John Hood: Our Sky Was Never Falling

RALEIGH — From July 2020 to July 2021, there was a net inflow of 637,729 Americans into these top-five destination states: Florida, Texas, Arizona, North Carolina, and South Carolina. During the same period, there was a net outflow of 918,443 Americans from these top-five exporter states: California, New York, Illinois, Massachusetts, and Louisiana. 

All five of the top in-migration states have Republican legislatures. Four of the five have Republican governors (North Carolina is the exception). On the other side of the ledger, four of the top out-migration states have Democratic governors, and four of the five have Democratic legislatures. “That’s all you need to know!” Republicans proclaim. “That’s all just a coincidence!” Democrats insist. 

You probably think I’m going to say that the truth is more complicated than either side would admit. And you’re right — but it’s not that much more complicated. 

Partisan control of government is obviously not the sole determinant of where Americans choose to live. In fact, for many individuals and families seeking to relocate, whether a state has a Republican or Democratic legislature isn’t an explicit criterion at all. They’re taking new jobs, moving closer to family or other desirable amenities, or opting for warmer climes as they plan for or begin their retirement. 

Indeed, if you look at the list of places experiencing a net outflow of Americans last year, it includes states such as Ohio and North Dakota with GOP governors and legislatures. And some blue states such as Colorado, Delaware, and Oregon enjoyed a net influx. 

Now that I’ve done the requisite throat-clearing, however, it is simply undeniable that when it comes to relocation patterns, politics matters. It’s not about party labels. It’s about what they signify. Generally speaking, Republican-led states tax and regulate less than Democratic-led states do. These policy choices, in turn, tend to make Republican-led states gain population faster by producing signals that prospective migrants can readily discern. 

For example, if you’re weighing multiple job offers with roughly comparable salaries, you may well go where you can buy the most house for your money, which will typically be in places where property taxes are low and home prices aren’t jacked up artificially by regulatory burdens. Alternatively, if what you really want to do is start your own business rather than working for someone else, freer economies are usually the better bet. 

Dozens of academic studies confirm these relationships. Places ranking higher on economic freedom tend to enjoy higher rates of job creation, business starts, and population growth. Consider a 2020 paper in the Southern Economic Journal that used a local economic-freedom index to examine relocation patterns. It found that for every 10% increase in a metropolitan area’s economic-freedom score, in-migration went up 27%. In a new American Business Review study of state population trends, economist Richard Cebula found that levels of both entrepreneurial activity and personal freedom are associated with higher rates of in-migration. 

In the age of COVID, differences in governing philosophy came into sharper relief. During the initial lockdowns, Democratic-led states shut down quicker and longer. Republican-led states were more likely to keep schools open. Americans noticed. While most wanted their governments to take the pandemic seriously, they also wanted their governments to be reasonable. 

Here in North Carolina, a flock of progressive Chicken Littles spent the past decade warning that the GOP-controlled legislature was ruining our economy and reputation by failing to “invest” enough in government. Their left-wing counterparts in fiscally conservative Florida and Texas were saying the same things at the same time. 

By no means have we solved all our economic problems. With regard to the willingness of individuals, families, and businesses to relocate to North Carolina and other market-friendly states, however, those Chicken-Little warnings proved to be wildly off the mark — and went entirely unnoticed by the hundreds of thousands of Americans who gladly moved here in the meantime, including 89,000 in just the past year. 

Our sky was, it seems, never falling.

John Hood is a John Locke Foundation board member and author of the new novel Mountain Folk, a historical fantasy set during the American Revolution (MountainFolkBook.com).