Especially when the topic is timely, it can be fun to re-read a book. After speaking with an old friend who last year moved to Florida with his business, I started giving another glance at The Armchair Economist by Steven Landsburg. This book provides common sense explanations of economic principles via common place scenarios with a general theme of incentives being at the heart of economics.
Take someone like a former resident and business owner in Enfield. “I thought I’d spend the rest of my life in Connecticut,” said Joe D. “But now that I’m in Florida, my business is thriving and there’s really no incentive to go back.”
What makes Florida so much more appealing (aside from the weather)? “Simple,” continued Joe D. “Florida doesn’t make it hard for me to run my business. There’s no personal income tax. And the sales and property taxes are lower.” His answer makes it easy to understand why so many Connecticut businesses and residents leave for greener pastures.
Right now, Connecticut is not providing the right incentives for people and businesses to stay. State Senator John Kissel recently wrote an article about all the new taxes implemented during this last legislative session: raising the minimum wage, payroll taxes for family leave, higher income and sales taxes, taxes on plastic bags, hikes in taxes on small business and even new taxes on dry cleaning services. Connecticut is the only state in New England that hasn’t recovered pre-recession job losses. Do our legislative leaders really believe all these new taxes and regulations will provide incentive for businesses and taxpayers to stay? And will any of these policies incentivize job growth? Unfortunately, all evidence points to the contrary.
“Most of economics can be summarized in four words: People respond to incentives” is the first line of Chapter 1 of The Armchair Economist and truly summarizes the book’s message. Incentives are powerful motivators. Remember when gas prices were over $4 a gallon? Fuel-efficient vehicles were flying off the lots while gas guzzling SUVs were collecting dust. Why does going to the gym elevate in importance before summer beach season begins? Why do some of us provide tangible rewards for our children to get good grades? It’s because we understand incentives are powerful motivators. If only our legislative leaders understood that principle. Perhaps then Connecticut would realize its former glory and again be synonymous with robust economic growth.
Written By Chris Rutledge
Previously published in the Enfield Press
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