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Competing for People

by Conor Friedersdorf

Reihan Salam has two interesting posts up, one defending the FDA from a Wall Street Journal editorial [correction: the FDA post is actually Avik Roy], and the other musing on the United States and its ability to retain ultra-rich citizens:

Bashing the rich has a powerful political and emotional appeal for many people. For people on the left, tax exiles are profoundly unattractive figures -- economic Benedict Arnolds, to evoke a phrase popular in 2004. I think about this more pragmatically. Plutonomy is baked into advanced economies. Without truly confiscatory taxes -- I'm talking about marginal tax rates in the neighborhood of 70 percent or higher -- large fortunes will keep growing larger, and the ultrarich will settle in the most congenial environments. The U.S. is a country rich in amenities that Dubai, Doha, and Singapore can't really match. So many of the ultrarich will pay a premium to live here, just as wealthy individuals pay a premium to live in California or Paris. But how big a premium will they pay? And how long will our edge in amenities last? 

It's useful to assume that the answer is not that big and not that long. Because if we're wrong, a trickle of adventure-seeking emigrants could become a cascade of our best and brightest.  

One way to keep our edge in amenities is to take a leftier road and spend more money on high-quality public services. The only wrinkle is that we'd have to fund them out of regressive consumption taxes, to avoid driving away talent. My preference is to take a rightier road, and remake our public sector so that it can offer high-quality services at low cost through the use of competition, for-profit social enterprise, personalization, privatization, and other strategies that don't rely on big increases in public spending.

Read the rest here.

This seems like a good time to mention that the US should make it much easier for the best and brightest in other countries to immigrate here. We're squandering a comparative advantage by failing to do so, and missing out on a generation of scientists, entrepreneurs, engineers, doctors, and others who would contribute enormously to this country if given the opportunity.