Thursday, December 6, 2012

"Do You Live In A Death Spiral State?"

Great Forbes article on "death spiral states," where "private sector workers are outnumbered by folks dependent on government".

"Eleven states make our list of danger spots for investors. They can look forward to a rising tax burden, deteriorating state finances and an exodus of employers. The list includes California, New York, Illinois and Ohio, along with some smaller states like New Mexico and Hawaii."
I wrote a post about this a few months ago. There's nothing stopping California and Illinois from entering the same positive feedback loop death spiral that killed Detroit, if they make bad enough decisions. If they do, so much better for the states that are lowering taxes and encouraging productive enterprise. Imagine having other states, besides Alaska, that pay dividends to residents?

Tonight's thought: consider a division of the country into zero income tax states with stingy welfare regimes that productive people flee to, and ultra high income tax states with crippling regulation that productive people flee from, in the context of Bill Bishop's Big Sort.

Which states' muni bonds do you want to own? Which states do you want to own property in? What if a group of these productive states issued a currency?

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