The Wall Street Journal reports New Hampshire's lack of an alcohol tax is spurring record sales and drawing the ire of neighboring northeastern states. The title of the article, "Tax-Free Liquor Lures Buyers, Stirring Crossborder Tensions", is a bit misleading in that no states seem to actually be irked by New Hampshire's fiscal policy. Massachusetts, the only state mentioned reacting to the lack of tax, seems to actually to accept it as reality and plans to move forward accordingly.
A few things to note. I find this to be a wonderful illustration of our democracy's greatest feature, federalism. Federalism is a preferable style for democratic rule for two reasons. One, it gives states the authority and flexibility to enact policies they feel would most benefit their residents. Consequently the country becomes a hotbed for experimental policy which ultimately results in failure and success. If there is failure, residents exit. If there is success, they flood in. One only needs to observe the Texas vs. California debate to begin to understand. In addition to experimentation (aka the application of freedom), the states disperse power over themselves and away from the federal government. In almost every case this is a good thing.
Another point I wish to address is that one may say this refutes my idea of international, or in this case interstate, competition. I do not believe this is true. New Hampshire's policy, as far as I can tell, was never reactionary. It was simply what legislators determined was the best policy for the state. Now it is possible, theoretically, State A could identify a policy weakness of State B, and thus adjust their policy to capitalize on the failures of State B's policy. In a certain sense, I could see this interpretation of applied federalism to be somewhat similar to the traditional definition of competition. It is an idea worth further studying.
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