California’s Cover Charge
18th April 2022
California has always been like a trendy nightclub that can get away with a hefty cover charge because everyone wants in. I once asked Arthur Laffer, of the famous curve, how California could keep getting away with such a high cover charge—i.e., high taxes and crushing regulation—when virtually no other state could get away with it. I was expecting a technical economic term—”exploitable asymmetries”—that is, the great climate and abundant natural beauty that many people are willing to pay a premium to enjoy (like me), but no. Instead, he said, “That’s like asking why pretty girls are mean. Answer: Because they can.”
But maybe California can’t any more. Even the pretty mean girls age, and start to show wrinkles, gray hair, and such. The Census data showing more middle class people leaving California than coming in reminds of the old Yogi Berra line about a popular New York restaurant: “Nobody goes there any more; it got too crowded.”