February 2004
The Free State Project: Move and Live Free?
On October 1, 2003, the Free State Project announced its intention to move twenty thousand advocates of limited government to New Hampshire. The goal, "liberty in our lifetime," is based on the belief that "the maximum role of civil government is the protection of life, liberty, and property." By recruiting members from across the country and concentrating them in a small, freedom-friendly state, the Free State Project hopes to succeed where it believes that national activism and the Libertarian Party have failed. But will it work? Will people exercise the first principle of competitive federalism by voting with their feet? Can individualists work together for a common cause? Will members of the Free State Project be able to shape New Hampshire's political climate? Panelists discussed the real difficulties of competitive federalism in action at a February 27 AEI event.
Michael Greve
AEI
The Privileges and Immunities Clause of the U.S. Constitution entitles the citizens of one state to all the privileges and immunities of another state on the same basis as is enjoyed by those citizens. The original Articles of Confederation version read:
"The better to secure and perpetuate mutual friendship and intercourse among the people of the different states in this union, the free inhabitants of each of these states-paupers, vagabonds, and fugitives from justice excepted-shall be entitled to all privileges and immunities of free citizens in the several states. And the people of each state shall have free ingress and regress to and from any other state, and shall enjoy therein all the privileges of trade and commerce subject to the same duties, impositions, and restrictions as the inhabitants thereof respectively."
The great mobility that you see reflected both in history and in these constitutional arrangements may have special salience in modern days. Communication and coordination have become much cheaper and easier with the help of technology, and the "new economy" has enormously increased people's mobility. At the same time, at the national level we have seen a total wipeout of libertarian policies or politics as an organized force. People choose on the margins that they have, and one way to do that is to pay more attention to the additional burdens that state and local governments pile on top of the inescapable federal burdens.
Jason Sorens
Yale University, Free State Project
The Free State Project started as an effort to identify the best state for people who favor smaller government and stronger individual liberties to move to. We started signing up people in September 2001 and by August 2003, we had five thousand members. We took a vote and on October 1, 2003, and we announced that New Hampshire had won hands down. We continue to recruit people to move to New Hampshire, and we hope to get twenty thousand commitments by September 2006.
The Free State Project advances and instantiates two different models of competitive federalism. The first is the Tiebout model: individuals with varying preferences vote on the levels and types of public goods to be provided in their local jurisdictions, and people who observe those mixes of public goods move to the jurisdiction that best fits their preferences. But in the real world, mobility and jurisdictions are limited, and this presents small government types with a coordination dilemma: individual choices may leave us as scattered and outnumbered as ever. But if we could coordinate on moving to a single state, we would have sufficient voter and activist concentrations to swing the state's policy in a significantly pro-freedom direction.
The second model is Barry Weingast's "market-preserving federalism." When jurisdictions have primary regulatory responsibility over their economies and capital and labor can move across borders freely, taxpayers and businesses will punish governments that impose inefficient taxes and regulations by moving to other jurisdictions. To forestall this threat, governments in a market-preserving federalist state will tend to keep taxes and regulations low, at the efficient level. So, the Tiebout model says that government will do what it should when you have jurisdictional competition, and the market-preserving federalism model states that government will not do what it should not when you have jurisdictional competition.
New Hampshire is by far the best choice for the Free State Project. It is a fairly wealthy state, and it pays much more in taxes to the federal government than it receives back in expenditures. New Hampshire does not have large metropolitan areas that tend to be more left-leaning; it is highly integrated into the international economy, and its economy is high-tech and knowledge-based. Because of its religious mix, New Hampshire does not have a great number of social conservatives. The state is also poised to benefit if the United States returns to a true model of market-preserving federalism. For example, New Hampshire could do much better if it were taking care of its own social security program, because its residents pay much more in social security taxes than they receive back in benefits.
Once New Hampshire moves dramatically in a free market direction, we will continue to attract individuals and businesses from other states. And other states will have to reform their own laws in order to avoid losing their tax base to our state. The Free State Project, in more ways than one, is the thin end of the wedge in increasing liberty throughout the United States.
Michael Barone
U.S. News & World Report
In 1960, New Hampshire was a lot like Vermont. Vermont was more Republican than New Hampshire: it voted for Alf Landon in 1936, while New Hampshire, led by the industrial town of Manchester, voted for Franklin Roosevelt. According to the 1960 census, New Hampshire had 606,000 residents; Vermont had about 389,000. Since then, however, the two states have diverged economically and politically. The New Hampshire population is now about 1.3 million, while Vermont is up in the 600,000s-reflecting slower but still significant growth. The two states have pursued very different kinds of public policy, and they have attracted different kinds of people.
Vermont has attracted culturally left-wing people; New Hampshire has attracted economically right-wing people. New Hampshire has consistently grown more than the national average and has been, in most cases, the only state in the Northeast to do so. Politically, New Hampshire is the most libertarian in the Northeast, and for a while at least, it exerted a real force on national politics. On election night November 1988, George H.W. Bush's first words were "Thank you, New Hampshire." He had beaten Bob Dole in the New Hampshire primary on the tax issue, and in the general election, he got 62 percent of the vote there. But in the 1990s, New Hampshire was inundated by statists. People lost wealth, and they rebelled against Bush. Also, their perhaps libertarian instincts on cultural issues moved them towards the Democrats. And while New Hampshire has no large central cities, it is part of the Boston metro area. Like many of the largest metro areas in the country, they trended towards Clinton-Gore Democrats on the cultural issues from 1992 to 2000.
At the same time, New Hampshire has retained its famous taxaphobia. In the 1990s the New Hampshire Supreme Court found in the preamble-style language of the state constitution a responsibility for the state to finance education. In response, Governor Jeanne Shaheen tried and failed to pass a broad-based tax to pay for state schools. In 2002, Craig Benson, a Republican, was elected Governor over a Democrat who was in favor of a state income tax. I think the Democrat got 29 percent of the vote. The court had plans to revisit the issue, but Governor Benson appointed a new member, and the narrow majority that decided the first case no longer exists. So the Governor and the legislature are simply ignoring the court, confident that if the case ever comes up again, their side will win.
Richard Vedder
Ohio University
I suspect that some of my fellow economic historians would dismiss the Free State Project, comparing it to the failed utopian communities of the nineteenth century. But the Free State Project is quite different-it is not based on trying to build an economy from scratch on flawed ideological foundations. And group migrations have indeed been very successful in changing the political and cultural environment-the Mormons and the Jewish migration to Israel come to mind.
The real way to question the soundness of the project is to ask: can twenty or even forty thousand people moving to a state in five years really change the balance of power? Suppose forty percent of the citizens of New Hampshire are what we might call conservatives or libertarians, thirty-five percent are moderates, and twenty-five percent are liberals. Census data suggests that even if thirty thousand libertarians move into New Hampshire over five years, the Free State Project migrants will be a minority among the new immigrants to the State. At most, it would change the political orientation of the total population by about four percentage points. But what if the mix is 48 percent conservative/libertarian, 30 percent moderate, and 22 percent liberal? The in-migration might provide the margin of support to allow libertarians and conservatives to rule.
Do Americans consider the role of government in making their migration decisions? The answer is clearly yes. Since at least 1850, at any moment in time at least one-third of the American population is living in a different state or country than the one in which they were born, and taxes seem to matter a great deal in migration decisions. Between April 1, 2001, and July 1, 2003, a net total of 819,110 native-born Americans moved out of high-tax states and into lower-tax jurisdictions. But an even larger number, 871,655, moved into the ten lowest-tax states. If you add another 940,751 immigrants, the low-tax states had a net in-migration of 1,812,406. One of the greatest migrations in human history is taking place as Americans are moving to low-tax havens that come closest to embodying the ideals of the Free State Project.
One byproduct of all of this migration is that it spurs greater interstate tax competition. In the last decade, the tax burden of the ten highest-tax states has actually fallen noticeably as the out-migration of human and physical capital forced these states to reduce the relative size of government. Americans are a society that likes to keep most of the fruits of their labor and find that they can grow and prosper more as a consequence.
Alan Bock
Orange County Register
Among the heavyweights of the libertarian tradition, Henry Hazlett wrote a book revising the U.S. Constitution with more explicit guarantees of private property rights and more explicit limitations on the powers of government. He tried to show in light of experience how expansively various courts and legislatures have interpreted the U.S. Constitution to try and see if it could not be firmed up. A fellow named Mike Oliver wrote a book called A Constitution for a New Country, and for about fifteen years, he tried to start a new country that would attract libertarians.
But the history of libertarian independence movements is littered with disappointments. In the 1970s, when we had the Vietnam War, a Republican president imposing wage and price controls, and Watergate brewing, a lot of people concluded that maybe the United States was irredeemable. The first project that comes to mind was on a reef that was underwater part of the day a couple of hundred miles from Tonga in the South Pacific. Libertarians planted a flag, called the new nation Minerva, and registered it with the UN. But the King of Tonga sent his war canoes out, and the handful of libertarians were not prepared to deal with it, so that project died. Then when the Bahamas gained their independence from Great Britain, Abaco (and several other islands) declared independence from Nassau. But the inhabitants, while somewhat sympathetic to the idea, decided finally that secession was not what they wanted. The next project was in the New Hebrides in the South Pacific, an island called Vanuatu; eventually that rebellion was crushed by the British.
Trying to establish a new country overseas has been less than successful, and that is why the Free State Project has at least more promise than some of these previous efforts. I do wonder what kind of resistance Free Staters will meet from natives or earlier transplants. Will libertarians, who are not always the most congenial people in the world, alienate people rather than persuade them? Still it is a (mostly true) cliché that small groups of dedicated people make most of the big social changes throughout history. So while only twenty or thirty thousand might not have a huge significant impact on New Hampshire, if a number of these people are reasonably savvy activists, they could make a much larger impact than the raw numbers would indicate.
AEI research assistant Kate Rick prepared this summary.
