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Archive for the ‘state politics’ Category

Early Friday morning, the House passed an important amendment to the  appropriations bill for Commerce, Science, Justice and Related Agencies. As Billy House reports (National Journal):

Using states’ rights as a bipartisan rallying cry, the House voted 219 to 189 early Friday to prohibit the Justice Department from using federal funds to conduct raids or otherwise interfere with medical marijuana activities that are legal in the states.

The amendment, which was sponsored by Rep. Dana Rohrabacher (R-CA), passed with the support of 49 Republicans and 170 Democrats.

“Despite overwhelming shift in public opinion, the federal government continues its hard line of oppression against medical marijuana,” Rohrabacher said. But he said the Drug Enforcement Administration would be blocked from using any money in this appropriations bill to conduct raids on state-legal medical marijuana operations or dispensaries, or otherwise interfere with state medical marijuana laws or doctors or patients abiding by them.

One might have hoped that more Republicans would have dusted off their support for the 10th amendment to cast a yea vote. But GOP support was far weaker when similar amendments were offered in the past (there have been six failed attempts since 2003). As the Marijuana Policy Project’s Dan Riffle (Reason) notes: “This measure passed because it received more support from Republicans than ever before…It is refreshing to see conservatives in Congress sticking to their conservative principles when it comes to marijuana policy. Republicans increasingly recognize that marijuana prohibition is a failed Big Government program that infringes on states’ rights.”

These days you take victories—even small ones—wherever you can find them. On to the dark hole of the Senate!

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A few days ago, I gave the theoretical logic for why the availability of the government shutdown results in growing government spending. Advocates of smaller government should advocate a default budget rule that is far milder than shutdown. Now, I have come across academic research by David Primo finding just this at the state level. States with an automatic shutdown provision actually spend on average $64 more per capita than states without such a provision.

As Tea Party Republicans approach the final denouement of their humiliating, destructive defeat on the latest budget battle, it bears thinking about how U.S. fiscal institutions essentially predestined this outcome.

HT: Matt Mitchell

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I have just posted a couple of my working papers to SSRN for those who are interested. They are as follows:

  1. Public Policy and Quality of Life: An Empirical Analysis of Interstate Migration, 2000-2012
    Abstract:
    Individuals and households choose their political jurisdiction of residence on the basis of expected income differentials and jurisdiction-specific characteristics covered by the general term “amenities.” In addition to fixed characteristics like climate and terrain, amenities may include public policies, as in the well-known Tiebout model of migration. Do Americans reveal preferences for certain public policies by tending to migrate toward jurisdictions that offer them? This article tests whether state government involvement in fiscal policy, business regulation, and civil and personal liberties more often reflects an amenity or a disamenity for Americans willing to move. As identification strategies, the article estimates spatial, matched-neighbors, and dyadic models of net interstate migration for all 50 states, covering the years 2000-2012. The evidence suggests that cost of living, which is in turn strongly correlated with land-use regulation, strongly deters in-migration, while both fiscal and regulatory components of “economic freedom” attract new residents. There is less robust evidence that “personal freedom” attracts residents.
  2. Civil Libertarianism-Communitarianism: A State Policy Ideology Dimension
    Abstract:
    This paper investigates the existence of a second dimension of state policy ideology orthogonal to the traditional left-right dimension: civil libertarianism-communitarianism. It argues that voter attitudes toward nonviolent acts that are sometimes crimes, particularly weapons and drugs offenses, are in part distinct from their liberal or conservative ideologies, and cause systematic variation in states’ policies toward these acts. The hypotheses are tested with a structural equation model of state policies that combines “confirmatory factor analysis” with linear regression. The existence of a second dimension of state policy essentially uncorrelated with left-right ideology and loading onto gun control, marijuana, and other criminal justice policies is confirmed. Moreover, this dimension of policy ideology relates in the expected fashion to urbanization and the strength of ideological libertarianism in the state electorate. The results suggest that the libertarian-communitarian divide represents an enduring dimension of policy-making in the United States.

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Is federalism for progressives? Libertarians, who are generally enthusiastic about the competitive federalism model, have tried to argue that the model provides, at the very least, a kind of modus vivendi for all ideological camps, allowing citizens in each state to have roughly the kind of government that they want. Relative to a single national standard on every policy issue, everyone is better off, right? Some progressives have agreed, to a point.

The problem is that status quo U.S. federalism is a long way from the competitive federalism model that scholars like Michael Greve favor. (I have contended that competitive federalism is still alive in the U.S. to a much greater extent than just about any other country excluding Switzerland and Canada.) The federal government establishes a firm national baseline on both economic and social policies. First, the U.S. Congress has authorized federal matching grants that incentivize state and local governments to spend their own taxpayers’ money on federal priorities. Even conservative politicians often have political trouble turning down “free” (better: “highly discounted”) federal money. Second, the U.S. Congress has authorized extensive federal regulations intruding into areas previously considered state prerogatives: securities and exchange regulation in the 1930’s (a provincial-only responsibility in Canada), occupational safety and health regulation in the 1970’s, mortgage originator licensing in the 2000’s, and health insurance regulation in the 2010’s, to name just a few examples. Third, the federal judiciary has established a firm baseline on civil rights, civil liberties, and “social” policies, repeatedly striking down laws regulating or criminalizing abortion, sodomy, contraception, and free speech, and, more recently, laws prohibiting gun possession and carrying, enacting public election financing, and authorizing certain regulatory takings. While some of these examples suggest that progressives might have reasons to favor a looser “baseline” from the federal judiciary, the overall historical trend has been for the judiciary to constrain conservative policies. (Note that libertarians typically favor judicial engagement on all or almost all of these questions, distinguishing their kind of limited-government federalism from the old “states’ rights” variety.)

Is there evidence that U.S. federalism as it already exists is tilted toward progressive priorities? I believe I have found such evidence in the distribution of state policy priorities.

Using the Ruger-Sorens database of state policies, which covers the years 2000-2010 (year-end), (more…)

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At Econlog, the very sharp Garett Jones makes an argument for paying politicians more:

There’s some evidence that when it comes to politician quality, you get what you pay for; Besley finds that higher pay for U.S. governors predicts governors with more experience in politics, and Ferraz and Finan look at Brazilian data and find a slower revolving door and better educated politicians in regions where politicians get better pay. But alas the egalitarian ethos in democracies makes it difficult to raise the pay of politicians.

But there’s a countervailing effect of high salaries for politicians: they increase careerism. With high salaries for politicians, you’re more likely to get candidates who give the voters what they want so that they can get (re-)elected. And one of the themes of Jones’s post is that the voters are ignorant and excessively egalitarian: we shouldn’t always give them what they want. We need politicians who are intelligent, informed, and public-spirited. High salaries get us more of the first two and less of the last.

What else does the evidence suggest? In the American states, governments that pay legislators more and generally have more professionalized legislatures have higher government spending. Neil Malhotra has found good evidence that the causal arrow goes from spending to professionalism rather than the other way around. However, his study, for all its sophistication, has some evidentiary holes, and I believe the last word has not been spoken. From my own observations of the highly deprofessionalized, low-paying ($100 a year) New Hampshire legislature, I would say that it attracts candidates who are ideologically motivated but not careerist. They deviate significantly from the views of the median voter, for good or ill.

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In his 1982 book, The Rise and Decline of Nations, economist Mancur Olson argued that over time, stable societies accumulate “distributive coalitions,” narrow special-interest organizations that complexify social life and burden the economy with overregulation and opaque forms of wealth redistribution. The notion that distributive coalitions are more often bad than good for economic performance, at least when they are not sufficiently “encompassing” to internalize the costs of inefficient redistribution, is pretty well accepted, but Olson’s thesis that political stability and the passage of time are the most important determinants of the number and power of distributive coalitions has been more controversial. One of the chapters of his book is an empirical test of the hypothesis on the 50 states. Olson finds that states settled earlier have higher rates of unionization and lower growth rates (in the 1960s and 1970s), except the former Confederate states, which “benefit” from the disruptive legacies of the Civil War and Reconstruction.

I am skeptical of Olson’s explanation for the growth of distributive coalitions, but his research does contain a kernel of truth. States that industrialized (note) early often show up on the bottom of economic freedom indices and usually have lower-than-average growth rates even today. Why is that?

To answer the question, we have look back at the social context of 19th century industrialization. The U.S. started out as an overwhelmingly rural, farming country. Industrialization populated the cities. Industrialization advanced first in those parts of the country that were unfit for export agriculture, benefited from high tariff walls on manufactures, and had a policy of free labor: southern New England, New York, and New Jersey. However, resource discoveries in the West also brought urban growth to California.

In 1900, the most urbanized states, by far, were Rhode Island (88.3%) and Massachusetts (86.0%). Then came New York (72.9%), New Jersey (70.6%), and Connecticut (59.9%). Pennsylvania (54.7%), Illinois (54.3%), and California (52.3%) were not far behind Connecticut. All of these states, with the possible exception of Pennsylvania, are now recognized as “deep-blue,” solidly Democratic states. Most of these states were relatively free for industry in the early 20th century, but they also boasted the strongest labor unions and most severe class conflict. These highly urban states became “proletarianized,” leading today to a strong concentration of Democratic votes in their metropolitan centers, according to Jonathan Rodden and other scholars.

As late as 1957, New Jersey was an example of a low-tax business haven. State and local taxes from all sources as a percentage of personal income stood at just 6.3% in New Jersey that year. Delaware had the lowest tax collections in the country, at 4.6% of income. States at the high end included Vermont (9.1%), which pioneered the state income tax, North (9.7%) and South Dakota (9.0%), and Oregon (9.0%). These states remained rural for a long time in part because prairie populism and Yankee progressivism yielded fiscal and regulatory policies that deterred investment. The South’s repression of blacks through Jim Crow kept their institutions “extractive,” to use Acemoglu and Robinson’s term, and their comparative development level low.

Nowadays, urbanization does not tend to produce proletarianization. Not many Americans are employed in manufacturing any more, nor are many private-sector workers covered by collective bargaining agreements. Thus, economic freedom has lost its self-undermining character. In the 1800s and early 1900s, economic freedom fostered industrialization, which brought on proletarianization, which led to a pro-regulatory public ideology, which then led to reversals in economic freedom. Now, late industrializers are not necessarily becoming less economically free. Indeed, there is a slight, positive correlation between present-day state urbanization rate and the Ruger-Sorens measure of economic freedom, controlling for left-right ideology.

States like California and New York are living off the accumulated capital of past economic freedom. Now that the political tide has turned decisively against economic freedom in those states, they are shedding people and jobs and growing more slowly than the rest of the country. Places like the Dakotas, Carolinas, Oklahoma, and Texas, which have reversed their anti-market policies of the past, represent America’s dynamic economic future.

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Cross-posted to freedominthe50states.org

The recent release of the 2013 edition of Freedom in the 50 States has sparked a great deal of interest and comment among academics, students, the media, and the general public. Since the goal of our study is really to spark a conversation about freedom and state policies, William and I have been happy to see all the feedback. From the hundreds of positive comments we’ve received over the past week, it’s clear the study sparked a conversation in which many are eager to participate. In this blog post I will address some of the feedback and questions about the study we’ve received.

First, it’s important to understand how our study conceptualizes freedom. We ground our conception of freedom on an individual rights framework. In our view, individuals should be allowed to dispose of their lives, liberties, and property as they see fit, so long as they do not infringe on the rights of others. The study is an index of how state and local public policies conform to this framework.

As is the case with any index, the “freedom index” has some limitations—-it cannot capture all aspects of freedom, such as freedom from depredations originating outside government. Nor is freedom all there is to quality of life. We thus encourage readers to use our scores in conjunction with other indicators when assessing government effectiveness, “quality of life,” or other, similar concepts. Visitors to our Web site can also personalize the rankings by choosing which aspects of freedom they value and see how the states compare against one another.

To ensure the transparency of the freedom index, which has been a critical goal for us from the start of this project, we try to answer as many readers’ questions as possible on our website. The most common questions that we have received have centered on why certain policies were included or not included in the index. Here, we address the policies readers have asked about the most. (more…)

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The new, book-length edition of Freedom in the 50 States: Index of Personal and Economic Freedom will be released on March 28 by the Mercatus Center at George Mason University. In the days leading up to release, I will be “teasing” a few of the novel findings and methods from the study. Here at Pileus, I’ve already posted a couple of teasers over the past few months, linked here:

This post will explain the logic and method behind the weighting scheme in the new edition. Every index of freedom has to use some way of weighting its variables to come up with an aggregate measure of freedom. The Heritage Foundation’s “Index of Economic Freedom” and Fraser Institute’s “Economic Freedom of the World” and “Economic Freedom of North America” essentially weight each variable equally, either within categories that are themselves weighted equally in the overall index (Fraser) or across the index as a whole (Heritage). The most commonly used international indices of democracy, Polity IV and Freedom House, and the first two editions of Freedom in the 50 States use “arbitrary” weights, that is, the researchers weight the categories according to their own judgment using general criteria.

We were unsatisfied with all of these approaches, as well as with inductive statistical alternatives known as “principal component analysis” and “factor analysis.” Here is how we put the case in the book:

Because we want to score states on composite indices of freedom, we need some way of “weighting” and aggregating individual policies. One popular method for aggregating policies is “factor” or “principal component” analysis, which weights variables according to how much they contribute to the common variance—that is, how well they correlate with other variables.

Factor analysis is equivalent to letting politicians weight the variables, because correlations among variables across states will reflect the ways that lawmakers systematically prioritize certain policies. Of course, partisan politics is not always consistent with freedom (e.g., states strong on gun rights tend to be weak on gay rights). The index resulting from factor analysis would be an index of “policy ideology,” not freedom.

Another approach, employed in the Fraser Institute’s “Economic Freedom of North America,” is to weight each category equally, and then to weight variables within each category equally. Of course, this approach assumes that the variance observed within each category and each variable is equally important. In the large dataset used for the freedom index, such an assumption would be wildly implausible. We feel confident that, for instance, tax burden should be weighted more heavily than court decisions mandating that private malls or universities allow political speech.

Previous versions of this index used a subjective weighting system, based on a rough assessment of the importance of each policy in terms of the number of people affected and the value they were likely to place on their infringed freedom. We were dissatisfied with the imprecise and subjective manner in which we constructed those weights, and for this edition we have tried to use a much more objective and independent measure of the “value” of each freedom.

The new, “objective” method of weighting variables is what we call the “freedom value” approach. Here is how we describe it: (more…)

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In Canada, provincial parties are totally organizationally independent of federal parties and may not even have the same names. Thus, the British Columbia Liberal Party has generally been right-of-center, and British Columbia Liberals tend to vote Conservative at the federal level. Quebec Liberals have generally been more Quebec-nationalist/decentralist than the federal Liberals. Most provinces have parties named “Progressive Conservative,” even though there is no longer any federal Progressive Conservative Party. And so on.

Of course, it doesn’t work that way in the U.S. State (and even local) elections feature Republican and Democratic candidates, except in Nebraska, where state legislative elections are nonpartisan. As a result, state election results are driven by national trends. Surprisingly, political scientists had not formalized this insight until recently. Here is a paper from Steven Rogers:

State legislative elections are not referendums on state legislators’ own performance but are instead dominated by national politics. Presidential evaluations and the national economy matter much more for state legislators’ elections than state-level economic conditions,  state policy outcomes, or voters’ assessments of the legislature. Previous analyses of  state legislative elections fail to consider which party controls the state legislature and whether voters know this information. When accounting for these factors, I discover that even when the legislature performs well, misinformed voters mistakenly reward the minority party. Thus, while state legislatures wield considerable policy-making power, elections are ineffective in holding state legislative parties accountable for their own performance and lawmaking.

Tyler Cowen calls this “the problem with federalism.” But it isn’t a problem with federalism as such. It’s a problem with U.S. federalism. In Canada, you can’t send a message to the federal government by voting against the incumbent federal party at the provincial level. (In fact, provincial elections are not held on the same days as federal elections.) Changing the perverse accountability dynamic of U.S. state legislatures may require something as simple as changing the names of state parties.

State parties may even have an incentive to do this. For instance, the Republican Party in New Hampshire could change its name to something like “New Hampshire Conservative Party” or “New Hampshire Party.” By doing so, it could help to insulate itself from the partisan swings at the national level that are beyond its control.

In the last election, New Hampshire Republicans lost majorities in the state house and the executive council. The reason for this was the (more…)

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Pileus‘s own Jason Sorens is, among many other things, the founder of the Free State Project. The FSP is an initiative that aims to put the convictions of people who talk about individual liberty to the test. Its proposal is based on the straightforward premise that a relatively small number of committed and organized activists can effect disproportionately large political change in their communities. More specifically, the FSP suggests that if 20,000 “liberty-loving people” were all to move to a state of relatively small population, their concentrated efforts could enlarge the scope of liberty in that state, perhaps even making it a genuine home of liberty.

After a somewhat contentious vote several years ago, the FSP decided that New Hampshire—of “Live Free or Die” fame—would be their liberty mecca. (Wyoming came in second.) If you sign on to the FSP’s initiative, here is what you agree to: If and when the total signatories on the FSP’s pledge reaches 20,000,

I hereby state my solemn intent to move to the state of New Hampshire. Once there, I will exert the fullest practical effort toward the creation of a society in which the maximum role of civil government is the protection of life, liberty, and property.

Some people are excited enough about the prospects—and, no doubt, depressed and frustrated enough about the decline of liberty elsewhere—that they are not waiting for the full 20,000 signatories: As of today, 1,117 FSP pledges have already moved to New Hampshire.

Why New Hampshire? Lots of reasons. The FSP actually gives you a list of “101 Reasons You Should Move to New Hampshire (If You Love Liberty).” Here is another reason: In the most recent edition of the “Freedom in the 50 States” report, co-authored by Sorens himself along with William Ruger, and published in 2011, New Hampshire comes out on top: The Granite State ranks #2 in “economic freedom,” #11 in “personal freedom,” and yet #1 in the combined “overall” ranking.

I find the prospects of making New Hampshire the Hong Kong of America intriguing, even inspiring. When the United States is spending itself into debt oblivion—something like the Nicolas Cage character in Leaving Las Vegas, we seem to be thinking that it’s all over anyway so we might as well drink ourselves all the way to death—and when government regulation is pouring out of Washington like the Mississippi over the levees in New Orleans after Katrina, the idea of an island of freedom amid a sea of bleak oppression has its attractions.

Even supposing 20,000 liberty-loving people would move to New Hampshire, however, I have reasons to worry about the likelihood of success of the FSP. Let me list a few here. I preface them by saying that I hope I am wrong about how worrisome they are. I too want a world for my children and grandchildren in which they are not slaves to government debt and regulation.

1. I have heard whispers that in the next edition of Sorens’s and Ruger’s “Freedom in the 50 States,” which I understand is due out in the Spring of 2013, New Hampshire no longer retains its #1 overall ranking—and that it might indeed slip several spots. (Perhaps neither Sorens nor Ruger cares to confirm or disconfirm this now, but I would be happy to have them do so if they wish.)

2. In the recently released Economic Freedom of North America 2012, which includes most of the provinces of Canada along with the States of America, New Hampshire lands in a disappointing sixteenth place, behind Alaska and above North Carolina. The EFNA report scores New Hampshire particularly low (a) on Social Security payments as a percentage of GDP (NH gets a 5.1 out of a possible 10 on this, 10 being highest), (b) on total tax revenue as a percentage of GDP (5.6 out of 10), and (c) on indirect tax revenue as a percentage of GDP (a dismal 3.0 out of 10).

3. CNBC recently published its list of “America’s Top States for Business 2012,” and New Hampshire’s spot is again disappointing: nineteenth—embarrassingly, behind Oregon and ahead of Arkansas.

4. Only today I saw this report from Wired that public buses in many metropolitan systems in America are starting to install listening devices with their surveillance systems, so that they can secretly record private conversations. Which metropolitan systems? You will not be surprised that it includes San Francisco and Baltimore; more surprising, perhaps, are smaller cities like Traverse City, Michigan and Athens, Georgia; but this I found both shocking and disappointing: “Concord, New Hampshire also used part of a $1.2 million economic stimulus grant to install its new video/audio surveillance system on buses.” That is wrong for so many reasons.

I also have more general reasons to doubt the possibility of the FSP’s success that are less directly dependent on having chosen New Hampshire as opposed to any state. Perhaps I will outline them in the future.

In addition to my caution that I hope I am wrong about the chances of FSP’s success in New Hampshire, I would also hasten to add that none of these worries entails that one should not still make the attempt. Even if one is certain of failure, some causes are worth fighting for regardless. If one is not willing to fight for liberty and prosperity, even against depressingly long odds, then what on earth would one fight for? One does what one can. One fights for liberty and against oppression, whatever the odds, leaving the rest in God’s hands.

Can New Hampshire be the place?

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Once upon a time, local governments accounted for the lion’s share of economic policy-making in the United States. Before World War I, not only was the federal government’s economic policy-making activity strictly limited to areas such as international trade, management of federal lands, trust-busting, and food and drug regulation, but state governments themselves were also internally decentralized. In 1913, local government own-source revenues (revenues raised autonomously by local governments, thus excluding grants) as a percentage of total state and local revenues (including federal grants to state and local governments) stood at a whopping 82%, according to my calculations based on historical Census Bureau data. If we assume that revenues track economic policy activity closely, this figure implies that four-fifths of all state and local economic policy activity occurred at the local level.

Today, of course, local governments are quite limited in their economic policy autonomy, with the most important remaining policy role left largely to local governments being K-12 education. Local revenue decentralization (the variable described in the last paragraph) was just 38% in 2008. This chart shows the evolution of local revenue decentralization over time for the U.S. as a whole:

So who killed local autonomy in the U.S.? The answer is: (more…)

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I want to piggy-back here on Mark’s great post on urban planning and the poor. I’ve been playing around with some state-level data on local land-use regulations and cost of living. The last decade in the U.S. has been one of very slow productivity growth. As a result, fast-growing states tend to be those with low growth in cost of living. This explains not just states like Texas but North Dakota as well (and at the other end, California). Take a look at the list of states with highest annualized real personal income growth over 2000 to 2007 (the deflator, a state cost of living index, comes from the newest, 2009 Berry et al. data, which explains why the series ends at 2007):

1. Louisiana – 2.8%
2. Wyoming – 2.8%
3. North Dakota – 2.6%
4. South Dakota – 2.1%
5. Oklahoma – 1.9%
6. Arkansas – 1.8%
7. Mississippi – 1.5%
8. Nebraska – 1.5%
9. Montana – 1.5%
10. Kansas – 1.4%

Surprised? These are hardly “knowledge economies.” In some cases, mining or energy accounts for strong growth, and indeed in multiple regression mining share of GDP in 2000 does strongly explain subsequent real personal income growth (per capita or total). And in Louisiana’s case Hurricane Katrina chased away a lot of low-income people. But part of the story is elastic housing supply leading to low growth in house prices during the 2000-2007 bubble. A better measure of state economic success is arguably total rather than per capita income growth, which rewards states that attract people. Here are those numbers:

1. Wyoming – 3.6%
2. Nevada – 3.1%
3. Florida – 3.0%
4. South Dakota – 2.8%
5. Arizona – 2.8%
6. Arkansas – 2.6%
7. Texas – 2.6%
8. North Dakota – 2.6%
9. Oklahoma – 2.5%
10. Louisiana – 2.5%

Again, these states have in common slow growth in housing prices during the bubble. And what explains slow growth in housing prices? Land-use regulation. I use the Gyourko et al. land-use regulation variable to predict both cost of living in 2000 and growth in cost of living over 2000-2007. It is an extremely strong predictor of both (statistical significance>99.99%). When net 2000-2007 in-migration (% of 2000 population) is regressed on both 2000 cost of living and the land-use regulation index along with controls (economic and personal freedom, 2000 accommodations GDP per capita), both are highly statistically significant and negative. When total personal income growth is regressed on migration, controls, and the land-use regulation index, land-use regulation is insignificant while migration is highly significant and positive. No surprise there – land-use regulation doesn’t reduce total factor productivity, but it does discourage labor inflows.

So here’s the big story of growth in those states that have experienced it in the last decade: lack of land-use regulation –> slow growth in cost of living –> more in-migration –> more income growth. Highly regulated states like California (-0.4% annual growth), Oregon (0.1%), Massachusetts (0.1%), and New Jersey (0.3%) could learn something. If we are entering a “great stagnation,” we may have to squeeze increases in living standards out of lower prices rather than innovation for a while.

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Florida recently passed a law requiring welfare recipients to be tested for drugs and throwing them off welfare if they test positive. Governor Rick Scott justified it as saving taxpayers’ money and discouraging drug use. It turns out to be costing taxpayers more money than it saves them, because hardly anyone tests positive. This isn’t conclusive proof, by the way, that the law isn’t discouraging drug use – after all, prospective welfare recipients could have modified their behavior after the law was passed – but it’s strongly suggestive that it is not, for low-resource citizens tend to have higher levels of political ignorance, and it would not be surprising if many of them did not know of the new law before applying.

Even if the law were working as intended, I think it would still be unjust. As Mike Riggs points out in the first link above, the law does not test corporate welfare recipients for drugs, only poor people. The fact that this is a government benefit does not mean that the government is justified in attaching any conditions it wants to it. Would it be justified in requiring every public school student (and parent??) to be tested for drugs? Would it be justified in requiring strip searches of welfare recipients? Drug testing is invasive and should always bear a significant burden of proof when conducted by government. In my view, while private employers have every right to test their employees for drugs, the bureaucratic, “zero tolerance” culture of drug testing has gone too far and should not be further encouraged.

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Few in power find it convenient to notice inconsistencies in their own conduct. Alas, but President Madison was no exception. Federalism and decentralization exist precisely because free constitutions should not depend on the good graces of those in office, but on the checks necessary to harry them back under the law.

Seeking the financial means to carry on his war, Madison did not appreciate New England’s opposition to his measures or her refusal to lend. As the enemy bore down from the north at various points along the Canadian border, Madison attempted to impose conditions on the New England militias, not trusting them, as he did the other states, to staff and command their own forces.

In these efforts, the fourth president was roundly rebuffed by the governors and legislatures of Massachusetts, Rhode Island and Connecticut. They correctly pointed out that the Constitution reserved to each state the right of officering her state militias: The president could certainly call those units into service according to the constitutional powers that authorized Congress to declare war, but he could not reorganize those units without a state’s permission. Unable to get his way, Madison refused to mobilize New England’s forces and subsequently refused to pay any expenses for her defense.

Governor Caleb Strong of Massachusetts organized and raised his own force of some 10,000 men at a cost of 1 million dollars, which was a considerable sum in that day. Facing such staggering costs and outraged by what they considered to be the unconstitutional and dangerous manner in which their region had been treated, the New England states elected to protest in the same spirit as they had done against the embargo, but this time they went a step further: Coordinated state action.

Under the inspiration of Harrison Gray Otis and Theodore Dwight (the brother of Timothy Dwight of Yale), Connecticut, Rhode Island, Massachusetts, and several counties of New Hampshire and Vermont sent representatives to meet in Hartford Connecticut between December 15, 1814 and January 4, 1815. There they formed a list of grievances and a call for constitutional amendments, concluding with a threat to organize another convention should these proposals not be taken up by the other states in the Union.

The men who attended this gathering tried to moderate the more extreme elements calling for secession and outright resistance to the national government (see Justin Winsor, Narrative and Critical History of America, vol. VII, Houghton Mifflin, 1888, p. 321 and notes) but the prospect of a convention sent shivers through the administration. It is not difficult to see why.

In “A Short Account of the Hartford Convention to which is Added an Attested Copy of the Secret Journal of that Body” (1823), Theodore Lyman, noted that Massachusetts was quite open about her aims, and “the sense of her citizens was at that time well known, and in relation to the Hartford Convention, she adopted without delay that course of conduct, of which an eminent example had been given less than half a century before, and which, in this juncture of affairs, was especially judicious, from the vast magnitude of the subject and occasion.” (p.8) That example was Madison’s own call at the end of the Annapolis Convention for the convention that followed in Philadelphia, which of course ultimately put an end to the Articles of Confederation.

When the Hartford Convention got down to business on its second day, it considered, according to the Attested Copy of the Secret Journal, the two constitutional grounds of New England’s grievances just mentioned: “The [unconstitutional] powers claimed by the executive of the United States, to determine, conclusively, in respect to calling out the militia of the States into the service of the United States; and the dividing the United States into military districts with an officer of the army in each thereof, with discretionary authority from the executive of the United States, to call for the militia to be under the command of such officer.”

The second grievance followed immediately after: “The refusal of the executive of the United States to supply, or pay the militia of certain States…on the grounds of their not having been called out under the authority of the United States, or not having been…put under the command of the commander over the military district.” These two grievances then formed the basis of the final and more damning constitutional conclusion that the national government had failed to meet its obligation as stated in the preamble “to provide for the common defense.”

In their protest the members stood on solid textual grounds. It was true that Section Eight of the First Article gave Congress the power “To provide for organizing, arming, and disciplining, the Militia, and for governing such part of them as may be employed in the Service of the United States,” but it specifically reserved “to the states respectively the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress.”

Did this “prescribed” discipline give Madison the right to reorganize the New England militias? It might have, but only if Congress had specifically formed such a policy, and had done so equally for all parts of the Union. The fact that President Madison asserted this as a matter of executive authority, and the fact that he applied that policy unequally to some of the states and not to all of them, violated both the spirit and the letter of the fundamental law. With these arguments before them, the delegates proposed their Constitutional remedies.

They called for consideration on the part of the states for amendments that would permit the state legislatures “some arrangement whereby the States may be enable[d] to retain a portion of the taxes levied by Congress, for purposes of self defence (sic), and for reimbursement of expenses already incurred, on account of the United States.” They then proceeded to request further consideration be given to certain other constitutional issues: To restrict Congress’ power to declare war; to restrain its power “to make new States, and admit them into this Union; to limit Congress’ power to impose embargoes and restrict commerce; to prohibit a president from the same state serving two consecutive terms; and finally, and perhaps most ominously of all, to eliminate the 3/5ths provisions of the Constitution “respecting slave representation, and slave taxation.”

This last provision underscored a growing cultural and political divide already evident between the northern and southern states. New Englanders had always felt aggrieved to some degree by the so-called 3/5ths compromises in the Philadelphia Convention. Already by this time, they saw it as a principal driver of western expansion, and the Southern states made little bones about their desire to move the peculiar institution westward, and to form an alliance with that region in opposition to New England.

Thus the Hartford delegates sought restrictions on admitting new states as well as the elimination of the South’s use of slaves in calculating her population numbers. It is interesting to note that at this point in time, the South’s rising star, J. C. Calhoun of South Carolina, was a strong nationalist defender of the War of 1812 and a proponent of a new national bank so that the general government could more easily finance such military ventures in the future. The irony of ironies is that this situation was about to change yet again.

As reported by Theodore Dwight, the Secretary of the Hartford Convention, in his later history of that meeting, the timing of the delegates’ report to Washington could not have been worse. It arrived just as news from England of the War’s end came along with the report of Andrew Jackson’s victory in New Orleans. While the war had not gone so well for America in general, the popular sense created by this juncture produced a patriotic fervor that was ill disposed to consider of the resolves of the Hartford delegates.

The commission attempted to quietly retire back to New England, but the popular reaction, especially among Madison’s Republican Party was to revile its proceedings as radical secessionism, and the reputation of that convention has labored under such a misapprehension ever since.

Far from secessionism, however, the Hartford Convention presented yet another means of interposition through coordinated state action, and to the degree that such coordination gathered more sustained attention (even if in the negative) from the other states, to that degree it succeeded. With the war’s end, Hartford’s issues became moot, but one could easily imagine what might have developed had the exigencies of war persisted.

The next stage of development in the ideas of interposition, however, would raise the stake higher, actually attempting what Jefferson had contemplated in the Kentucky Resolves: Nullification. Interestingly, the author of this approach was our leading nationalist of the 1810s. Calhoun had been a student of Theodore Dwight’s brother about a decade earlier at Yale. Timothy Dwight shared his brothers’ attachment to the reserved rights and powers of the states. Calhoun had resisted such thinking as his student, but when the issue of tariffs touched his own state’s interests in the next decade, he began to avail himself of Dwight’s understanding, coming to a deeper appreciation of the need to constitutionally restrain centralized power, but he did so with an interesting and novel twist that would have a profound impact on the popular perception of state’s rights.

And Calhoun’s solution would prove perhaps the most difficult and cumbersome of all…

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Political Math’s piece on Texas’ amazing job growth has been getting a lot of attention around the ‘Net. As regular Pileus readers know and as Political Math’s piece confirms, job growth is largely a consequence of population growth, and population growth is largely a consequence of warm climate, low cost of living, low taxes, and high personal freedoms. Since Texas enjoys all four of those characteristics in spades (personal freedoms maybe a little less so), it is unsurprising that Texas has grown so much. To what extent can Rick Perry claim credit for that job growth? I think he can claim a bit of credit to the extent that he can point to a record in which he has supported policies that have kept cost of living and taxes low and personal freedoms fairly high.

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Noel Johnson, Matt Mitchell, and Steve Yamarik have a new working paper answering that question in the affirmative. They look at state fiscal and regulatory policies and find that Democrats generally like to increase taxes and spending when in control of state houses and Republicans do the reverse. But when states have tough balanced-budget requirements called “no-carry rules,” Democrats and Republicans don’t differ much on fiscal policy. Instead they try to appeal to their constituencies by pursuing regulatory policies – in general, Democrats increasing regulation and Republicans cutting it. As the paper’s still in the working draft stage, they are looking for comments on it.

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Is liberty an “amenity” that people find attractive? We know that people do not necessarily tend to vote for liberty, in part because they are politically ignorant or even irrational, but when it comes to where they choose to live, people can be expected to pay close attention to how the laws in different places affect their quality of life. Economists model migration rates across jurisdictions as a function of economic opportunities (real income differentials) and “amenities” (example). Thus, it is standard practice in the literature to use inter-state migration rates in the U.S. (adjusted for the component predicted by economic growth) as a proxy for the desirability of different states as places to live. The question I address here is whether liberty is an amenity; in other words, do states with more freedoms attract more people?*

My study with William Ruger, Freedom in the 50 States, addressed this issue briefly. We find that both economic and personal freedom are associated with net inter-state migration over the 2000-2009 period. In other words, freer states attract people from less free states. The relationship holds when we control for climate, measured as average January temperature in a state’s largest city. We also find that real personal income growth (total, not per capita) over 2000-2007 is positively associated with economic but not personal freedom. Thus, it remains an open question whether economic freedom attracts people because people find it desirable for its own sake, or whether it attracts people by promoting economic growth. However, it does appear that people are attracted to personal freedom for its own sake.

This blog post offers a first look at a much more sophisticated analysis of the issue, bringing in more control variables and more advanced, appropriate estimation methods. (more…)

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Why do “red” states that tend to vote Republican in presidential elections take more federal money than do Democratic-leaning, “blue” states? This surprising correlation between ideology and federal dependence has been often noted (see for instance here, here, and here). Indeed, this fact seems to be trotted out whenever we hear “what’s the matter with Kansas/Connecticut” arguments from the left/right, respectively. Are conservative states hypocritical and liberal states self-abnegating, or is there some deeper explanation?

First, let’s take a look at that correlation. In the chart below, I’ve plotted each state with federal grants to state and local governments in that state, as a percentage of personal income, for fiscal year 2007-8, on the Y axis, and percentage of the vote for Obama, McKinney, and Nader in the 2008 election on the X axis. The line through the points represents the least-squares line of best fit. As you can see, there does indeed appear to be a negative relationship between liberal ideology and acceptance of federal grants.

Is the correlation statistically significant? To see this, I (more…)

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When tensions with England finally began to degenerate into violent altercations, first on the western frontier in such places as Tippecanoe and later along the Great Lakes, the Madison administration decided the time had come to vindicate America’s claims of offended sovereignty. Unsurprisingly, these claims also happened to coincide with popular desires to expand into the Old Northwest and Canada. Those particular voices were especially powerful in the mid Atlantic and southern states. Two of the leading voices of those regions, Henry Clay and J.C. Calhoun were united at this point in their careers, generally supporting more vigorous forms of nationalism at home and abroad.

But Mr. Madison had let the charter of the first Bank of the United States expire in 1811, and when he turned to finance his war he had of necessity to turn to state banking institutions. These entities were comprised of various private and state banks who were generally quite willing to buy American treasury securities. There was one region, however, that was not quite so willing: the New England states and the banks that operated under their approval.

Already rocked by years of embargo, New Englanders were poised to suffer even more outrages in open war. Popular sentiment ran high against the conflict, and when the treasury presented its notes for sale to New England banks they received a cool reception. The vast majority of such paper was consequently sold to the south and west. Indeed, needing to purchase supplies in the north, the national government found this a particularly galling impediment. To remedy the situation, Madison’s administration not only borrowed from existing banks in the mid-Atlantic states, it actively promoted new ones, even over the existing laws of those states that had tended to restrict private unchartered banks.

From 1811 to 1815 the number of banks more than doubled, from 117 to 247, 35 of which were unincorporated. The result was a massive increase in circulating paper money–nearly three times the amount in circulation at the start of the war. Treasury certificates were used as, and encouraged to be considered backing for notes in the same fashion as gold or silver. But one difficulty was not anticipated. When the District of Columbia was burned by British marines on August 24, 1814, it quickly became apparent that certificates on the U.S. government might not be such a sound investment.

Runs the banks that very month demonstrated the insolvency of most of the new institutions, and in opposition to various state laws, the national government encouraged the mid-Atlantic and southern states to ignore or restrict bankruptcy proceedings against their offending banks, but allowed those very institutions to pursue such proceedings against their own debtors. All this was done, no less, while they continued to make new loans, adding yet even more to the already general inflation.

Only one region did not experience suspension of payments or bank runs: New England. For once in over six years, the New England states could boast a small economic indicator in their favor. In Federalist 10, Madison had argued that federalism might serve to insulate local evils from becoming universal, national ones. In this case, the evils of expansionism had been halted at the gates of Massachusetts, and New England’s representatives left little doubt about their sentiments in this regard.

In words that would later come back to him, a young Daniel Webster, then a representative of New Hampshire, declared in Congress on December 9, 1814, that the “operation of measures unconstitutional and illegal ought to be prevented by a resort to other measures which are both constitutional and legal. It will be the solemn duty of the State Governments to protect their own authority over their own militia, and to interpose between their citizens and arbitrary power. These are among the objects for which the State Governments exist, and their highest obligations bind them to the preservation of their own rights and the liberties of their people.”

Would it be too much to suspect that Webster both knew and approved of the New York statement of ratification? But even if he hadn’t, and that seems dubious, the words demonstrate just how deeply the sense of the states as checks to central power was engrained in the American mind. At this point in time, Webster was no Jeffersonian. He was a New England Federalist, and the home states were listening. On to Hartford.

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I’ve just gotten back from a Cato Institute event discussing the new study, Freedom in the 50 States, with my coauthor William Ruger, John Samples, and Michael Barone. I’ll post the video when it’s available. The Mercatus site for the study allows you to download the study and to use a calculator to see how states would change on the index if they made certain policy reforms. They’ve also put together this nice little video for the project:

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With the war in Europe between France and England intensifying, Americans found their rights as neutral traders regularly violated by both French and British navies, and French and British port restrictions further limited American opportunities for commerce. To make matters worse, on numerous occasions, English vessels had boarded American ships and “impressed” many of their crews into service as if they were British subjects. Such disregard for American sovereignty and rights was taken hard by the public, but America’s naval capacities were far from adequate to enforce a due respect on the high seas. Yet doing nothing was not a popular option.

President Jefferson attempted to draw a lesson from our colonial past and impose an embargo of American trade. The hope was that such an embargo would inconvenience European commerce to such a degree as to bring the powers, especially Britain, to that level of respect which American arms were insufficient to obtain. In 1807, the Embargo Act was imposed, interdicting all vessels from entering or exiting American ports. Trade was the life blood of New England, however, and the Embargo hit them especially hard. As weeks moved to months and months to a year, the suffering in the port cities became nearly unbearable. Numerous calls for lifting the interdiction were heard, but none of the offending powers seemed even remotely ready to bargain. Unwilling to surrender the point of honor or to risk outright war, Jefferson’s administration remained steadfast in its policy.

At a certain point, the states began to question not only the efficacy of the measure, but its justice. Should not the risks of trade be borne by the traders themselves? Why a general restriction? If families and communities are ruined, is this not an indication of a policy gone too far? Indeed, so far that it might conflict with a vital principle of constitutional government? The national authority was to engage in defensive action in support of the states and their communities, not in their strangulation. If it could not live up to its military obligations, this was no excuse for an imposition of a total ban on trade, a power not contemplated in the original design.

In the earliest resolutions of Massachusetts, Connecticut, and Rhode Island the hue and cry was again heard. Massachusetts’ legislature, as Thomas Woods noted in his collection of sources, sought only formal political means, and counseled patience on the part of its citizenry as it pursued these avenues of redress. Rhode Island observed that it was “the duty of this general Assembly, while cautious not to infringe upon the constitution and delegated powers and rights of the General Government, to be vigilant in guarding from usurpation and violation, those powers and rights which the good people of this state have expressly reserved to themselves…” Here were the states as Sentinels calling out their warning.

But Connecticut, first through its governor and then its legislature went further still, openly and officially “declining to designate persons to carry into effect, by the aid of military power, the act of the United States, enforcing the Embargo.” And “that the persons holding executive offices under this state, are restrained by the duties which they owe this State, from affording any official aid or cooperation in the execution of the act aforesaid.”

This action went the further step of embracing the idea of non-cooperation, and its precedent went back to colonial legislatures that had refused to cooperate with the enforcement of the Imperial Stamp Act. No force would be applied directly to interdicting federal officials, but no cooperation would be accorded them either. They could do their work on their own, but in the absence of active assistance or support from state institutions, they would find that task far more difficult. No power of the federal government could compel action on the part of the states in this regard.

And here New England’s civil society operated in yet a further way to exert force against the centralized exercise of power, again, much like what had happened in earlier colonial protests. While not directly engaged in administering smuggling, the governments of New England gave tacit affirmation of private actions through their resolutions. New England’s merchants were long practiced in the arts of running goods around imperial restrictions. Now they would do the same with respect to national ones. And the general government found its resources stretched to the breaking point.

Remarkably, Jefferson himself later reflected on this opposition of local authorities. He recalled this episode as a powerful illustration of why local governance is so critically important to the maintenance of a free society! No longer president, he could reflect with some approval on the nature of the opposition he had then faced. (more…)

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The recent recession cut deeply into state treasuries, forcing legislatures to raise taxes or cut spending or both to eliminate budget deficits. It is interesting to note which states opted for big tax hikes over big spending cuts. USNews Money blogger Rick Newman has compiled a list of the 10 states with the largest enacted and “proposed” tax increases per capita over the 2009-2011 years, based on figures from the Association of State Budget Officers.

Almost all the states on the list either had unified Democratic control for most of the period of analysis (New York, Delaware, Connecticut, Wisconsin, Washington, Oregon, Massachusetts, New Hampshire) or are ideologically liberal (Connecticut, California). Arizona is one of two exceptions; they had a particularly large real estate bust. Kansas I can’t explain – but they only show up because of “proposed” increases. I will go out on a limb and predict that most of those increases will never be enacted.

By the way, the two-thirds requirement for raising taxes in California, which effectively gives veto power to moderate Republicans, does not seem to have had the ill consequences attributed to it – California is #2 on the list.

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Vermont has passed a law authorizing a single-payer, government-run health insurance system. Apparently the plan fails to grasp the fiscal nettle and thus may never come to fruition. Nevertheless, I hope they go forward with it. I don’t think it will work – to the contrary, the experiment should serve as an object lesson to the rest of the country. But we are only going to get a ceasefire on health insurance at the federal level if PPACA can be repealed and the left comes to realize that they can try out their cockamamie schemes at the state level, so why not let those crazy libertarians do the same?

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Not long after the ratification of the Constitution, Madison came to have serious doubts about his former Federalist friends. Particularly, he came to suspect the sincerity of many who had asserted that the new government would possess only those powers specifically delegated to it.

The first disappointment came with Hamilton’s championing of the incorporation of the Bank of the United States in 1791. It sparked the formation of the first party system: Federalists who supported the bank versus Republicans (not the modern party by that name) who opposed it. Madison felt especially sensitive to this issue. He remembered that the power of incorporation had come up at the Philadelphia convention. Indeed, he remembered it so well because he had been the one to move for its approval. He also recalled that it had been roundly voted down.

To Madison’s thinking, the power to incorporate was a very particular and peculiar power. At the time he had proposed its inclusion in the Constitution, he was certain it could serve important national purposes, but having been voted down, he was just as certain that no such power had been given to the general government.

Hamilton took a different view. The bank, he argued, would be of such significant utility to the collection of taxes, the paying of obligations, the administration of finance, both public and private, and of the regulation of commerce and the value of coinage, that it achieved the level of an implied power. Its necessity was established by its usefulness, and as such, it was constitutional.

To Madison that way of thinking amounted to no limits at all. By such an assumption, anything deemed useful could be done by the federal government regardless of whether or not it had been specifically written down. Where then was the promise of reserved and delegated powers?

Madison summarized his concern poignantly on the floor of the House: “With all this evidence of the sense in which the con (more…)

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New York was Hamilton’s great project. So closely divided was the state, that at various moments, he despaired of its coming into the union.

At one point the Antifederalists offered a compromise. They would support a conditional ratification dependent on the passage of certain key amendments, including the all important construction of delegated and reserved powers, or what eventually would become the Tenth Amendment. Hamilton wrote Madison for his opinion of the proposed compromise, and the response was unyielding: New York could “not be received on that plan.” It must be, Madison elaborated, “an adoption in toto, and forever.” Hamilton read the letter aloud to the Convention and it is reputed to have steeled the nerves of the Federalists for resistance. Rather than read, “on condition,” New York’s statement of ratification was amended to say, “in confidence.” The statement ran thus:

“Under these impressions, and declaring that the rights aforesaid cannot be abridged or violated, and that the explanations aforesaid are consistent with the said Constitution, and in confidence that the amendments which shall have been proposed to the said Constitution will receive an early and mature consideration, — We, the said delegates, in the name and in the behalf of the people of the state of New York, do, by these presents, assent to and ratify the said Constitution.” (Emphasis added)

In his America’s Constitution, A Biography (2005) p. 38, Ahkil Reed Amar concludes that this wording cinched the case against conditional ratification based upon powers reserved to the people of the states. Amar’s particular aim was to put any idea of legal secession to rest, but he also went on to implicate other forms of interposition as well.

Not so fast.

Amar stopped his reading at a point altogether too convenient for his thesis. Here is what the rest of the paragraph said:

“In full confidence, nevertheless, that, until a convention shall be called and convened for proposing amendments to the said Constitution, the militia of this state will not be continued in service out of this state for a longer term than six weeks, without the consent of the legislature thereof; that the Congress will not make or alter any regulation in this state, respecting the times, places, and manner, of holding elections for senators or representatives, unless the legislature of this state shall neglect or refuse to make laws or regulations for the purpose, or from any circumstance be incapable of making the same; and that, in those cases, such power will only be exercised until the legislature of this state shall make provision in the premises; that no excise will be imposed on any article of the growth, production, or manufacture of the United States, or any of them, within this state, ardent spirits excepted; and the Congress will not lay direct taxes within this state, but when the moneys arising from the impost and excise shall be insufficient for the public exigencies, nor then, until Congress shall first have made a requisition upon this state to assess, levy, and pay, the amount of such requisition, made agreeably to the census fixed in the said Constitution, in such way and manner as the legislature of this state shall judge best; but that in such case, if the state shall neglect or refuse to pay its proportion, pursuant to such requisition, then the Congress may assess and levy this state’s proportion, together with interest, at the rate of six per centum per annum, from the time at which the same was required to be paid.”

Here the representatives of the people of the state of New York fairly put the new government on notice in no uncertain terms that they reserved certain powers to their own legislature. (more…)

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Among the defenders of the Constitution, a great deal was said about the states as a check to the power of the national government that informed the first ideas about interposition. 

Madison’s contention in Federalist 39 is well-known. Our union was to be “partly federal and partly national.” Among the premier federal attributes were such provisions as the equal representation of the states in the Senate by senators appointed through state legislatures, portions of the Electoral College, portions of the amendment process, and the very means of ratification through conventions of the sovereign peoples of the various states.

This last attribute is often not given the attention that is due to it, but James Madison made this point repeatedly in other venues as well. He noted it in various letters and in the state ratification convention in Virginia. It is a major part of the argument against the notion put forward by his critics that the Constitution would establish a consolidating government.

Here is what Madison’s Publius said: “[T]his assent and ratification is to be given by the people, not as individuals composing one entire nation, but as composing the distinct and independent states to which they respectively belong. It is to be the assent and ratification of the several states, derived from the supreme authority in each state…the authority of the people themselves. The act, therefore, establishing the constitution, will not be a national, but a federal act.”

This point was repeated again in Virginia’s ratifying convention. The reason was to assure the Constitution’s critics that the sovereign power of the people of the states was not being usurped. If a simple national majority, he reasoned, were all that was required to form the union, then the majority of all the people of America could bind Virginia or Rhode Island even if they had voted in the negative. This was not the case he assured his opponents.

But beyond ratification, did this conception of sovereign power have any other constitutional implications for the states? What exactly is the relationship between the people of the states and the national government? What if there is a dispute between them? This is where Publius becomes more ambiguous, and it is from here that much of the controversy concerning Madison himself originates.

In the same essay, Madison went on to argue that national supremacy meant that a national tribunal must determine the legitimacy of national laws, at least “so long as they are objects of lawful government.” Setting aside for a moment what is meant by “lawful,” he asserted, “It is true, that in controversies relating to the boundary between the two jurisdictions [state and national], the tribunal which is ultimately to decide is to be established under the general government.” This is necessary, he believed in order “to prevent an appeal to the sword, and a dissolution of the compact.” Really?

Where then resides the hoped for check to centralization? Here it rests on the impartiality of the judges of the court, for whom “all the usual and most effectual precautions are taken to secure this impartiality.” The difficulty is that the very contest presumes an illegality. A state would not contest a national act unless it thought the act to be unlawful; that is to say, not permitted by the Constitution. Is it then reasonable to conclude that they will rely upon the judgment of a national court? (more…)

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A rumble can be heard emanating from assemblies and governor’s mansions across these fruited plains. It is a sound reminiscent of by-gone days that echo down through centuries of constitutional thought. Prompted by everything from unfunded Congressional mandates to the new omnibus healthcare bill, (See here and here) these reverberations strike cords of distant legal memory that are, for most of us, only imperfectly recalled.

For many, talk of state’s rights, interposition, and even nullification brings forth unsavory recollections of illiberal and tyrannical state and local institutions of chattel slavery, Jim Crow and the color bar. That association is understandable given the prevailing interpretation presented in classrooms, but very unfortunate if we stop there.

One of the most essential roles of states in any federal system is to act as counterweights to centralization. For this reason all power is not assigned to the national authority. In the original constitutional design of the American federation, what was not given was reserved to the states or to the people thereof, and it is from this perspective that the check to central power, the bite of Federalism, was to be derived in its most essential forms.

The idea of states as checks to national concentration pushes the bounds of constitutionalism, but it was understood that however approached, and by whatever means undertaken, this role was not to be pursued for light or transient reasons.

The idea of interposition took many forms. It could embrace official expressions of disapproval by the legislature or governor of a state. It might entail simple, non-cooperation with federal authorities, such as a refusal to enforce a federal law, or acknowledge a mandate. Or, it might take the form of an unofficial understanding on the part of local groups and institutions, usually operating under the tacit approval of the state, not to comply with federal measures.  In its most extreme form, interposition could assert the right to interdict the enforcement of an offending provision through an act of outright nullification. How far a state might go in pursuit of this last line of interposing itself is a question of some delicacy.

Preventing by official policy or action the enforcement of a federal measure stresses the limits of constitutionality. If either of the contending powers moves from peaceful toleration or acquiescence to violence, the episode takes us from the realm of the legal to the revolutionary. For this reason, nullification has always been the most dangerous and the most controversial form of interposition.

The basis for the authority of all these options, however, remains rooted in the constitutional ideal itself. It was not the product of a mean or unnecessary political expediency. On the contrary, the idea of interposition was an attempt to sort out a vital constitutional principle and was first articulated, not to defend slavery, but to support free speech, free trade, peace and the liberty of fugitive slaves.

Federalism in all its various forms can be an instrument for good as well as ill. Like any political order, its quality is determined by the people who compose it. To really understand why the states are again making noises of interposition, we need to understand something of the history of our federal structure of government. The reason new life is breathed into old thoughts has everything to do with what rests at the center of our political existence.

Why do we have states? Lincoln made the claim that the Union preceded the states. What he could not say, however, was that the federal government as constituted in 1787 preceded them, because clearly it had not. The main thrust of Lincoln’s reasoning was that the Revolution and the move for independence began as a united effort. The implications of that claim are still debated and one need only recall the exchanges between Mel Bradford and Harry Jaffa on this point. What is certain, however, is that the federal government did not create the states. What then is the role of states in our federal order?

The authors and advocates of the Constitution, whatever they may have thought privately, were not free to assert any desired construction, but had to contend for the support of the peoples of their various former colonies. They needed to address directly the concerns of liberty that had animated the move to independence, and more specifically they had to allay the fears raised by their critics, the Antifederalists. In this way, whatever hidden motives might have existed, it is the stated intentions of the Federalist advocates that must bear legal weight.

Among the primary objects of the Revolution was to secure the liberty of the colonies to determine the disposition of their own properties, free from arbitrary imperial commands. American anxieties of the late eighteenth century grew in direct proportion to the growth of imperial designs by King and Parliament.

The Antifederalists are often called the old revolutionaries as much for their actual age as for their adherence to older ideas about colonial liberties. The list of such advocates is long and venerable: Brutus, Federal Farmer, Cato and Centinel. My favorite, however, is one not so generally recognized, but to my mind, gave the reasons for decentralization and the existence of states most succinctly and eloquently: Maryland Farmer. He took a long range perspective based on some very ancient precedents.

Edward Gibbon’s first volume of The Decline and Fall of the Roman Empire came out in 1776, and like other important works of its time, Americans were eager to read it. By the time of the Constitution, Maryland Farmer had imbibed its central lessons and recognized how closely its themes complimented American experience. He disputed the charge often heard that the states, if not united under one supreme head, would soon be at each others throats. No, he said, citing Gibbon, real terror is to be found where there is no hope of escape, no exit.

Anticipating the role of competing jurisdictions, Maryland Farmer cautioned against rejecting the Articles of Confederation, observing that “In small independent States contiguous to each other, the people run away and leave despotism to wreak its vengeance on itself; and thus it is that moderation becomes with them the law of self preservation.”

The referenced passages of Gibbon illustrated that understanding nicely. Noting the ease with which a person onerous to power could escape in the Europe of his day to the safety of a rival state, Gibbon pointed to the very different reality of the ancient empire: Rome, he observed, came to fill the world, “and when that empire fell into the hands of a single person, the world became a safe and dreary prison for his enemies.”

Maryland Farmer took that point to heart and asked Americans, who had just fought a war to resist the imperial designs of England, was it all simply to consolidate power in your own hands? He hoped not.

So strong were these sentiments in favor of decentralization, Federalists had no choice but to address them. Some of the most eloquent passages of the Federalist Papers were set out with the explicit aim of refuting the consolidationist claims of the nature of the Constitution. Indeed, more than one of those pieces by Publius was penned by that arch purveyor of centralized authority himself, Alexander Hamilton. In the next part we will examine how Publius attempted to negotiate the question of a federal check to national power, and look at the roots of interposition as they were presented by the supporters of the Constitution.

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The first of a series will begin tomorrow, the Ides of March (the 15th), an appropriate time to initiate an investigation of interposition and federalism in America. On that date in 44 B.C., Julius Caesar was slain for his offences against the Roman Republic. It was a futile act of desperation. The empire was not defeated, but the event remained a symbol for millennia of resistance to tyranny and concentrated power. This series will attempt to investigate the spirit of that resistance as it relates to our federal system of states as counter or makeweights to centralization through the instrument of interposition: what is its history and constitutional forms, and whither should it go now?

 In a recent spate of books, attention has been given to the place of the states in our federal union. More particularly, the subject of nullification has been the focus of Thomas Woods’ latest works, one of which is specifically by that name. In that book, Woods delves into certain key aspects of America’s constitutional history, but quickly focuses on what is a fairly specific subset of a much larger category of constitutional ideas embraced by the term, interposition.

Interposition is where a state or other organs of local governance and/or civil society attempt to intercede between the people and an act of the federal government that is deemed unjust or unconstitutional. This can take many forms, moving from the merely declaratory and/or uncooperative to the more extreme modes of obstruction or even interdiction. Nullification occupies the last of these categories. It is the outer edge of the continuum. It attempts to provide legal grounding for a state to directly obstruct enforcement of an offending federal measure, and is of all the instruments available to a state or people, the most dangerous and problematic. (more…)

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Many of you recognize the term “bootlegger-Baptist coalition,” first introduced by Bruce Yandle in Regulation (1983). The bootleggers essentially secure transfers under the moral legitimacy provided by the Baptists (the metaphor refers to the common interest of Baptists and bootleggers in securing regulation of alcohol sales). For those of you who have not encountered this term before, there is a fine piece by Randy Simmons, Ryan York, and Dianna Thomas in the Winter 2011 edition of the Independent Review entitled “Bootleggers, Baptists, and Political Entrepreneurs.”

As used by Yandle and others, the term refers to the rather counter-intuitive coalitions that often emerge around regulatory policies. Yet, one wonders whether there has been something of a bootlegger-Baptist coalition in the Badger state. I know a number of public school teachers and I am persuaded that they (and many of their representatives) are convinced that the National Education Association and its state affiliates are interested in educational quality. For them, it may be “about the children.” They may be the Baptists, to use Yandle’s metaphor. Who then are the bootleggers? There are many candidates, of course, but one may be the union’s health insurance company.

According to an article in today’s Milwaukee Journal-Sentinel, two-thirds of the state’s teachers are insured by the WEA Trust, the health insurance corporation created by the Wisconsin Education Association Council (WEAC), the state affiliate of the NEA. Because WEA Trust secures its business via collective bargaining agreements, it has not been subject to the same competitive environment as other insurers.

Brown Deer school district (1800 students) decided to break with WEA Trust at the beginning of the fiscal year. As a result “the district saved $170,000 in just one year – the equivalent of at least two teachers.” Of course, the decision to change insurance carriers (but not reducing the level of benefits) generated an interesting result:

Earlier this year, the Brown Deer district’s teachers union filed a complaint with the Wisconsin Employment Relations Commission over the district’s decision to switch from WEA Trust. Koczela [director of finance for the Brown Deer School District] suspects the move was aimed at protecting the insurance company rather than the employees’ benefits, which she said remained the same with the lower-cost carrier.

Now that the districts have been freed from collective bargaining over benefits, they are free to drop WEA Trust. Governor Scott Walker claimed that simply providing teachers with the same health care program enjoyed by state employees would save taxpayers $68 million a year (a claim that WEA Trust rejects) and others would place at the low end of the range. Whether they avail themselves of these savings—and whether the savings are as advertised—remains to be seen.

How much is collective bargaining worth to WEA Trust? An analysis released last year by the Education Action Group and the John K. MacIver Institute for Public Policy, reported that school districts that cover 100 percent of the premiums paid WEA Trust $1,724 per month (family coverage); those who went with non-WEA coverage paid $1,466 per month. This was based on data on 364 school districts provided by the Wisconsin Association of School Boards. As a result of these premiums and the barriers to entry created via collective bargaining agreements, WEA Trust has amassed over $316 million in net assets (2009). Although WEAC and the WEA Trust share a common address, they are separate entities. It would be illegal for WEA Trust to simply transfer resources to the union (although the above mentioned report suggests that it may contract for services with the union).

For those interested in more on this topic, here is a link to a brief analysis conducted by the Wisconsin Policy Research Institute (the original source of Walker’s claims).

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At The Monkey Cage, Andrew Gelman takes issue with my post on union density and tax collections by state. I argued that states with higher percentages of workers covered by collective-bargaining contracts have higher tax collections as a percentage of personal income, and that the relationship is probably causal. Gelman argues that it is inappropriate to infer causation from a correlation among observational data. My UB colleague Phil Arena offers a qualified defense of my post.

I more or less agree with the points Phil makes, as well as Gelman’s main point. Yes, correlation does not automatically mean causation, and in my original post I moved very quickly between the two without acknowledging the difference – not the sort of thing I would do in a journal article. Nevertheless, the most natural interpretation of my results is indeed causal. It does not seem plausible that higher taxes cause higher union densities (I can think of no reason why this should be the case). On the other hand, it is quite plausible that higher union densities cause higher taxes: in my state the education unions have been lobbying heavily against spending cuts and a proposed property tax cap. What about endogeneity due to omitted variables? Well, the most plausible one would be ideology: liberal states have higher unionization rates and higher taxes. But I controlled for ideology, and indeed even “overfitted” taxation to ideology with a squared term.

Finally, the dynamic analysis showed a correlation between unionization rates in 2000 and change in tax burdens over the next eight years, although it was not quite statistically significant. But because it’s a short time period, we shouldn’t expect taxes to change all that much. Most of the dependent variable is going to be statistical noise. The effect found is also substantively impressive, even if not statistically significant, and as Ziliak and McCloskey remind us, that’s often what we really want to know.

So yes, Gelman is right that correlation doesn’t automatically imply causation, but I nevertheless contend that the most plausible interpretation of the relationship between union densities and tax levels in the states is that the former are affecting the latter.

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One of the purposes of “right to work” legislation, currently being debated in Indiana, New Hampshire, and other states, is to reduce the percentage of the workforce covered by collective bargaining agreements. Leaving aside the ethics of collective bargaining as practiced in the U.S. today, what are the political and economic consequences? Since unions donate almost exclusively to Democratic candidates and lobby heavily for more government regulation and spending, it would be unsurprising if more unionized states ended up with bigger state governments.

To examine the evidence, I ran statistical models of unionization and taxation over the 2000-2008 period. The dependent variable in the first analysis is state and local tax collections as a percentage of state personal income, excluding mineral severance and gas taxes (since large and resource-abundant states will otherwise look like states with large tax burdens), in Fiscal Year 2007-8, the latest year for which data are available. The main independent variable is (more…)

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I am assuming that most readers of this blog have a commitment to freedom of association and, as a result, are quite willing to accept voluntary self-organization of labor via trade unions in the private sector. Management and labor can negotiate over the terms of the labor contract and, if it appears that higher levels of compensation are compatible with corporate profitability, mutually beneficial exchange may occur. If the two bargaining partners miscalculate, they bear the costs (e.g., through declining market share reducing profitability and the demand for labor). They are free to renegotiate the terms of their agreement in subsequent rounds.

But what of unions in the public sector? There seems to be a clear public choice problem: public unions and elected officials engage in mutually beneficial exchanges—generous compensation packages for political support and campaign finance—while shifting the costs on to the unorganized taxpayers. On the face of things, this seems no different than the dynamics intrinsic to Stigler’s economic theory of regulation.

In the case of Wisconsin, it is clear (at least to me) that the effort to eliminate collective bargaining for public sector unions is as much about politics as it is about long-term budget imbalances. The Wisconsin Education Association Council (WEAC), which represents some 98,000 workers, charges membership dues that run some $1,000 per year. Some of these funds, in turn, are spent to support candidates and incumbents (largely Democratic) who will prove overly sympathetic to union demands for higher rates of compensation.
As an AP story by Ryan Foley explains:

WEAC is typically among the largest-spending special interests in Wisconsin politics, helping former Democratic Gov. Jim Doyle win two terms in office and often trying to sway key legislative races with television ads and mailers. It also contributes to other groups that run political ads in favor of Democrats and against Republicans.

WEAC’s political arm has spent more than $11 million in donations to campaigns and spending to support and oppose other candidates since 1998, nearly all of it helping Democrats, according to McCabe [Mike McCabe, director of the Wisconsin Democracy Campaign]. The group endorsed Milwaukee Mayor Tom Barrett, a Democrat, in his race against Walker for governor last year.

McCabe said WEAC’s campaign spending dwarfs that by other unions — including American Federation of State, County and Municipal Employees, which represents tens of thousands of state and local workers in Wisconsin. But he said they were all a key part of the Democratic party’s coalition in a state that has generally leaned to the left.

By eliminating collective bargaining, forcing annual union certification, and ending the automatic deduction of union dues, Walker would eliminate a potent source of Democratic campaign finance while changing the dynamic that is driving the long-term growth of health care liabilities. Whether Walker’s campaign is driven primarily by budgetary concerns or the desire to solidify Republican control in the state government is anyone’s guess. Both will result if the bill is passed.

There could be institutional changes that would alter the dynamics and allow for the continuation of collective bargaining for public sector unions (e.g., public financing of political campaigns, bans on union contributions to political campaigns). But they seem unlikely. Absent such changes, the public choice problem remains.

It seems difficult to escape the conclusion that public sector unions are different.

Update (h/t Naben)
This morning’s Milwaukee Journal-Sentinel reports:

The 14 Wisconsin Democratic senators who fled to Illinois share more than just political sympathy with the public employees and unions targeted by Gov. Scott Walker’s budget-repair bill.

The Senate Democrats count on those in the public sector as a key funding source for their campaigns.

In fact, nearly one out of every five dollars raised by those Democratic senators in the past two election cycles came from public employees, such as teachers and firefighters, and their unions, a Journal Sentinel analysis of campaign records shows.

The 14 senators raised $1.9 million since the start of 2007, with $344,000 from public employee unions and government workers. As the story notes, this does not count donations of under $100 and independent spending (e.g., “the Wisconsin Education Association Council, the state teachers union, dropped nearly $1.6 million in independent spending in four Senate races last fall”). No surprises here, of course. Transfer-seeking is ubiquitous and is not reserved for businesses, even if they tend to be the most adept at the game.

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The drama continues in Madison as Governor Walker and the GOP majorities try to find a means of moving forward without conceding to protestors. Absent a quorum, the Senate cannot vote on a budget-repair bill that would significantly limit the collective bargaining for public sector union members and force higher contributions for pensions and health care. The unions claim to be willing to accept the higher contributions; the sticking points are changes in the institutional framework for future collective bargaining, forcing the unions to submit to annual recertification, and threatening the automatic flow of resources from state paychecks to union coffers.

The strategic question for Republicans: how to draw Democratic state senators from palatial Rockford, Illinois, to create a quorum. The cheese in the trap: voter ID. As reported in today’s Milwaukee Journal-Sentinel:

In a move meant to lure boycotting opposition senators back to Wisconsin, the Republican leader of the state Senate threatened Monday to force a vote soon on a bill that is abhorred by Democrats: requiring people to show an ID at the polls.

Although the voter ID bill as currently written would require a quorum of 20 because it would use public funds to provide IDs to poor citizens without state-issued driver’s licenses, Senate Majority Leader Scott Fitzgerald seems willing to strip these provisions to facilitate passage.

The stakes for Democrats are quite high. According to the Journal-Sentinel, some 26 percent of Wisconsin voters are from union households, and in the last gubernatorial election, the Democratic candidate Tom Barrett won 63 percent of this vote. Poor voters—those without driver’s licenses—constitute another relatively secure voting block for Democratic legislators. If the voter ID strategy is implemented, Democrats may have to address a difficult question: which constituency to sacrifice?

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As a Wisconsin native (and former resident of the People’s Republic of Madison) I have watched the events of the past few days with some interest. The Milwaukee Journal-Sentinel has had decent coverage (here). Madison’s progressive daily, the Capital Times, has some interesting coverage as well (here).

The controversy involves the new Republican Governor Walker and GOP majorities in the state legislature attempting to make a first step toward controlling long-term liabilities by forcing public sector employees to assume a greater share of their insurance premiums (12.8%) and pension contributions (5.8%). More important, Governor Walker is seeking to place new restrictions on future collective bargaining (e.g., raises would be limited to inflation unless greater increases were approved via referendum) and unions would be required to hold annual elections to retain their representational role; they would also no longer be able to deduct union dues from paychecks.

While the Republicans hold a majority in the Senate (19-14), a quorum of 20 is required to conduct business. The Democratic minority has thus retreated across state lines to a resort in palatial Rockford, Illinois, beyond the reach of state troopers. The schools have been shut down in Madison, Milwaukee and elsewhere due to “sick outs” and the demonstrations at the Capitol have drawn thousands (including the AFL-CIO’s Richard Trumka, scheduled to speak Friday at noon).

The stakes for public sector unions—now representing a majority of organized labor—could not be greater, so one should anticipate an ongoing flow of resources into the state until the state legislature has completed its business. Given that its Madison, the Socialist Party of Wisconsin has joined the fray, along with the National Education Association and the Tea Party. All in all, it is proving to be quite an event.

Wisconsin has led the way in the past with key welfare state initiatives (e.g., workman’s compensation, unemployment compensation). One may wonder, given the fiscal crises being faced by so many states, whether it will be leading again, this time in clawing back some of the power claimed by public sector unions. Will states facing even greater fiscal challenges follow suit?

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When it comes to supposed threats to Americans’ freedoms originating in academe, conservatives often like to point out the mouldering Marxists in various humanities departments around the country. I am largely unconcerned, except to the extent that these professors impose ideological orthodoxy on their students or erode academic standards. No, a far larger and more imminent threat comes from the inherently politicized discipline of “public health.”

Formerly a discipline devoted to research on sanitation and epidemiology, public health is now more or less an explicitly ideological field devoted to ginning up panic over freely chosen, private behaviors and to cheerleading for paternalist government action to prohibit or discourage them. Take any fun activity enjoyed by those who are not urbanized, (generally) white, middle-aged, highly educated professionals – smoking, shooting, drinking, eating tasty food, calling a friend in the car, generally exercising “personal freedoms” – “public health advocates” are agin’ it. (Of course, you don’t see them agitating against marathon running or rock climbing or bungee-jumping or long-distance hiking or extramarital sex. Fun, risky things that urbanized, highly educated professionals like.)

The question the public-healthies (for short) never think to ask is: Does maximum health make people better off? If people are aware of the risks of an activity, and do it anyway, doesn’t that very fact show that they are better off being permitted to do it? Why is there a need to tax or regulate them into compliance with your preferences? If you think that people are not aware of the risks, why not restrict yourselves to educating them – in a sane, reasoned, non-hysterical way?

The new public-healthery has (more…)

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A bill to adopt approval voting has been filed in the N.H. House, and one of the co-sponsors is a member of the relevant committee. The bill would establish approval voting for all state offices and presidential primaries. Approval voting is an electoral system for single-winner elections that allows voters to cast not more than one vote for as many candidates as they like and selects the top vote-getter. Steven Brams and other political scientists have endorsed the system as an alternative to plurality rule (or “first-past-the-post”) because a) approval voting is more likely than plurality to select a Condorcet winner when there is one, b) approval voting tends to favor candidates with even temperament and broad ideological appeal, and c) approval voting is more likely than plurality to permit victories by independent and third-party candidates. (However, approval voting is much less likely to ensure representation for political minorities than is a multi-winner, proportional electoral system.) I see approval voting as a good option for inevitably single-winner elections like gubernatorial races and possibly also when it is desirable to keep districts very small and “close to home,” as the massive N.H. House of Representatives does. However, the N.H. Senate has highly artificial districts, and statewide party-list proportional representation seems like a more logical system for that body. Nevertheless, all efforts at bringing electoral reform to the fore of debate are to be welcomed.

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