This past Saturday, I made a presentation at a convention in Las Vegas. There were probably 300 people in the room, which was a little surprising. I said to the group, “Take a look to your right and now to your left. These are the types of people who attend economic presentations on Saturdays in Las Vegas. And I am the type of person who makes them.”
Fortunately, the group thought it as humorous as I did.
Interestingly, I have only ever been to Vegas on business. Casino gambling isn’t much of a temptation to me. I find no thrill in it and get no adrenaline rush. After all, if the odds were in your favor, there would be no such thing as casinos. But that didn’t stop me from putting some money into a slot machine. Oh no.
I chose the “Crazy Rich Asians” slot machine. I suppose I chose it because Michelle Yeoh’s picture was on it. Also, the movie is pretty good as well. Just don’t ask me what the rules were. Almost a week later, they are still a mystery to me.
All I know is, I hit this button a few times and the thing lit up like a Christmas tree. I don’t consider myself a stupid person, but the items on the screen didn’t make any sense. Two pictures of Michelle Yeoh, one of Constance Wu, a couple of diamond rings, and I don’t know what else. Voila! I won three free games and was somehow up $35 on the 1¢ slot machine.
Crazy Rich Asians? Well, it was certainly crazy. So much so, I cashed out. I figured I would end up losing it all once I knew what was happening. So, $35 in winnings? If everyone was a big shot like I am, Vegas would go belly up. Just call me Johnny Vegas.
While I was out there, I got an enormous number of advertisements on my phone for something called CalFresh. According to the Wikipedia page, this: “is the California implementation of the federal Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp program, which provides financial assistance for purchasing food to low-income California residents.”
Remember, I was in Nevada and not California.
If I got the ad once, I got it no fewer than 100 times. It was a little baffling to me. To that end, I have never, not once, received an ad for Alabama’s equivalent. I suppose Montgomery has better usages for the program’s budget.
It was even more confusing because it made CalFresh out to be kind of “the thing to do.” It had a cute, perky pitchwoman. They set it in a farmer’s market. People passed around fresh fruits and veggies in environmentally friendly bags. There was even a smartly attired family of four in it. The very attractive “mom,” as there was no way she was old enough to have kids that age, smiled pleasantly into the distance.
It was all so sanitized and, dare I say, pleasant. Who wouldn’t want CalFresh?
The point here isn’t to bash the SNAP program in California. Heck, it was pretty impressive stuff. It is to suggest the size of the state government is massive out there. I mean professionally produced vignettes imploring people to take public entitlements? The advertising budget alone, huh? Wow.
Interestingly, the ad was playing on my phone when my Uber driver showed up to take me to the airport. Coincidently, his name was also John. However, that wasn’t what I found interesting. No, it was the fact he had moved to Nevada from, you guessed it — California — about 14 months previous. The reason? The taxes were ridiculous. The government was too intrusive, and the cost of living prohibitive. Sure, he missed the ocean, but he wasn’t in any hurry to go back.
What’s more, he said he lived in a relatively new community where just about everyone was originally from California. According to John: “if this keeps up, there isn’t going to be any middle class left over there. There will be only the extremely rich who can afford it and the extremely poor living off the government. And, there will be a lot more of them. Something has to change. Everyone is moving here or to red states like Texas. Are you from Texas?”
When I told him I was from Alabama, I wasn’t convinced he had heard of the place.
Trust me, I didn’t prod this guy at all. I also didn’t prod him to tell me about his air conditioner issues or about some of the shoddy carpentry in his new house. “They are just putting them up as fast as they can, because people are flocking here.”
This sort of takes me to the point today, a question really. Why is it people seem to be moving away from states with largest government apparatuses, yet people still want government to do more? Or at least they seem to do so.
Consider the following bullet points from The Pew Charitable Trusts:
More recently, population change from July 2020 to July 2021 shows:
- Among the 17 states where population declined over the year, losses were greatest in New York (-1.58%), Illinois (-0.89%), Hawaii (-0.71%) and California (-0.66%). Losses in these states were driven by people moving away.
- Four states experienced population declines because more people moved out than in, and more people died than were born: Massachusetts, Mississippi, Michigan and New Mexico. The data does not separate deaths related to COVID-19 from others.
- Aside from states with declines, population grew more slowly over the year than over the 2010-20 period in 19 states. Among them, Washington, Colorado and Oregon experienced the biggest slowdown in growth compared with their decade-long pace.
- After Idaho and Utah, population grew the fastest in Montana (1.66%), Arizona (1.37%), South Carolina (1.17%), Delaware (1.16%) and Texas (1.06%). Gains in each came mostly from new residents moving into the state.
To be sure, you could make an argument this doesn’t necessarily reflect the long-term trend. Or that COVID changed everything. That remote work is skewing the numbers. There are any number of counter arguments. However, the numbers are what the numbers are, and they seem to be accelerating.
Don’t get me wrong, Alabama’s government is by no means a paragon of virtue. Further, we aren’t growing very rapidly here either. Still, if you click on that link above and look at the chart in the middle, a story emerges. As a rule, states with higher taxes and bigger governments are losing population while the inverse is true.
This, then, takes me to my absolute final point today, an opinion really: wanting bigger, more expansive government is as confusing to me as casino gambling and the Crazy Rich Asian slot machine. I know the odds are against me, and it is best to get while the getting is good.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows not only on this day but every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
Chief Economist & High Roller
Please note, nothing in this newsletter should be considered or otherwise construed as an offer to buy or sell investment services or securities of any type. Any individual action you might take from reading this newsletter is at your own risk. My opinion, as those of our investment committee Investment Committee, is subject to change without notice. Finally, the opinions expressed herein are not necessarily those of the rest of the associates and/or shareholders of Oakworth Capital Bank or the official position of the company itself.