Politics & Policy

The Fat Cats’ Veto

For taxpayers of all sorts, moving trumps voting.

With a rueful eye on the local mayoral election, my colleague Charles C. W. Cooke noted: “I’m moving out of New York City in three weeks. Good timing.” I had had similar thoughts myself, remembering my time commuting in to Buckley Towers in Manhattan from nearby Connecticut. (You know who most misses the much-lamented New York Sun? Train commuters, for whom it was the ideal newspaper.) I suspect that many others had similar thoughts. In fact, I have a half-baked theory that Republican candidate Joe Lhota was derailed by the subconscious trains of thought of all of us potential refugees to the suburbs: “I might be perfectly happy in Connecticut or Westchester County, if only the trains weren’t so awful,” which is exactly what an underdog New York mayoral candidate would want potential voters to be thinking — unless that underdog is, like former mass-transit boss Joe Lhota, associated in the public mind mainly with awful train services. The more we thought about Bill de Blasio, the more we thought about trains, and the more we thought about trains, the more difficult it was to get excited about Joe Lhota. Better he had been head of the sewer department, given the raft of you-know-what that is headed New York’s way under Mayor de Blasio.

Perhaps those of us who were on Wednesday morning wondering if Pennsylvania really is too far a commute are simply the right-wing versions of those crybaby movie stars who promise to move to Zimbabwe if a Republican is elected president. But there is a bit more to it than that.

The other big news on Tuesday, largely overlooked in the Election Day cable-news natterings, was that India launched an unmanned Mars mission, and did so for the shockingly low cost of $73 million, well less than NASA’s $2.5 billion Curiosity mission. That is, as I noted on Tuesday, really something remarkable for a country that within my lifetime saw its public discourse dominated by the issue of famine prevention and as late as the 1940s saw millions die of starvation. Radical economic change is possible; unhappily, it is possible in both directions. India’s economic turnaround was inspired by factors ranging from humanitarian concerns to plain national self-interest, but it was also motivated in part by shame. “There are rich Indians in Germany,” a stridently nationalistic Indian politician once told me, “and in England, and the United States. The only place you find poor Indians is in India.” From the 1970s to the present, Indian leaders have fretted about the “brain drain,” and there was a great sense of pride in the 1990s when that began to turn around — followed by a new round of despair when those homecomers, frustrated, began to re-diaspora-ize themselves. “Disillusionment with India’s political dysfunction and seemingly ineradicable corruption and inefficiency has made many of them want to go back to relatively low-growth but less challenging and more secure economic environments,” Pankaj Mishra noted last month. He might want to start putting together a guest column for the New York Post.

That’s because New York City experienced a similar (if much less dramatic) trend over the past 30 years. In pre-Giuliani New York, the only people much inclined to stay were those so fabulously rich that they were insulated from the effects of the city’s moral collapse and those who were so lamentably poor that they had no hope of escaping. The billionaires and celebrities may have stayed, but the doctors and small-business owners went to Connecticut and New Jersey. There is still a sort of inverse Indian principle in the city: You meet rich New Yorkers from all over the United States and from all over the world; poor New Yorkers come from New York. It took something like an economic miracle to get well-off, highly educated, globetrotting Indians to return to India, and a miracle of a different sort to make New York a widely attractive city once more. From 1950 to 1960, New York saw its first population drop; from 1970 to 1980, it suffered the largest population drop ever experienced by a U.S. city, with nearly 1 million taking flight over the course of the decade. It would be the new millennium before the city recovered from that loss.

Some immigrants cross oceans, some only cross the city limits. The suburbs of Philadelphia and Detroit contain some of the loveliest communities in all of the United States, which probably is less testament to the inherent desirability of those communities and the wisdom of their municipal leaders than to the incompetence, corruption, and rapacity of the political machines that dominate those cities. Philadelphia lost a half-million residents in the second half of the 20th century, but the population of the five-county metropolitan area remained stable — people simply packed up and moved to the suburbs. The problem for such cities is that it matters — and matters a great deal — who leaves and who stays. The people with the most to lose and the most options are, naturally enough, the first to go. People with more wealth, income, and education are the first ones to figure out where the city limits are, especially if they are married couples with children. The people left behind tend to have less, and they are less capable of demanding good governance from city authorities. The existence of places such as Villanova and Bloomfield Hills means that there are thousands of business executives, doctors, professors, business owners, and well-heeled ruckus-raisers who have no personal stake in whether Philadelphia has decent schools or Detroit has safe sidewalks.

One of the few natural advantages of New York City has always been that Manhattan is an island, meaning that a gunshot fired in Harlem might be heard on the Upper West Side, where dwell people who have the clout to get a city councilman on the telephone and be taken seriously when they demand that something be done about it. That advantage persists in a diminished state, but other related advantages do not. The most important of New York’s was that the city long enjoyed a kind of monopoly status as a place that certain kinds of people simply had to be in order to conduct business: If you were in finance, you needed to be near Wall Street. If you were in publishing, media, or fashion, you needed a presence in Manhattan, which gave your employees a strong incentive to want to be there, too. That is no longer as true as it once was, and that is a problem for Bill de Blasio and his central campaign promise, which was, if you have forgotten, a very large transfer of wealth from New York City’s private sector to its public sector. His tax-the-rich program overlooks that an ever-dwindling number of high-income people and firms have a strong financial attachment to New York. You meet a lot more hedge-fund guys in Dallas these days than you used to. The headquarters of a fair number of Manhattan-based financial firms already have over the years followed their employees to Connecticut or beyond.

The super-rich may or may not mind that much — especially given that their income tends to come in the form of capital gains, which receive preferential tax treatment — but your $100,000-a-year midlevel workers already have discovered the roads to Charlotte and Salt Lake City. And as Mike Bloomberg was lambasted for pointing out, you can’t ignore the super-rich, either, given that fewer than 100,000 New Yorkers pay half the city’s taxes, and 500 of them pay 15 percent of the city’s taxes. That is problematic in and of itself, but it’s not like everybody else gets off the hook — de Blasio’s tax hike on those who make $500,000 or more will have real consequences for people in less rarefied income brackets. When your landlord, vendors, or customers get a tax hike, their problems have a way of becoming your problems, which is why a fair number of people who will never have incomes approaching that cutoff point understand that they will nonetheless be affected by it. That and a great deal of skepticism about de Blasio’s commitment to sustaining Mayor Giuliani’s crime policies have a fair number of New Yorkers across the income spectrum rethinking their leases.

People will come, and people will go, and that’s the natural state of things. But the inescapable fact, unfair as it may seem, is that the people with the highest incomes are almost by definition those in highest demand; they are the easiest to lose, and the ones that it hurts a city — or a country — most to lose. While we may not be inclined to weep for the private-jet set, it is worth keeping in mind that a great many of our so-called fat cats got fat starting and running businesses. In 2011, an average of nearly five businesses a week left California, 28 from Orange County alone, seven of which relocated to or expanded in Texas. It is almost always popular to promise to raise taxes on the fat cats, and the crude arithmetic of democratic politics means that it is usually profitable to promise to tax a wealthy minority and give the money to a less-wealthy majority. A majority may very well vote for such redistribution — moving is the fat cats’ veto. And as dysfunctional, Democrat-dominated cities around the country have seen, it becomes the middle class’s veto, too.

— Kevin D. Williamson is National Review’s roving correspondent and the author of The End Is Near and It’s Going to Be Awesome.


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