Adaptation? Never!

Consider for a moment that you've established a strategy for increasing the success of a small business you're trying to build. You decide that you'll dramatically increase spending (on advertising, hiring more people , building nicer offices). You borrow and then borrow some more to fund all of this. Instead of improving your profitability, your business begins to struggle. Cash is flying out the door and you begin to lose money every month. So ... you increase spending on advertising even more, hire even more people, borrow even more. You double down on a failed strategy, disregarding its results and hoping that a miracle will happen and things will improve. You refuse to change course, to admit that your strategy was flawed, to adapt. Your business moves inexorably toward bankruptcy.

In essence, what I've just described for a small business is the blue model of governance at the federal, state, and local level, except that instead of suffering the consequences of their failed strategy, Democratic politicians place the burden on taxpayers.

Nothing exemplifies this more than the current state of affairs in my ex-home state of Connecticut. CT is true blue and has been for a long, long time. It does occasionally elect a GOP governor, but the legislature is always Democratic. For decades, CT has spent too much, taxed too much, borrowed too much, capitulated to the demands of public employee unions (think: generous pensions that are not adequately funded), and refused to adapt. The result is that this once vibrant and beautiful state is spiraling toward economic ruin. Business development is very weak, it's population is falling, it's infrastructure is crumbling. The Wall Street Journal reports:

Connecticut lost General Electric ’s headquarters to Massachusetts earlier this year, so Governor Dannel Malloy is now trying Illinois’s business model: Raise taxes, and then when businesses threaten to leave, write a check to other businesses so they’ll stay. Behold his $22 million taxpayer gift to Ray Dalio’s Bridgewater hedge fund.

Last week the Governor presented Bridgewater with $5 million in grants and $17 million in low-interest, forgivable loans to renovate its headquarters in Westport along the state’s Gold Coast. Mr. Malloy said that other states including New York were trying to lure Bridgewater, and Connecticut couldn’t afford to lose the $150 billion fund or its 1,400 high-income employees. We’ve got nothing against Mr. Dalio, but he could probably dig up $22 million from petty cash.

The Governor’s office says Nutmeg State tax revenues could shrink by $4.9 billion over the next decade if all of Bridgewater’s employees departed. After Appaloosa Management’s David Tepper escaped to Florida from New Jersey last year, Trenton’s budget gnomes sounded the public alarm.

“We see what happens in places like New Jersey when some of the wealthiest people move out of the state,” Mr. Malloy warned. This is the same Governor who has long echoed the progressive left’s claim that tax rates don’t matter. Maybe he was knocked off his horse by a vision on the road to Hartford.

Like other states with progressive tax codes, Connecticut is dependent on high earners. As recently as 1990, the state had no income tax and had long been a refuge for companies and employees fleeing high-tax New York. But as usual after an income tax is introduced, the political class keeps raising the rate.

Mr. Malloy’s Republican predecessor Jodi Rell raised the top marginal tax rate to 6.5% from 5% on individuals earning more than $500,000, and Mr. Malloy raised it again to 6.99%. Hilariously, Ms. Rell said last month that she’s also moving her residence to Florida because of the “downward spiral” in Connecticut that she helped to propel.

Now let's think for a moment about things at the federal level. Barack Obama, Hillary Clinton, and Bernie Sanders tell us that we should all pay our "fair share." That the blue model is the only path forward. By that, they mean that a very small percentage of taxpayers should pay for the costs of Big Intrusive Government and the wasteful and ineffective programs it delivers. They further claim that increasing taxes has no negative effect on economic growth, and that government, not private enterprise, is the key driver for growing the economy. It's all a lie, but it's a lie that resonates with a non-trivial percentage of the populace. And when things get worse, when debt increases to dangerous levels, when government services get more and more sketchy, corrupt and ineffective, they double down on their blue strategy.

Adaptation? Never!