The state level experimentation in policy during and after the pandemic gives insights into what works, and what does not. This contrast is clear between New York and Florida.
By: Bobby Casey, Managing Director GWP
July 6, 2020
They are free to experiment with their citizenry socially, politically, and economically. We see this in the varied responses to government, levels and implementation of regulations, and varied tax and central banking regimes.
The outcomes of those experiments can draw or repel people. The US will draw immigrants from Asia. Europe draws North American immigrants. It’s not just countries! Within the US, you see it between states, with people fleeing California for Texas or Arizona and people from New York fleeing to Florida.
It’s no secret that Texas and Arizona have far lower net tax and regulation burdens than states like California. Each state, like each country, has their pros and cons. There are no perfect governments. However, there are varying degrees of imperfect governments.
The recent pandemic has taken an economic toll on nearly everyone. A few businesses did very well like Amazon and Netflix, while so many others were forced to close their doors forever. Every state handled the pandemic differently as well.
South Dakota didn’t do much of anything, for example. But there were some stark differences between New York and Florida. One of the more glaring differences was how each state manged nursing homes.
As of late June, the claim was that 43% of all covid deaths in the US were in nursing homes with 11% of cases coming from those same nursing homes. Governor Andrew Cuomo allowed covid positive patients into nursing homes in New York. Governor Ron DeSantis in Florida did the exact opposite. While both states see a high number of covid deaths tied to nursing homes, Florida mitigated that trend by not introducing covid infected patients into nursing homes.
While New York focused its efforts on locking people down, distancing, and mask wearing, Florida focused their efforts on keeping the nursing homes as safe as possible:
Florida, a retirement state with more nursing-home patients than New York, saw nearly 5,000 fewer nursing-home deaths than did the Empire State.
The overall economic losses projected by the CBO to the US are grim:
The Congressional Budget Office projected on Monday that the coronavirus pandemic could cost the United States economy $16 trillion over the next 10 years. When adjusting for inflation, the pandemic is projected to cause a $7.9 trillion, or 3 percent, loss in “real” G.D.P. through 2030.
Florida took a more laissez-faire approach to the pandemic. They were very targeted in their policy making. Still they did take a hit economically in their tourism especially. New York took a hard line approach and it showed in their unemployment numbers hitting a record high. That of course is turning around now that things are starting to reopen, but the fact remains there are some businesses that are not coming back.
Drops in employment means loss in tax revenues. That’s the facts. Blue state red state, it doesn’t matter. When people aren’t working and producing, states aren’t generating revenues which means their budgets are either operating in the red or they need to make cuts.
Cutting spending isn’t in the nature of government, but deficit spending is a major blight on any political career. So what do they do?
Again, New York and Florida diverge.
New York is racing against the fiscal clock and has a shortfall to make up for, and it’s called a ticket blitz:
New York City’s newly adopted budget includes a planned ticket blitz that’s expected to cost motorists some $42 million in the coming months.
The NYPD will reassign 75 workers in its Traffic Enforcement Division to ticket-writing duties to counter the fiscal effects of the coronavirus crisis, a City Council source told The Post on Wednesday.
For the same reasons why Arizona didn’t push their asset forfeiture reforms through, New York is also looking to policing profits as a source of revenue.
Florida is going the free market route. It amounts to doubling down on pulling more New York expats, which is an indirect pot shot at their tax revenues. Florida passed what might be the largest and most sweeping occupational licensing reform bill.
According to the Institute for Justice, it repeals more occupational licensing laws than any other state’s reform bills.
All told, the new law either repeals or reforms over 30 licenses, including by reducing required educational hours for certain licenses.
It includes state to state reciprocity in licensing for many occupations such as cosmetology. It repeals some licensing altogether like those for interior design and hair braiding. It even is paving the way for hair and nail technicians to make house calls.
Dietitians can advise people on healthy eating provided they are not under the direction or supervision of a doctor with a medical condition; nor can they present themselves as medical professionals. Evidently there were sting operations that lead to jail time when a dietitian gave nutritional advice.
The state took responsibility for food truck regulations. This means a city can’t double down on regulations. Cities can now only enforce zoning laws.
Encouraging entry level entrepreneurship is the best and fastest way out of the recession induced by degrees of policy folly. Time will once again tell which is the most sustainable course of action to recovery.