Yippie Ki-yay! I had the great good fortune to be part of a small luncheon hosted for NY business owners by Governor Rick Perry of Texas last Wednesday. Gov. Perry was in Manhattan to recruit businesses to relocate to Texas. His arguments were powerful and hard to gainsay.
Perry articulated a blunt mantra based on what he perceives as fiscal insanity in the policies of NY, CA, IL, NJ, and others toward business and especially toward the entrepreneur. He spoke in terms that are profoundly practical for most of us small businessmen in these states. I would suggest these states, including my own, perk up their ears and listen. They ignore his message at their peril.
Like all states, New York needs successful entrepreneurs to simply survive in a rapidly evolving national business climate. Many industries will surely be rendered obsolete in the next decade. These dinosaurs must be replaced by leaner, more innovative companies. Any city or state government that structurally impedes and straight-jackets the nimbleness and verve of the entrepreneurial community will surely pay a heavy price.
Perry understands this in spades. His pitch for Texas is couched in the idiom of freedom more than financial venality. While he points to the many financial benefits for doing business in a consciously business friendly state like Texas, his greater argument is philosophical. You cannot consciously and spiritually disincentivize the passionate entrepreneur with the benighted thralldom of a wasteful, rigid, intrusive bureaucracy. Perry’s key insight is that this kills the elan and the unique frisson of business risk- takers. Businesses under this oligarchic yoke should and will leave their present venues. And when they do, it will result in at least a partial “Detroitization” of the states they leave. Even California and New York. Good bye tax base. Hello heavier tax burden on the companies remaining in such inefficient bureaucratic states.
Harvard professor Niall Ferguson, coincidental with Gov. Perry’s appearance in New York on June 19, wrote a compelling op-ed in the WSJ castigating what he calls “Planet Government.” It is a neat companion piece to Perry’s plain talk. Ferguson quotes Clyde Wayne Crews of the Competitive Enterprise Institute who notes the particularly invidious effects of over-regulation on small businesses whose costs are over 36% higher per employee than they are for bigger firms. The Federal Register—the official directory of regulation–today is 78,961 pages. In 1986 it was 44,812 pages and in 1936 it was 2,620.
To survive, entrepreneurial businesses will increasingly move to states like Texas that allow and encourage them to function freely and healthily.
Ferguson concludes his WSJ piece with this quote from Alexis de Tocqueville‘s prescient book of 1833, Democracy in America. De Tocqueville warned against a US government covering society’s surface “with a network of small, complicated, painstaking, uniform rules through which the most original minds and the most vigorous souls cannot clear a way….[The regulatory state] prevents things from being born: it does not tyrannize, it hinders, compromises, enervates, extinguishes, dazes, and finally reduces the nation to being nothing more than a herd of timid and industrious animals of which their government is the shepherd.”
States like my New York cannot afford the smug and sanguine assumption that folks like us won’t shake the dust of governmental insanity from our entrepreneurial sandals. Governor Perry certainly knows we will. He is doing us all a favor by publicly offering his salubrious Texas ambiance as a compelling alternative.