushed in the name of the Israel’s government desire to push all Arabs out of Palestine. MAGA has always been a racist organization with Pence being Trump’s loyal tool.

    1. Barkley Rosser


      In my post on this on Econospeak I note something that has basically disappeared from view, although some did note it at the time. This is that almost certainly Netanyahu deliberately ordered the act that set off the Palestinian reaction consciously expecting such a reaction for the purpose of blocking the effort by his rival for being prime minister, Yair Lapid, forming a government and thus removing him from power finally. It looks like this has succeeded.

      The crucial action, now completely unmentoned, was ordering police and security forces to attack Palestinians inside the al-Aqsa mosqure, injuring 330, one of the last days of Ramadan, thus triggering total outrage by the Palestinians, as well as Muslims around the world, given that the mosque is the third holiest site in the Muslim world after the Kaaba in Mecca and the Mosque of the Prophet in Medina.

      Why this blocked Lapid’s effort, which the Israeli president, Reuven, had just invited him to attempt after Netanyahu’s failed effort to form one is because the key to forming a government had fallen into the hands of the Israeli Arab parties in the Knesset, with whom Netanyahu attempted a failed negotiation, and whom Lapid was surely going to approach to provide at least silent support for a government led by him. But now this is out of the question given the explosion of protests by Arab Israelis in reaction to Netanyahu’s outrageous action.

  9. Macroduck

    There is more wrong with the argument made by Rich State,Poor State than the fact that it doesn’t live up to its own claims about growth. If it were true that low tax state were growing faster, we would also want to look at levels. All else equal, states with lower productivity and lower wagez should narrow the gap over time. All else equal including equal tax rates. Low income states should close the gap without low tax rates. The fact that they are not demonstrably closing the gap even with lower tax rates is evidence that tax rates don’t have much effect.

    In fact, by the logic that taxes explain everything, if low income states are catching up, then it must be that their tax policies are wrong. And they have lower, more regressive taxes. And they aren’t catching up. So their tax rates are too low. QED

  10. ltr


    May 17, 2021

    Population Growth and the Which Way Is Up Problem in Economics

    Paul Krugman’s column * today commented on the recent data showing continuing low fertility rates, which is likely to mean a stagnant or declining working age population in future years. Krugman points out that this is no big deal, Japan and Europe have been living with declining working age populations and have managed just fine.

    But, he does point out that a declining working age population is likely to lead to lower rates of investment, and therefore create a risk of “secular stagnation,” a sustained period of inadequate demand in the economy. To counter this problem, Krugman recommends large-scale public investment programs along the lines proposed by President Biden, but considerably larger.

    All this seems very much on the mark, but it is worth contrasting this with the concerns raised by the deficit hawks for the last four decades. Their concern was always that when the baby boomers retired, they would still be consuming things, but there would not be enough workers to produce the goods. This was a story of too much demand and too little supply. That is a story of inflation.

    In other words, the concern that the deficit hawks have been raising forever is the complete opposite of the problem that the economy is likely to face as the economy ages. Instead of having too much demand, it looks like we will have too little demand. We will actually need the government to run large deficits to keep the economy close to full employment.

    Not only were the deficit hawks wrong about the magnitude of the problem, they were wrong about the direction. As the old saying goes, “economists are not very good at economics.”

    * https://www.nytimes.com/2021/05/17/opinion/low-population-growth-economy-inflation.html

  11. macroduck

    And another thing…

    Is employment growth really he right metric by which to assess the effect of taxes on overall growth? Shouldn’t we look at output per capita?

    Let’s say I’m Larry Ellison. I want to open a new facility and I want to make as much for myself as possible. If I can arrange to pay lower salaries by locating in a state with no income tax, the Tennessee gets the facility. My employees get a lower pre-tax salary (yay for me!) and the same after tax salary Tennessee doesn’t have an income tax. More jobs for Tennessee, but not necessarily more jobs for h U.S. or the world. And not necessarily more after tax info e for anybody but me.

    Now, if there positive externalities, we might prefer low taxes, even though Ellison gets all the tax-avoidance money. We should see those externalities in something like GDP per capita, yes? Then why is Tennessee in the lower half of the class in GDP per capita? (https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_GDP_per_capita) And don’t even look at the top of the list – bunch of liberal, high-tax hellholes.

    Well economic success isn’t everything. How about educational attainment? No-tax Tennessee is in the lower half there, too. Dang.

    Poverty rate? Dang again. Tennessee has no state income tax and is in the bottom of the class when it come to keeping it’s people out of poverty. https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_poverty_rate

    Kiplinger has kindly published a ranking of states by tax burden: https://www.kiplinger.com/kiplinger-tools/taxes/t055-s001-kiplinger-tax-map/index.php

    The calculation includes sales and property taxes, as well as income taxes. See if you can sort out a pattern of taxes and economic performance. Tough to do, what with California being among the most tax-friendly ad New York among the least. It seems clear that there is migration from some higher to lower tax states, but no evident pattern of higher output per capita or higher welfare in low tax states.

    To me, this looks like the Larry Ellison’s of the world are deciding where their workers will live, based on what’s good for Larry Ellison. This is not what I think of when I hear “voting with their feet”. Ellison chooses and his workers do as they are told, including putting their kids in rotten schools. Thanks, Larry.

    1. baffling

      people like to argue migration to texas is because of low taxes and loose businesses. after moving to texas, my net income was about the same as one of those higher tax northern states. why? property and sales taxes tend to be higher in the no income tax states. and salaries tend to be lower. so the net effect is about the same. however, i can tell you that housing in texas is NOT as cheap as people make it out to be. housing was much cheaper up north. the same can be said for florida. ever see the property tax bill from florida or texas? no wonder they do not need a state income tax.

    2. Dilbert dogcart

      Wonder how low Tenn’s combined tax rate is. Governments fund themselves with a variety of taxes.

  12. Moses Herzog

    Folks, I seem to recall criticizing a Mr Bill Gates on this blog in a similar style fashion that I did Andrew Cuomo. And I seem to recall at least one commenter coming to Mr Gates’ defense in a similar way that at least one commenter came to Andrew Cuomo’s defense. Can I “whiff out” all of these guys?? NO, I don’t claim I can do that. But I am pretty good at it, and some of them you can smell the stench from about 500 miles off:

  13. ltr


    May 18, 2021

    Eurozone recession confirmed at start of 2021

    The eurozone economy declined by 0.6 percent in the first quarter of 2021, data showed on Tuesday to confirm a technical recession, as gross domestic product contracted in all larger countries except France.

    The European Union’s statistics office Eurostat said GDP in the 19 countries sharing the euro fell 0.6 percent quarter-on-quarter in the Jan-March period, for a 1.8 percent year-on-year fall.

    The figures were in line with the initial flash estimate on April 30. Together with the GDP decline in the fourth quarter of 2020, of 0.7 percent in the quarter and 4.9 percent from a year earlier, the eurozone was in its second technical recession since the COVID-19 pandemic began.

    The economies of Germany, Italy, Spain and the Netherlands all contracted. France’s economy grew by 0.4 percent quarter-on-quarter….

    1. ltr


      May 18, 2021

      Beijing ‘very close’ to become 1st Chinese city with herd immunity: experts
      By Lou Kang

      More than 80 percent of Beijing residents over the age of 18 have received their first shot of COVID-19 vaccine, a move amid an accelerated national campaign that has delivered at least 400 million vaccine doses.

      Experts reached by Global Times said that Beijing is very close to becoming the first Chinese city achieving herd immunity, however, self-protection is still needed.

      Local media said on Monday that more than 15 million residents had received COVID-19 vaccines in the Chinese capital in the past five months. About 12.3 million residents out of a total of 21 million residents have finished the two-dose vaccination process.

      Beijing started its vaccination project on January 1. Of Beijing’s 16 districts, 11 have inoculated at least 80 percent of their residents so far. The rates in Daxing and Shunyi districts, which house two international air hubs, have exceeded 90 percent.

      The vaccination rates of employees in various industries such as healthcare, express delivery, tourism, hotels and other services have also exceeded 90 percent in Beijing, media reported.

      About 2 million residents aged over 60 have received at least one dose of vaccine, among whom the oldest was 100 years old, and more than 20,000 foreigners have also been vaccinated, the Beijing Daily reported….

      1. Jacques

        I wonder why this blog allows Chinese government propaganda to be posted. Isn’t there a way to block links to the Chinese Communist Party, which is widely known to be actively engaged in misinformation campaigns and the manipulation of news? And, it gets really tiring them being so pervasive.

        1. Moses Herzog

          @ Jacques
          It’s about going the nth degree to make sure everyone gets their voices heard. The 1st amendment is about protecting the voices which are offensive and the voices which you do not personally like. If everyone liked it what everyone said, there’d be no no point in the amendment law. If Menzie blocked a person/commenter/troll/agitator would he be breaking the 1st amendment?? NO, obviously not. But I think Menzie tries to run the comment section “in the spirit of the law” or “in that vein”. What I find “ironic” (or maybe fitting actually) is that the same Americans (largely white Americans) who harshly criticize China for not allowing the free expression of their own people, turn right around in the next breath, and go after a Chinese–American who makes the extra effort to allow ALL views on the blog, even those highly critical of himself. The man is to be commended for it. As I have stated about a zillion times, my two favorite blogs of all time are Baseline Scenario (Sirs Kwak and Johnson) and this blog (Sirs Chinn and Hamilton) because they would allow diverse views and even attack upon themselves. It shows a degree of thick skin (and self-asssurance, not arrogance) to allow comments highly critical of your own views. The reality is that tolerance to opposing views, which, again, should be commended, “invites” more criticism and unfortunately more abuse of that freedom.

          I have been on at least 3 blogs, where I was shutdown for constructive criticism (or not even necessarily criticism, just disagreement), because the hosts could not swallow the points I was trying to make. “Kid Dynamite” is one, there was another that was run by a lawyer (I think he worked for treasury, or some large banks, or both) that was well thought of in some circles, I forgot the blog name, but it had some respect, and another one still well known that I won’t name.

          I have been one of the benefactors of the two hosts tolerance, so take it for what you will. For all the negatives, it STILL makes for a better blog.

          1. pgl

            You know Greg Mankiw used to allow comments. But when a few of us decided to note that tax progressivity should be judged on all taxes including state and local and not just the Federal income tax, he shut down all comments. I guess we were jerks to suggest Greg’s spin needed to be revisited.

          2. Moses Herzog

            *excuse me, I should have typed beneficiaries, not benefactor, for some reason my brain always wants to conflate these two words.

          3. Moses Herzog

            Was this around the same time as the walkout of Mankiw’s class???

            Unlike Professor Mankiw, we will let him have his say:

            Some other related thoughts on this topic, circa 2006:

            Personally, I wish Harvard Economics students would allow the free market to perform its job, don’t give Harvard any tuition dollars that relate to Mankiw’s class by refusing to even register for Mankiw’s class. Skipping of classes university administrators chuckle at. Not one single student registering for an offered class?? I promise you THAT gets attention. And it gets attention pronto.

          4. Barkley Rosser


            Was the one you won’t name Brad Delong’s? He has been notorious for deleting comments he disagrees with.

          5. Moses Herzog

            @ Barkley Rosser
            NO it was not Delong’s. I rarely visit his site. I’ve always found his format/presentation very sloppy. I’m not referring to his writing, just the blog design. I’m relatively neutral on Delong as a person/blogger. I just find the format of his blog headache inducing. If I had one bone to pick with the guy is he plays too much apologetics on Lawrence Summers. Other than that I just have no idea on the guy, mainly just apathy. If someone especially recommends a post, then I might hop over there, that’s about it. I quoted him once recently about the Rogoff Reinhart mess mainly out of convenience because he happened to agree with me on the fact they were soft-pedaling austerity. As far as I know I can comment on his blog, though it’s been ages since I tried.

  14. ltr


    Dean Baker @DeanBaker13

    Bankers hit new low — if that is possible — complain about the government paying off the loans of Black farmers because new loans would carry lower interest rates


    Banks Fight $4 Billion Debt Relief Plan for Black Farmers
    Lenders are pressuring the Agriculture Department to give them more money, saying quick repayments will cut into profits.

    9:12 AM · May 19, 2021

    1. ltr

      May 19, 2021

      Banks Fight $4 Billion Debt Relief Plan for Black Farmers
      Lenders are pressuring the Agriculture Department to give them more money, saying quick repayments will cut into profits.
      By Alan Rappeport

      WASHINGTON — The Biden administration’s efforts to provide $4 billion in debt relief to minority farmers is encountering stiff resistance from banks, which are complaining that the government initiative to pay off the loans of borrowers who have faced decades of financial discrimination will cut into their profits and hurt investors.

      The debt relief was approved as part of the $1.9 trillion stimulus package that Congress passed in March and was intended to make amends for the discrimination that Black and other nonwhite farmers have faced from lenders and the United States Department of Agriculture over the years. But no money has yet gone out the door.

      Instead, the program has become mired in controversy and lawsuits. In April, white farmers who claim that they are victims of reverse discrimination sued the U.S.D.A. over the initiative.

      Now, three of the biggest banking groups — the American Bankers Association, the Independent Community Bankers of America and National Rural Lenders Association — are waging their own fight and complaining about the cost of being repaid early.

      Their argument stems from the way banks make money from loans and how they decide where to extend credit. When a bank lends money to a borrower, like a farmer, it considers several factors, including how much interest it will earn over the lifetime of the loan and whether the bank can sell the loan to other investors.

      By allowing borrowers to repay their debts early, the lenders are being denied income they have long expected, they argue. The banks want the federal government to pay money beyond the outstanding loan amount so that banks and investors will not miss out on interest income that they were expecting or money that they would have made reselling the loans to other investors….

    2. ltr

      Black farmers, farmers of color, were methodically discriminated against by Department of Agriculture policy and enforcement for generations, and to me the resistance against undoing the effects of discrimination is shocking and saddening.

    1. Moses Herzog

      Oh my darling, oh my darling
      Oh my darling, Brownnbaaaaack
      You are lost and gone forever
      Dreadful sorrow, Brownbaaaack

      Wait, that doesn’t even make sense…….

  15. Moses Herzog

    Drove by two gas stations yesterday (no lines, nearly all pumps vacant of cars) $2.61 per gallon. S*ck it Northeast America.

    1. baffling

      the texas governor just wants to continue to make covid a political issue. to take this control out of the hands of local government is the antithesis of those arguing against big government. apparently it is ok to let local school boards teach creationism, but it is not ok to let locally elected officials make their own health rules for the local community. talk about a double standard. texas has placed a huge burden onto the hands of the local business owners, with the resulting conflict it knows will occur.

    1. Menzie Chinn Post author

      pgl: My mistake, it’s Jonathan Williams (I wrote John originally). Different person (officially Walter J. Williams writes Shadowstats).

      1. Moses Herzog

        Do I dare ask the question how Williams gets away with charging that subscription price!?!?!?! Is Shadow Stats any better than ALEC??? (Yes, I am that naive, this is an earnest question)

  16. Moses Herzog

    Completely off topic:
    I heard this story around lunchtime today. I thought it was superb. The entire thing is 11 minutes long. When you have a slow moment in the day, or maybe the nearest weekend, I highly encourage you to have a listen:

    Or better yet, next time you’re in Chicago, have a visit to the museum and let them know you haven’t forgotten these wonderful and very American artists.

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