 Welcome to the FeeCast, your weekly dose of economic thinking, brought to you by The Foundation for Economic Education. My name is Richard Lawrence, and we are here today on a new set, or at least partially new. We have chairs, we have a sign. We have these lovely people looking at us, which we should probably acknowledge at some point when we start referencing their ideas. But we are here, as ever, with Anna Jane Perrell, Dan Sanchez, and Mary Ann March with pink hair. And the pink hair is, again, one of those things you wanted to do before your birthday, right? We turned 30 at the end of the month, so this is item number 28, 30 new things before I turned 30. Excellent. Well, it looks great. Thanks. And we are happy to have everyone on the set today. We are talking this week about sort of something that we were discussing last week, which is banning of all of the things. And it seems like that's happening more and more in that left-wing location of California. Last week we talked about some local municipalities such as Santa Barbara banning plastic straws and how Starbucks has decided to ban plastic straws throughout all of their facilities nationwide. This week we're talking about something a little similar but different. And that is, in San Francisco, that hub of activity and commerce and business and wealth that it is, they are considering, or they're actually working toward, banning free food inside corporate cafeterias, which is an interesting twist on the corporate slash government banning of things bandwagon. And so, Dan, what is happening in San Francisco where companies up to this point are offering their employees food at no charge? Yeah, so we have an article on the website today, San Francisco's protectionist attempt to ban company cafeterias written by our former co-host here, Brittany Hunter. And she talks about how it really is a protectionist move because the idea, the special interest that's really pushing for this are the local restaurants. And the local restaurants are arguing, hey, we can't compete with free. All these tech companies are offering free food to their employees and it's keeping them from going out onto the street and finding a restaurant to eat lunch. And it's keeping money from the local economy and so they think, okay, well, we can force them to patronize us by shutting off that alternative source of food. And the rationale here is what exactly? Why exactly would sort of a city like San Francisco be against companies having free food? I mean, this sounds like the greatest thing ever, I wish we did it at fee, but we do it sometimes. We get pizza, we get fried chicken, but like on a regular basis, we cannot as a company afford to have a chef. This is a problem for some people because... Well, the idea was that San Francisco was hoping that these tech companies would come in and they would bring in not only tax revenue but business, but local business. So their argument is that, oh, well, they're being anti-social, that they're communing in and they're just driving straight into work and then just holding up in work and... Everything in the office, not leaving to the poke bar downstairs, not going to the burger shack across the street. And so the restaurants are upset because apparently their food doesn't taste good enough for the workers to go and patronize them. Free tastes good, man. Yeah. Free does taste good. To be clear, I think is it that they're banning the cafeterias, they're banning kind of industrial-style kitchens within these companies because if they're just passing out free apples one day, it can't be them... I doubt they're banning. I doubt they're banning. We're going to get in trouble. Yeah. I doubt they're banning snacks. Yeah. Yeah. But I guess, yeah, it's kind of like the large, I guess, the large serving of, large preparation and serving of food in a designated dining hall, maybe. I mean, I'm thinking that's what it is. It just seems silly. It seems like they're incentivizing companies to not go there, because if I had a company and I want to offer perks to my employees, such as a delicious cafeteria for free, then fine, I just won't be in San Francisco, I'll go to San Antonio, I'll go anywhere else. Well, it does seem like more and more companies are actually leaving San Francisco and California to go to places like San Antonio or Austin or other places in Texas. Those two states, respectively, are the biggest net out migration in California in the country. So more people are leaving California than people coming in. They are number one in that rating versus Texas, who is number one in net inward migration. This is all according to U-Haul, which is of course the truck rental company that measures all of this. And they should know, right? Because they're renting the trucks. Yeah. Actually, that reminds me. We had an article on the fee website a couple of months ago about, I think, in February about how people are finding it hard to find U-Hauls in places like San Francisco, so many people are leaving one way tickets out and the U-Hauls are going and not coming back. And so we're seeing this sort of pattern continue, continue. My former state where I used to live and I worked for seven years, Illinois used to be number one in net out migration, now California is number one in net outward migration. And Dan Mitchell on our website, one of our authors, actually notes that we continue to see an increasing amount of net outward migration in these high-tax, high-regulation states. People want to get out. People don't like the experience of having high taxes and having restrictions on what they can do and what their places of work can do. Yeah. I mean, because this is just really the tip of the iceberg. I mean, they're a very ban-happy governments in California. They just, it's almost creative how much they're finding different things to ban. They're banning entrepreneurially. They're actually finding entrepreneurial ways to ban things. So it's somewhat of a credit ban. Right. Well, it's more like that they're opening up the entrepreneurship, so to speak, of other states to be less ban-happy and to attract them. Similar to what you were saying, that there's out-migration of people who are fleeing places with high taxes, high regulation, where it's hard to get a job, it's hard to find a place to live because of all these government regulations, that it's the states especially who have less of a burden that are drawing a lot of this migration. So we have this other article called, Americans are voting with their feet for economic freedom. And there was recently a release of the migration data for inbound states versus outbound states. And one finding was that the average top individual income tax rate in the top five inbound states is 4.9% compared to 7.7% in the top outbound states. So you can even see patterns where the inbound states tend to have lower taxes and that outbound states tend to have higher ones. And another case is that, I'm sorry, I lost my place there, but you get the point. Yeah, and so it seems to be a pretty good connection between those people who are leaving a high tax state, right? So that's one of the reasons they could be leaving, according to the data, and going to places where they had to pay less in tax. That seems to be a fairly strong connection. And so this concept, voting with your feet, is something we hear a lot, but maybe not necessarily something that we've really defined very well. Well, basically when you vote with your feet, you're expressing your preferences. Usually we think about this as the actual physical migration, and you might be voting with your feet to leave a place, or, as Dan was mentioning, you might be voting with your feet to enter a place. Yeah, and the thing about voting with your feet is that it's very practical. It's not ideological. You might have certain preferences in terms of how you vote and what you think ideally would happen, but when the rubber meets the road and you actually have to live somewhere and you actually have to deal with the tax burden, with the job climate, even though you might not even realize why the climate is so bad, the economic climate is so bad in one state, it still has the effect that the states with the more reasonable economic policies will tend to draw people in, and the ones with less, so we'll push them out. Well, yeah, I mean, it's a very, when you boil it down, the concept is, I mean, we can talk, what's so, I guess, applicable about voting with your feet is that you can apply it to something as small as, you do really care about the fact that we don't want straws, so I'm going to vote with my feet by choosing to patronize a company that doesn't use straws. That is voting with your feet as much as moving to a new state or, yeah, moving to a new country, something like that, and so voting with your feet is really just a way to express your values without having to go into a vote. And it's voluntary, and as you're saying, it's people are revealing their preferences. And it may be different from the preferences that they put on social media, for example, which is a very interesting notion, too. So we'll get back to that and we'll get back to more after we take a quick break after these messages. Hi, I'm Sean Malone, director of media for fee.org. Of course, you already know about fees, incredible articles and written content, but did you know that you can also watch our fantastic videos and listen to our podcast at our website as well? Visit fee.org slash shows to get the latest content from the series you love, such as Out of Frame, Common Sense Soapbox, How We Thrive, The Words and Numbers podcast, and, of course, The FeeCast. Once again, that's fee.org slash shows for more great content like this. Thanks for watching. Welcome back to The FeeCast. We've been talking about voting with your feet, also sort of voting with your pocketbook in the case of a commercial exchange. You can choose whether or not to patronize a certain store. And so this brings up a larger point that we have not yet really referred to in this sense, but a friend of fees, a former co-worker of ours, Max Borders, has an event that actually uses this concept in its name. And this concept is called Voice and Exit. And it's developed by a guy named Albert Hirschman, and he lived sometime in the 20th century. And he was basically formulating ideas about how people can interact with commerce or even with government. And that's the sense that Max at his Voice and Exit show, his event, actually uses it. And so what exactly is this juxtaposition between voice and exit? Well, when you express your voice, you might do that politically. You might do that by arguing with people about politics. You might do it at the voting booth. In commerce, you might do it by purchasing something. Or exit, that's withdrawing association, so the freedom of disassociation. So politically, you might actually withdraw from, you might emigrate, you might outmigrate. Or in commerce, you might withhold your dollars, you might boycott even. And so this idea that to the extent that you can withdraw from association, that that in itself is powerful, because people want to associate with people. And so in order to compete for your patronage or your tax dollars, that other people are going to have to try to accommodate you and try to compete and attract you. And so this is a very important concept, because the idea is these are different ways to exercise your preferences, right? You can choose to leave or exit. You can choose to be loyal and stick with it, whether it's a company or state of California. Or you can choose to express your opinion otherwise. Say what you'd like to have changed, vote like you mentioned, Dan. And so this concept we're bringing up because it relates directly to the notion that we were discussing earlier, voting with your feet. And people actually voting with their feet exiting the state of California, for example, for Texas. And so different people want different things out of their life. And the notion of exit in a political sense is what we're going to talk about now. Sort of why people could make the decision and how they could make the decision to interact with their local communities. And what kind of impact that that has on the decisions of the government, so those communities too. Yeah. I was just going to say that this, it reminds me so much of when we saw a couple of states first legalized marijuana. And now we're up to 30 states that have legal medical marijuana in another nine states and Washington, DC, that do legal recreational, just started with a couple and they saw good results and then other states picked up on that and they imitated them. I'm glad you brought that up, Miriam, because marijuana pot generally is maybe considered more of a left wing type of thing, legalizing drugs in that sense. But there's also actually doing things on things that are considered more right wing, such as firearms and guns. Right choosing to live in a state where there's friendly or gun laws. Right. Your notion of where you want to live, what values you want represented in your community and your state and your city, you can affect where you are, right, by exiting or you can affect what they're doing by voice. So, yeah, I think that's why it's so great when you can kick policy decisions down from the federal level down to the state level, instead of having one policy towards drugs for the entire country and you have multiple policies and it's like little experiments where they try it out and see how it works, like see how overdoses, the rate of overdoses, what happens in states that prohibit drugs versus the ones that allow it. Yeah. I think when you take it to a smaller scale, there's so much more respect for the dignity of people and like Dan said, use the word experiment. It's so much better to do smaller experiments than to have an experiment on 300 million people, like their population in the United States. Which is pretty unique in the way that the U.S. is formed from a government side because it's a federal system. You don't have a unitary government at the very top like they would, for instance, in London. The parliament creates laws that are applicable all throughout the entire United Kingdom, at least in the United States you have what they call these laboratories of democracy where if the federal government has a constraint on it through the Constitution that it can't regulate or can't create a law, then the states in many cases can actually do that and that brings it much further down to a local level. And again, these experiments are connected because part of the experiment is like, okay, which attracts the most taxpayers. And how do they interact together? Right. How does Texas interact with California when there's such a disparity between the environments there? Yeah. I really love this term that Daniel Mitchell, one of our frequent writers, has jurisdictional competition. Oh, wow. Explain the term. So it's the idea that when you have multiple jurisdictions and there is freedom of migration from jurisdiction to jurisdiction, that again people are able to vote with their feet. That if there are bad policies, one way that you could tell whether these policies are bad or not is if people flee them. And if you have good policies, then one way that a criterion for that is if people are drawn to them. And so governments are incentivized to compete with each other for taxpayers. And so you can't be too oppressive or else you will lose that competition. Yeah. Ilya Somen to paraphrase him, he kind of describes voting with your feet as having power to pick your political regime. Of course, there are some barriers. I mean, voting with your feet, it sounds nice, but is it that easy to just pick up and go if Atlanta passes laws that I don't like? Well, I've got a lease on my apartment and I work here. It's not as easy for some people. Yeah, there are definitely barriers to exit. And I think that one of the ways that we can maybe improve, improve on exit or make exit easier is to innovate ways to make barriers lower, right? So that's one of the things that we can as individuals, as decision makers do is that we can make barriers lower or figure out ways or innovate ways to make barriers lower to exit. And so over the past few decades, we've had more and more focus on people having voice, right? We've enfranchised many new people, the enfranchisement of women, the enfranchisement of former slaves and people who weren't freeborn white males, right? That's happened slowly but surely over the past few centuries here in the United States. And is the concept of voice sort of been overplayed at this point? Should we focus more on exit? I mean, I think both are powerful. Having the ability to to vote or to withhold your dollars and to get up and go. I think that they lend themselves to one another. And I think that the smaller the jurisdiction that the cheaper the exit is. Because like you said, there are barriers to exit. Well, if you are in the middle of like imperial China and you have one emperor for thousands and thousands of miles in every direction, that's a really expensive exit. And so the smaller you have of these polities, then the easier it is to jump across the border. A polity in the sense you mean like a jurisdiction, the different areas through which people are moving to and from. And the notion here again is exit is not always something that's costless, right? I mean, you can choose very easily not to patronize shop across the street instead of another shop. But things like gentrification. This is a concept that a lot of people in the inner city are concerned about today because you either have new people moving into a neighborhood, raising all the prices of the real estate so that the taxes that people pay on their properties becomes unaffordable. What do you do then? You get another grocery store that's across the street that's instead of the right aid that you used to buy things at is a whole foods, the prices are much higher. What is a person to do? So gentrification in the sense can be a problem that's understood. But your point is that we should make the barriers to exit much lower. Yeah, we should just encourage. I mean, again, thinking about how entrepreneurs can innovate ways to decrease barriers. I mean, that's something that you think that we can apply this to anything. But really, it's I mean, applying innovations to barriers to exit. Like now we have planes when we only had boats. I mean, thinking about how we can as individuals make it easier for exit to be a possible solution because you're right. There's so much voice now. It's like people say they're moving to Canada, but is anyone moving to Canada? You know, right? And even when you can't physically exit, you can digitally exit in a lot of ways like that if you with cryptocurrencies or with internet commerce or with, you know, working for a company in another country that to some extent that these are borderless exchanges. And people can, if there is a good policy in one country, and you can partake of that industry over the internet, then you can benefit from those good policies. Right. So we have a lot more to talk about, a lot more in the weeds to get to. But we're going to exit this segment of our fee cast and go into the next one after a couple of messages. Oh, boy, you know, starting out in the music business or just any business, you have to have the carrot dangling. You have to know what your goals are. I think as anybody goes in without a goal, you're pretty much doomed. This is a family business. My daughters, my son-in-law, my brother, we can't walk away from this. This is not something we'll walk away from. This is something we pass on. I mean, you're always going to run into the wall. It's just, can you figure out how to go under it, around it, over it? That makes for a longevity of a business. You can't give up. You just don't let yourself give up. Watch Mama Goldtone and more documentaries about women in business in our How We Thrive series at fee.org slash shows. Welcome back to the fee cast. We've been talking about several ideas here. We've been talking about voting with our feet if we don't like a place that we happen to live in. We've been talking about exit versus voice, right? We have a lot of voice in our politics today, in our conversations, talking about whether exit is possible, whether it's costless, whether we can do things to bring the cost of exit down so that more people can exercise that option instead of just complaining about things all day on Facebook. But I like complaining. One of the things I want to talk about now is sort of when you talk about jurisdictions, which are these areas of certain power, right? And a jurisdiction really can be defined as geographic or even a non-geographic area where a certain authority is exercised, right? And if you don't like that authority, you can leave that jurisdiction. You've been talking, Dan, about the notion of federalism being able to kick down the authority or the power down to the local level. And so the next question I have is what does local power or authority look like? When you bring government down to the smallest level, what does that mean? What is the smallest level that makes sense? Well, I really agree with Ludwig von Mises, who once said that... This guy right here. Yeah, this is Ludwig von Mises, an Austrian economist, who also had a lot to say about politics. And in one of his books, he really advocated for the complete right of secession, that any group of people should be able to secede from whatever larger jurisdiction they're part of. So secession, of course, is separation, saying, I'm out, we're going to get out of this altogether and exit. Yeah, and he said that if it were practical, that really that should be extended down to the level of the individual. So to me, that's the ideal size of sufficient smallness, is down to the individual. Whoa, a radical, nothing was going to go there with sufficient smallness. I think that sufficient smallness is a concept that at least economists toss around a lot when they are talking about how we apply policies, especially I think from a market-driven or individual choice-driven model. Specifically, I think about how sufficient smallness is something that people explore when you're talking about property rights and conserving resources. You have to have sufficient smallness for that to work. Sufficient smallness is, yeah, something kind of, I think that it's a moving target depending on what goods and services you're talking about, what individuals you're talking about, what kind of values you're trying to inform or you are being informed or are informing your decisions. So sufficient smallness, I think, is obviously a moving target. I don't know. Yeah, I mean, I think part of what you're getting at is this fear that, okay, well, if we get too small, then we're not going to have enough of diverse resources to sustain ourselves. But you have Hong Kong, for example, which is just a city-state, and they are very natural resource-poor because this is very small, but they're very rich at the same time. So the idea is that you trade with other countries. Other jurisdictions, other people who have things that you have or that you don't have that you want and they can actually produce for you at a cost that you're willing to pay. Of course, this is the hallmark of the free market system. Yeah, when I think about my ideal for a sufficiently small community, I tend to think of it as being small enough where people can get what they want. And what I mean by that is in terms of urban planning, that all the people who want a lot of public parks and public spaces, that they can go to a community of like-minded people and they can all vote to do that with their tax dollars, whereas people who don't want to pay for those parks, they can go to a community with other like-minded people and they won't have parks and then everybody wins. This has implications not only for a city with its city next door that happens to have values that you might prefer over the one where you are, but also states, right? There are no real barriers between states. If you want to move, there are also implications for international borders as well. But you scaled up, but even to scale smaller, going from a city to neighborhoods. Yes. And most people who move within states are choosing their neighborhoods. When we cross state and even county, when we cross county lines, that's usually when people are moving for jobs. Yeah. Well, and the other notion there, of course, when you're talking about scaling even lower is a subdivision, a private sort of homeowners association is a kind of jurisdiction that you might at some point, even though you decided to move into it, want to exit because the fees are too high, your neighbors suck, the dog keeps pooping on your lawn and no one does anything about it. And so jurisdictions aren't only government, but they're any kind of regime of power that we can either opt into, opt out of. The question is to what degree it's easy to do those things. Yeah, I think it's like communes. I mean, that's technically a jurisdiction. Kibbutz, a kibbutz in Israel, where you come together and voluntarily in theory. You are working on a communal basis with other people. You are harvesting all the goods in a communal sense. You're not keeping any for yourself. You're doing everything for the community. And one would hope that in this kind of modern voluntary commune that you would have the ability to leave with no problem. Yeah. Yeah, I think an important point is that political fragmentation does not necessarily mean economic fragmentation. That you can have a global division of labor even with a really small politically balkanized city-states that, and in fact- Balkanized meaning very fragmented, very small. Yes, yes. And in fact, you're more likely to have free trade with those because the bigger the jurisdiction, the more they can afford a policy of economic isolation. Whereas, again, a jurisdiction as small as Hong Kong, basically they have free trade forced on them. That that's the only way that they can prosper. In order to get things that they need. Yeah, OK. And similarly, political fragmentation does not mean cultural fragmentation. That you can have a big community with people speaking the same language, even having the same religion, having the same customs and norms, but having different political jurisdictions within that. And so what you're basically saying, Dan, is even if you do have very small, sort of voluntary authority jurisdictions, that doesn't mean necessarily that everyone's on their own, right? Yes. You don't talk with anybody. You don't share a culture with anybody that you're all growing everything you need on your little plot of land, and that's it, right? You still have the ability to trade with other people to get what you need, right, which is an important difference from some of the ways that we think about isolationism in other senses. It's actually the opposite of isolationism because it pushes your community to exchange what it needs back and forth versus, like you said, like larger communities, I mean larger, I mean, large countries that are underserved in sort of authoritarian regime actually can isolate themselves easier. Yeah. So smallness actually lends itself to a more, almost like you have to be willing to exchange with others. Yeah, so like more. Oh, yeah. So even now you have the European Union, which is trying to make Europe into a super state that the European Union, even though it establishes free trade within Europe, it is hugely protectionist outside of Europe, and it can afford that protectionist policy to some extent because it's It's efficiently large, yeah. But what made Europe rich in the first place was its political fragmentation, that throughout the Middle Ages and after the Middle Ages, as it grew rich and into the Industrial Revolution, that no one power was able to centralize control over all of Europe, that you had lots of different countries, lots of different city-states, but you had a lot of commerce in between that and a lot of cultural unity too. So you had a lot of experimentation, in many ways you had a lot of progress from those elements of experimentation that were allowed to flourish underneath all these different competing jurisdictions, unlike where you mentioned in China, Imperial China, everything under one unitary state, and God help you if you deviate from whatever they wanted to do in Beijing. Yeah, so if an emperor of China decided, oh, well, okay, printing is no good, then printing was no good, no printing throughout the entire realm. Whereas in Europe, it's like, okay, you won't let me do printing in this country, I'm just going to hop across the border, and that's what happened over and over again. That's what I was going to ask if there was a lot of physical migration that was taking place as well during that time in Europe. Yes, yeah. And so what's the high note that we can end on here? Okay, so we have some degree of jurisdictional competition here in the United States. If you love plastic straws, move to Georgia, we'd love to have you here in Georgia. And if you don't like straws, California awaits, right? And the only thing that needs to happen is for us to figure out how again, now that we focus so much on voice as a society, how we can focus more on exit, how we can get it possible, how we can make it possible for people to afford either culturally or spiritually or socially or fiscally to move from one place where they don't agree with things to another place where they do. I think we need to encourage innovation, again, to decrease barriers to exit so that we can then encourage exit. And because through exit, we empower individuals to truly live their values. And whatever they want to do, whether that is having straws or whether that's not having straws, I think that exit is so critical to, I mean, to ultimate human progress. And I think that so encouraging innovation, I think is one of the keys to encouraging exit. And I think that innovation could look like a lot of things that could like Airbnb, that could resemble certain ride-sharing companies that give people greater access to leaving. It could mean lowering property taxes. It could mean doing other things that make it possible for people to live their values, which, of course, we at FI love living our values. Our values are many, and you can find those out on our website. One of our values is not to take too much time beyond what we've promised. So we're going to end it right here. We would love to see you next week at the FIcast. Look up all of our other episodes on our YouTube and Facebook channels. In the meantime, have a great weekend.