In my last post, I explained how the right to "vote with your feet" in a federalist system provides strong protection for owners of mobile assets. Owners of such assets can leave a jurisdiction which subjects them to confiscation, excessive taxes, or other harsh treatment. By contrast, owners of immobile assets, such as land, benefit less from interjurisdictional competition under federalism because they can't take these assets with them if they choose to move.
This point has an important implication for one of the standard criticisms of decentralized federalism: the belief that voting with your feet benefits the rich more than the poor. In some ways, the reverse might actually be true, because the poor are less likely to own significant fixed assets than the rich do. Wealthy people who own expensive houses or other fixed assets (e.g. - factories, large estates, etc.) can't move as easily as poorer individuals whose only major assets are their bodies and minds. To be sure, the rich will find it easier to pay the costs of a move. However, these costs are unlikely to be large in the modern world, where cheap interstate transportation is readily available (especially for those who don't have a lot of possessions to take with them). Overall, it should usually be easier for the poor to vote with their feet than for the more affluent.
Empirical evidence supports this conjecture. As I note in Part V of this article, people living in households with an annual income under $15,000 per year are twice as likely to make interstate moves as those in higher income classes. Historically, poor and oppressed groups have often used interstate mobility to their advantage, even in periods when the costs of transportation were much higher than today. The mass migration of African-Americans out of the Jim Crow South during the early 20th century (briefly discussed in the same article) is a particularly striking example.
Obviously, attracting poor people is not as valuable to revenue-seeking states as attracting an equal number of affluent ones. However, so long as the poor people in question are economically productive, a state government still has some incentives to compete for them - especially if bringing them in also attracts capital from investments in firms that might hire them. Thus, despite widespread racism, early 20th century northern state and local governments did make at least some effort to be hospitable to southern black migrants out of these kinds of self-interested motives. Moreover, attracting a large number of lower-income workers might benefit a state's bottom line more than attracting a small number of higher-income ones. The former group might actually pay more taxes in the aggregate (especially in a state where much of the revenue comes from sales taxes, which are not progressive).
Advocates of centralization often claim that it benefits the poor. In some ways this is true; for example, it may be easier for the federal government to redistribute income to the poor than for a state to do so. However, it is important to recognize that centralization also undermines the ability of the poor to help themselves by voting with their feet. If the early 20th century United States had had a unitary policy on race, it would likely have been far closer to that of the Southern states at the time than the northern ones. Thus, millions of southern blacks would have lost the opportunity to better their lot. If the European Union had a common labor policy today, it would likely have strictly regulated labor markets similar to those of France and Germany, which would make it impossible for citizens of the EU's poorer nations to improve their situations by moving to areas with better employment opportunities - as millions have done over the last two decades.
As both the United States and the European Union move towards greater and greater concentration of power in the central government, we should be wary of the possible negative effects on our poorest citizens. While centralized control of redistributive welfare programs might help the poor, central direction of many other policy areas is likely to have the opposite effect in so far as it undermines citizens' ability to vote with their feet. Far from helping the disadvantaged, the trend toward centralization might well cause them more harm than good.
Related Posts (on one page):
- Maryland May Use Eminent Domain to Take Over the Preakness:
- Why "Voting With Your Feet" in a Federal System Benefits the Poor More than the Rich:
- Federalism, the Baltimore Colts, and the Limits of Eminent Domain: