Governments should compete for residents, not businesses

I&#x27;ve owned houses in two cities in my life.<p>One called itself &quot;A developer-friendly community&quot; and the other &quot;A healthy community&quot;<p>The cities were organized around their taglines. One was 300 years old and focused on parks, trails, conservancy, and community centers. The other a younger city focused on growth and sprawl, tax abatements, and new businesses.<p>You should live where the government aligns with your phase of life and personal goals and be free to choose a new government later. Also, democracies can shift over time but generally it is easier to move somewhere new than to feel entitled to change a municpal culture simply because you got older.

How does Bay Area fit in the narrative? From my personal point of view, Bay Area, where I live, offers very little to its residents: public schools have super low standards and low teaching qualities. Many of the schools use seemingly run-down portables while public schools in other states, such as WA, have amazing buildings and facilities. More than 1&#x2F;3 of the families in the Bay Area choose private schools, the highest ratio in the US. The housing price has been through the roof. The average commute time is north of an hour. California also has higher taxes for income and business than most of the other states. Yet, people have been flocking to California (except last year) and tech companies still choose the Bay Area for their headquarters.

This line of thinking comes up often on HN but it ignores the central reason for governments to enact borders, a rather modern invention. Governments (at the behest of businesses) enforce borders so that labor cannot effectively organise. A border exists often for workers only, but is mostly a legal fiction that corporations can easily navigate.<p>The most common example for the Americans reading this is NAFTA, which makes workers in Detroit compete with workers in Mexico (suppressing wages in both location) while allowing the auto manufacturing companies to treat all of North America as one market. Toyota can move their plants around the region somewhat freely; can someone in Mexico freely move to the midwest?

It&#x27;s not one or the other, governments ( US state governments ) compete for both. Companies want to be where the workers are at and workers want to be where the jobs are at. A state needs qualified residents to attract businesses and they also need good jobs to attract residents. The articles says WFH is changing that but I don&#x27;t see WFH ever being on a wide enough scale to have much influence.

This is pretty silly because governments do compete for residents. Having jobs is a major part of attracting new residents unless you are a (sub)tropical paradise. A business that doesn’t employ anyone or consume any inputs from other state businesses is not going to be a particularly interesting business to incentivize.

There are a few countries who compete for residents.<p>For example, The Netherlands has a 30% tax advantage for all immigrants, for 5 years. Thats <i>huuuuuge</i>.<p>[1]: <a href="https:&#x2F;&#x2F;www.iamsterdam.com&#x2F;en&#x2F;live-work-study&#x2F;living&#x2F;official-procedures&#x2F;30-tax-ruling" rel="nofollow">https:&#x2F;&#x2F;www.iamsterdam.com&#x2F;en&#x2F;live-work-study&#x2F;living&#x2F;officia...</a>

With falling birthrates in developed countries, competing for residents will be exactly what they will be doing.<p>Making a success of large scale immigration will be essential to the future prospects of those nations&#x2F;communities.

This piece is an op-ed, not straight reporting.<p>Tyler Cowen, its author, is a noted economist (with libertarian leanings), and he favors competition in many forms. Anyone curious about him and his views should read his blog Marginal Revolution and listen to his podcast. They&#x27;re both smart:<p><a href="https:&#x2F;&#x2F;marginalrevolution.com&#x2F;" rel="nofollow">https:&#x2F;&#x2F;marginalrevolution.com&#x2F;</a><p><a href="https:&#x2F;&#x2F;conversationswithtyler.com&#x2F;" rel="nofollow">https:&#x2F;&#x2F;conversationswithtyler.com&#x2F;</a><p>Tyler has written extensively about stagnation in the American economy. Part of that stagnation is the decreasing mobility of Americans.<p>I very much agree with him that governments should compete for residents, especially the right kind of residents.<p>It takes hard work to build a successful city.<p>If we look at San Francisco, we see a city that has done everything it can to drive away many residents, and in so doing, destroyed its tax base, leading to a budget crisis. A great lesson in what not to do!<p>Why should there not be a market for talent, where the towns and cities of America compete to make themselves more livable, better centers of serendipity, better providers of public services? That sounds great to me.<p>In an earlier America, some cities took this mandate very seriously. For anyone curious, Stanley Marcus of Neiman Marcus tells the story of about the leaders of Dallas deliberately made it attractive to early residents in order to build their town. His biographical book is called &quot;Minding the Store.&quot;

The only way to make it happen is to incentivize it monetarily. That means the government’s budget would have to be heavily controlled by how many residents there are. But just residency is too narrow of a lens to make any conclusions from, in my opinion.

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That was true until end of XIX century. Especially so in XIX century. For a person a move was quite simple, sometimes just few miles over the border. But moving a business, brick-and-mortar business like coal-mine or brewery was hard. That kept personal taxes low and business taxes high.<p>But XX century changed that.

Residents need jobs. Alaska is one of the most beautiful states in the country, but there are relatively few opportunities for work. If there were more jobs, more people would consider moving to Alaska.<p>We got a taste of this effect when remote working became common. A lot of people moved to other states and cities they wouldn&#x27;t or couldn&#x27;t live in before when they were expected to live near the office. But of course remote working isn&#x27;t possible for many industries, particularly for blue collar labor, so if you want those people to move into your area, you need to have job opportunities to offer them.

There already are programs to attract residents that can boost a country’s tax base and add investments to economy. Media likes to call them “golden visas” and have derided them all the same. Sure there are issues like risks of ill-gotten funds getting laundered or criminals getting a new start without facing consequences of their crimes, but the same can be said about companies that are used as fronts for the same individuals. In the end, very large sums of money seem to open most doors, whether it is for individuals or companies.

I think the real problem is some cities have grown far too large. Larger the city harder for businesses and people to move out of it. Let the city residents through their elected council chose the path they want to pursue, with enough diversity people can prefer to move in and out of a city with very little impact on their day to day life. I have moved in and out of Sunnyvale&#x2F;Mountain View&#x2F;San Jose few times.

It&#x27;s worth remembering that New York-based opposition to subsidies for Amazon&#x27;s construction of &quot;HQ2&quot; in Long Island City was widely vilified and disparaged in mainstream media outlets across the political spectrum. This latest development looks like a pretty strong vindication of those who were outspoken against these tax handouts to Amazon.

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Businesses are paying more taxes than people do, so the article&#x27;s title is eeconomically infeasible. Also I suspect that businesses are creating more jobs, so 2:0.

Who needs to compete when places like Florida are actively engaged in secondclass citizen warfare.<p>But yeah, the right coupling of business and government is as unhealthy as religion.

They should do both.

theyre-the-same-picture.jpg<p>The #1 reason people move is for employment opportunities. Although, promising some companies tax breaks doesn&#x27;t guarantee you&#x27;re going to meaningfully create jobs. But the same goes the other way around, giving residents low taxes or other incentives also doesn&#x27;t guarantee they&#x27;ll move there, if they can&#x27;t get a job.

&gt; Overall, there may be less competition to attract corporations. At the same time, political competition for residents may become more intense, because more people will be able to choose where to live regardless of where they work. This competition could lead to improvements in schools and parks.<p>I am as capitalist as they come, but I don&#x27;t disagree with this assessment at all. I find it bizarre how some cities almost became hostile to their own citizens and got away with it because of a monopoly on the good jobs.

Wow. Is Bloomberg actually a credible business publication?<p>Barring a serious housing surplus, or similar major economic problems, there are ~no upsides for political leaders who actually work to attract more residents to an area. (Attracting more &amp; higher bidders, for the limited housing stock, is a different story.)<p>Vs. &quot;attracting new business&quot;? That attracts plenty of favorable press, bragging rights, etc. And for local governments - which live on property taxes and have to fund the schools &amp; local services - every dollar worth of business properties is a money farm, and every dollar worth of residential housing is a money pit.

The article is valid in speaking specifically about <i>US states</i> competing, but otherwise I find the idea of treating governments, and countries, as mere economic platforms, that compete like a business would, disturbing.<p>They are representatives of their nations, and their duty is to their people, to whom they are guardians, of said people and their homelands. They should not be &#x27;competing&#x27; for more residents just as families shouldn&#x27;t compete to attract other&#x27;s children.

What are the best strategies to attract remote workers to a location?<p>* Utilities such as roads, water, high speed internet feel like table stakes now. Fiber internet is quickly spreading in rural areas, and I know people with septic tanks and a fiber line. Ten years ago Google Fiber was a major selling point for Kansas City.<p>* Governments have little control over climate, nearby geographic features, time zone, and a million other details. They can highlight their strengths in marketing campaigns.<p>* Cost of living only works for so long. We&#x27;ve seen areas in the last decades that have an influx of population and they usually see a corresponding increase in COL. There are approaches governments can take to slow down the growth of COL, but it seems inevitable.<p>* Taxes and local regulations might help attract some workers. Cannabis consumers might be more inclined to move somewhere they can gain access legally. High income workers might be attracted to places without state income tax. Women might migrate to a state that aligns with their abortion politics. Motorcyclists might prefer places with lane splitting.<p>* Large projects such as professional sports teams, well connected airports, large hospitals or ski lodges might play a role. Governments can attract these types of projects.