|Image from Mish Sedlock's essay|
Mish Sedlock has a very good essay over at Zerohedge about Cook County, Illinois's loss of population.
His underlying thesis is that governmental units will not be able to tax their way out of their budget problems. This is not a Laffer Curve argument. This is a votes-with-their-feet argument.
The Laffer Curve is based on the belief that high marginal tax rates reduce economic activity because it shrinks the marginal gain (profit) from incremental activity. As a kid you might have been willing to do ten pushups for a fudgesicle. How many pushups would you be willing to do if the fudgesicle already had four large bites already taken out of it? Probably not ten.
I think it is a great essay but have a couple of issues with Mish's chart.
|Charted with a Log scale, Cook County, Ill and Wayne County, Mi.|
|New York City 1903|
|New York City, 1913.|
Cook County has a more diverse economy. The county grew but not as explosively (in percentage terms) as Wayne County.
While some might take heart in the fact that Cook County population pretty much plateaued post-1970 (as opposed to dropping), it should be noticed that the only other time Cook County showed a decade-on-decade flatline was the 1930s when the country endured a depression.
Predicting implosions is tricky business. Observers can document the potential energy but they cannot predict the triggering event. Cook County (and Illinois) could be on its knees in 2018 or it could stumble along for another thirty years.