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Inevitable Tax Increases

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In the latest WSJ blogger celebrity death match, Max Sawicki says


Social Security and Medicare spending will increase faster than GDP, requiring increases in taxes, and there is not a damn thing anyone can do about it

Tyler Cowen responds,

I don't think that I can spend Max's money better than he can. I think even less that the votes of millions, filtered through special interest politics, can spend his money better. But that is what you must believe, if at the margin you wish to raise taxes.

Both Cowen and Sawicki agree that Social Security and Medicare are the key determinants of future tax rates. That makes their debate (you should read the whole thing) much more informed than most discussions of taxation.

Cowen argues for reductions in projected benefits in Social Security and Medicare, and Sawicki argues against such reductions. Neither sways the other.

This reminds me of an essay I once wrote on policy diversity.


I would love to live in the only major industrial country that uses vouchers for school funding, private accounts for retirement savings, and catastrophic insurance for subsidized health care.

My point is that Max Sawicki's policy preferences, for heavy taxation and social welfare programs, are already in place in many developed countries. But my preferences, for a much smaller welfare state and lower taxation, are not. Since we cannot be certain that one side or the other has the better argument, why can't we have some diversity? In my essay, I suggested breaking the United States into two countris: Miltonia and Hillaria. Perhaps the red state and blue state divide already provides a basis for this (I would have to move).

For Discussion. Which developed country comes closest to a free-market model?


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CATEGORIES: Fiscal Policy



TRACKBACKS (3 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/217
The author at PRESTOPUNDIT in a related article titled THE HECK with "Red" state, "Blue" state, writes:
    Arnold Kling would like to see Miltonia versus Hillaria. Really.... [Tracked on March 19, 2005 1:54 AM]
COMMENTS (44 to date)
Bernard Yomtov writes:

Tyler Cowen writes,

I don't think that I can spend Max's money better than he can. I think even less that the votes of millions, filtered through special interest politics, can spend his money better. But that is what you must believe, if you wish to have a democratic government.

Oh, wait, I made a typo. Instead of the last seven words I quoted he actually said at the margin you wish to raise taxes.

Sorry.

spencer writes:

Maybe what you need to discuss is why the blue
states rank higher on almost every measure of economic well being then the red states and that includes business.

Because this analysis sure implies that your thesis is not valid.

Boonton writes:
In my essay, I suggested breaking the United States into two countris: Miltonia and Hillaria. Perhaps the red state and blue state divide already provides a basis for this (I would have to move).

The only problem is how to wean the red states off the welfare tax dollars provided by the blue states. Initially the red states might have a large current account deficit which they would have to finance, over the long run, by running deep trade surpluses with the blue states. Can the red states really sell that much country music to New York and California? Only time will tell!

Mitch Oliver writes:
Maybe what you need to discuss is why the blue states rank higher on almost every measure of economic well being then the red states and that includes business.

A couple months ago I recall reading an article on Tech Central Station which stated that red states were growing economically, while blue states were not. Unfortunately I can't find the article right now.

Might not the present rate of growth be a better indicator of how well present policy works in various states?

Bernard Yomtov writes:

Mitch Oliver asks,

Might not the present rate of growth be a better indicator of how well present policy works in various states?

It might, or not. One has to be careful comparing growth rates off different bases. A small economy can grow at 5% more easily than a larger one can.

spencer writes:

Actually you are right on the growth rates for the most part as the states tend to converge.

But the red states have a long ay to go and the differences in the public sector has been around for a long time.

It is like our republican governor in Mass. In came here from a red state to get the high quality education he could not get in a red state and make a fortune investing in high tech firms that could not exist in a red state. Now, for political purposes he keeps trying to turn us into a red state and pull the rug up behind him so that others can not do what he did.

William Woodruff writes:

To answer your question:
Which developed country comes closest to a free-market model?

Australia ! 13 years of uninterrupted growth, the OECD expects grwth of 3.8% (of GDP) next year and 3.6 in 2006. Grew at 3% GDP last year, enjoys a budget surplus (try that George Bush !), a social safety net and low marginal tax rates.
Source Economists Feb 5,2005

Denmark ! Grew at nearly 3% last year, enjoys both a current account surplus and budget surplus (try that George Bush, and you call yourself a conservative !), with a social safety net which does not leave 40% of its citzenry without health care.

William

Brian Moore writes:

Regarding the discussion question, I was under the impression that Hong Kong was always the freest market. How much has absorption into China affected this?

I'd definitely agree with the Australia vote.

I really like the "divide the nation" idea. When you think about it, that was the original point of Federalism. If a bunch of states had stupid laws, people would migrate away from them. Unfortunately, such differentation is no longer possible. There are only microscopic legal differences, and lead only to tiny choice differences -- like incorporating your company in Delaware.

Boonton writes:

You still have to correct for government transfers. If Flordia sees an influx of retireed Republicans collecting Social Security checks its economy will grow. However this has nothing to do with Florida's economic policies (well perhaps to the extent that Florida has policies that make it attractive to retirees as opposed to simple geographical luck).

Since the subject has come up, every now and then I've tried to find GDP numbers for individual states and had no luck. Does anyone produce this data? Is it too expensive to estimate for so many small economies?

Tony Vila writes:

The main problem with such federalism is mobility. The optimal tax rate for generating revenue is probably a lot higher in "just one government", than the world where firms and people can run to other "states" to seek preferential policies. Now most econo-libertarians like this, since it causes states to have motives to keep taxes down via competition. But if you're talking about finding out what the ideal policies are, and not just "whatever we can do to make taxes = 0", it's a hugely distortionary effect.

Indeed, dividing the world into different sectors makes a lot of sense. It doesn't if you're looking at it from an evolutionary standpoint, though. Then you have to make sure to take into consideration other previous resources and standpoints. This also doesn't really appreciate current costs to happiness. Wars and such are great for advancing society, the provide mobility and technology and other things, but they are very hurtful right now and regrettable things.

Boonton writes:

The intellectual shift on the left that should take place is away from providing for the poor towards dealing with income volitility. Programs such as social security have great staying power because they literally provide a measure of security in a world dominated by market outcomes that are by definition unpredictable (if you could predict market outcomes then central planning would be feasible).

Another area where this has come up is the recent bankruptcy 'reform' bill. Again the most effective argument the left has is in areas where the middle class (and to a degree upper class too) desires financial security.

This is why social security & medicare should be kept as a retirement benefit and not simply reduced to welfare for poor seniors. Bush has a clear ideological perference in pushing more risk onto the 'typical American' rather than making it easier for him to deal with risk.

spencer writes:

Data on state GDP is not readily available but data on state income is published regularly by the govt. You will find that most blue states rank significantly higher then red states on real per capital income. On average red states average real per capita incomes is about 20% higher, with some significant exceptions.

spencer writes:

Isn't the real problem with your approach is that no "free-market" country has ever evolved into a
developed country. The data implies that the worse thing for a countrys standard of living is to have a weak government. Name a single developed country without an effective government providing large scale education, healthcare and infrastructure, including law.

That has always been the biggest argument against pure free market strategies.

Max Sawicky writes:

The state analog to GDP is Gross State Product. The BEA at Commerce Dept does estimates, which can be found here:

http://www.bea.gov/bea/regional/gsp.htm

Jim Glass writes:
Spencer wrote:

Maybe what you need to discuss is why the blue states rank higher on almost every measure of economic well being then the red states ...

A technical point here: There are no blue states (apart from Vt and Mass) only blue cities.

Look at the map. Do New York, Illinois and California look like blue states?

So you should properly be comparing measures of well being in the deep-blue voting areas like Washington DC, the Bronx, East St. Louis and so on, with those in the 80% of the country by area that vote red.

p writes:

Let's remember history when we characterize red versus blue states economic status. Blue states were once red states. They grew prosperous on the minds and backs of their red state populations. As they have aged they have turned blue. The reasons are many.

Let's also remember that Harvard and MIT are vetsitages of the past when they were great red states. I would also add it is the red in them that makes them valuable to the world. No one rushes to the blue state elements of these great schools (eg, gender studies.

As for red states citizens rushing to blue states for education. Yes, but remember that the blue states must import these talented red state citizens to fill their halls with intellectual excellence.

Bernard Yomtov writes:

Jim Glass,

What in the world does area have to do with it? It's people who are entitled to political representation, not empty fields.

mcwop writes:

Man, the whole blue state - red state subsidy argument is the dumbest ever. Demographics explains much of the difference. In raw dollars blue states got a lot of federal money. Example, California received $219 billion (more than many red states combined) in Federal dollars, and Wyoming (where 50% of the land is owned by the Feds) got $3.8 billion. Of course, Wyoming has a tiny population, where moose outnumber people so on a per capita basis it looks lopsided compared to California. The subsidy argument is just as dumb as the argument that Bush won more acreage so he must be right.

Anyhow, onto the discussion question. I am going with Ireland.

Source for numbers: http://www.taxfoundation.org/taxingspending.html

Rob Sperry writes:

" But if you're talking about finding out what the ideal policies are, and not just "whatever we can do to make taxes = 0", it's a hugely distortionary effect."

There have been several countries that have activly tried to prevent folks from leaving. They even built walls. They usualy had leaders that talked a great deal about ideal policies.

I am sorry you regard other peoples freedom as such a distortinaly effect in your efforts.

What in the world does area have to do with it? It's people who are entitled to political representation, not empty fields.

Then why does Wyoming have the same number of senators as New York?

Tony Vila writes:

Rob Sperry writes:


There have been several countries that have activly tried to prevent folks from leaving. They even built walls. They usualy had leaders that talked a great deal about ideal policies.

Yes, and that was bad. But not doing that means you can't really use diversity to find out what the best economic policy is.

Clearly freedom of immigration is more important than this (or 90% of issues discussed on this blog). But you can't tell me that say, Bermuda has the better economic policy than the US, because it has many more corporations per capita than the US does. It's because they offer competition, driving down tax policy all around.

Steve Conover writes:

Why can't GDP grow at least as fast as *total* federal spending (not to be confused with just SS+Medicare spending)? The GDP growth question is crucial to the debate. See "A Gaping Hole in the Social Security Debate" at this page:
http://www.optimist123.com/optimist/2005/03/a_gaping_hole_i.html

ted writes:

Max Sawicki favors CONTROL. His justification is irrelevent. Are you willing to give him control or not?

Rob Sperry writes:

"Yes, and that was bad. But not doing that means you can't really use diversity to find out what the best economic policy is. "

Let me be more dramatic here … if your idea of the “best” economic policy involves shooting people who try and flee the paradise you create, then you need to reevaluate your idea of “best.” I understand you are trying to make an abstract argument, but my counter is that you have abstracted too much from realty to the point that trying to apply the conclusions to reality would be a disaster on the scale of North Korea.

It is very dangerous to start thinking about “best” solutions that involve things like restricting fundamental human rights, or changing the basic nature of human beings. The problem is not with human freedom or nature, but of you idea of the “Best.”

“But you can't tell me that say, Bermuda has the better economic policy than the US, because it has many more corporations per capita than the US does. It's because they offer competition, driving down tax policy all around.”

I don’t know much about Bermuda. I don’t think corporations per capita is a relevant metric. But I do think offering alternative government systems that people can choose from is inherently a good thing and because I think that the best systems are those that let individual choices dominant I think driving down tax policy ought to occur.

Boonton writes:
Look at the map. Do New York, Illinois and California look like blue states?

So you should properly be comparing measures of well being in the deep-blue voting areas like Washington DC, the Bronx, East St. Louis and so on, with those in the 80% of the country by area that vote red.

Nonetheless, NY and CA are likely to have 'blue policies'. In that case you can validly compare blue economies to red. Its also interesting to wonder if the 'red welfare' pattern exists in blue states? New York City, for example, has long complained that it is a net tax payer to the state government. In other words, 'red' parts of NY state are indirectly subsidized by 'blue' NYC tax dollars.

mcwop, the source you cite seems to back up the blue-state feeding the red-state claim. California, for example, ranks in the 40's in terms of tax money received back versus paid in. Space may be a more significant issue. If one person lives in a vast empty desert but the gov't spends $10B to build a secret air base there it will look like that 'state' is getting $10B in tax dollars for nothing. In reality most of the money is going into the base & not various welfare payments.

I agree with you its a silly argument but so is the whole blue-red divide.

DR writes:
the only major industrial country that uses vouchers for school funding, private accounts for retirement savings, and catastrophic insurance for subsidized health care.

You're talking about Canada, right? Here in Edmonton, 100% of the money follows the child to any school in either of the two entirely separate public school systems, each of which offers a broad range of choices, or 75% of the money if you enter the entirely private sphere. Contributions to retirement savings accounts are 100% deductible (up to a large maximum), grow 100% taxfree until withdrawn (which they can be at any time), and there are effectively no limits on how they are invested (the Canadian content restrictions were minor, easy to evade, and were removed in the latest budget). There's obligatory catastrophic insurance coverage, on the one-big-HMO model, one per province, for any need-to-have medical care, with private insurance widely available to cover nice-to-haves. I don't think it's subsidized, unless you're counting your insurance payments, but other than that it seems to meet your needs. What's not to like?

Lawrance George Lux writes:

To Arnold's question: Singapore represents raw Robber-Barron capitalism combined with Police-State social welfare.

Social welfare is a function of Population size, not ideology. Diehard Mississippi even recognizes overall Living Standards as dependent upon expanding Social welfare programs.

Why do Republicans, Libertarians, and Austrians believe a Government possessing Police Power will ever take their hands out of your pocket? lgl

William Woodruff writes:

DR:

Yet, many on the right here are constantly beating the drum of how bad the "Canadian Model" is (ie economy, health care, etc).

They have convinced Americans how horrible the Canadian Health Care Model operates.

William

mcwop writes:
mcwop, the source you cite seems to back up the blue-state feeding the red-state claim. California, for example, ranks in the 40's in terms of tax money received back versus paid in. Space may be a more significant issue. If one person lives in a vast empty desert but the gov't spends $10B to build a secret air base there it will look like that 'state' is getting $10B in tax dollars for nothing. In reality most of the money is going into the base & not various welfare payments.

I agree with you its a silly argument but so is the whole blue-red divide.

Yes, it backs up the statement in terms of tax money received back versus paid in, but it does not support statements that red states are some sort of welfare queens living off blue states.

Take the base example; those dollars are included in these calculations. So, in WY where the Federal government has decided to own lots of land (something many people in WY want to change), then the feds have to send money there to support those lands. Why should this reflect negatively on the people of WY (population: 500,000)? The blue states do have input to what is done with federal land in WY. In no way should that definitively suggest that people in WY are some sort of welfare queens. Social security payments are also used in these calculations. These payments are not welfare; people that collect it paid money into that SS system. If a blue state has a younger population than a red state then the nature of the pay-as-you-go system skews the numbers.

So, I hope we are in some sort of agreement. I just want to be sure people are clear as to why I think the "welfare queen" argument is indeed silly.

Bernard Yomtov writes:

What in the world does area have to do with it? It's people who are entitled to political representation, not empty fields.


Then why does Wyoming have the same number of senators as New York?

Gee Patrick, you've missed my point. What a surprise. Jim seemed to think that the fact that 80% of the area of the country votes "red" is significant, as though the vote of one farmer is somehow equal in significance to the votes of the many people who live on an equivalent amount of land in a city. I disagree.

Why does Wyoming have two Senators? I guess because the Framers of the Constitution compromised between big states and small states, but not being able to see the future they did not foresee the huge population disparities that would arise among states. In other words, it was an unwise compromise with unfortunate effects.

Mcwop writes:
DR writes: What's not to like?

It is very difficult to emigrate to Canada to get those nice perks. Probably a good call on Canada's part.

DR writes:
Mcwop writes: It is very difficult to emigrate to Canada to get those nice perks. Probably a good call on Canada's part.

It's not easy to emigrate anywhere, but Canada is one of the easier places, which is yet another thing that PO's the US. For Americans, if you're a professional under NAFTA, you can cross the border to work with nothing more than an offer letter. To stay truly permanently, you'll eventually have to do some more paperwork or meet a nice Canadian girl or boy, depending on your preferences. From other countries, it's not much harder. As a result, Canada's per capita immigration rate is something like 10x that of the US.

Jim Glass writes:
Look at the map. Do New York, Illinois and California look like blue states?

So you should properly be comparing measures of well being in the deep-blue voting areas like Washington DC, the Bronx, East St. Louis and so on, with those in the 80% of the country by area that vote red.

Boonton wrote:

Nonetheless, NY and CA are likely to have 'blue policies'. In that case you can validly compare blue economies to red.

If you are stating that the "blue policies" that reach to the border of the Bronx and Queens and end there are the same as the policies in the neighboring communities of Westchester, Nassau and beyond that vote red, you're trying to kid somebody in a big way. And I dare say the same about East St. Louis, DC, San Francisco, etc.

The claim was people who live in areas that vote blue are better off by "almost every measure of economic well being". So fine -- compare those measures of well-being in the Bronx to right over the border in Westchester and Putnam, and in Brooklyn to right over in Nassau and Suffolk (and in DC to Maryland and Virginia, etc.)

Look at income, life expectancy, educational attainment, tax rates, cost of housing, etc. They are all among "almost every measure", eh?

As one specific example, one might start by taking a look at unemployment and the cost of retail goods in the Bronx - -- where when big retail stores like BJ's, Wal-Mart, and Ikea offer to set up shop, creating jobs and lowering prices, and even the Bronx's own "blue" legislators support them to get those jobs and lower prices for their constituents, the city-wide big blue machine manufactures legal obstacles to kill them for blue political purposes.

So the big retail stores instead go right over the border into southern Westchester and open there. So who gets the jobs, lower cost of living, extra tax revenue that allows lower tax rates, etc, and who doesn't?

What a difference a border line makes! And blue policy, too, alas for the overcharged and unemployed poor of the Bronx.

If you don't think different forces drive politics in the cities, you're kidding us all.

Bernard Yomtov writes:

Jim Glass, What in the world does area have to do with it? It's people who are entitled to political representation, not empty fields.

Empty fields don't vote red any more than rent controlled buildings vote blue, Bernard.

There was a claim that people who live in areas that vote blue are overwhelmingly better off welfare-wise than those who in live in areas that vote red.

So, that is much more accurately measured by county than state, right?

And if you continue calling everything in New York north of the Bronx an "empty field" even the Democrats up there will get annoyed at you.

Mcwop writes:
As a result, Canada's per capita immigration rate is something like 10x that of the US

Not according to the CIA factbook it is just under 2X.

Canada 5.96 migrant(s)/1,000 population

US 3.41 migrant(s)/1,000 population

I have several friends trying to emigrate there to ski bum. It is not very easy.

Boonton writes:
Take the base example; those dollars are included in these calculations. So, in WY where the Federal government has decided to own lots of land (something many people in WY want to change), then the feds have to send money there to support those lands. Why should this reflect negatively on the people of WY (population: 500,000)?

The Fed decided that? How did the Feds get lots of land? Did they order people in WY to give it to them or did they purchase it? Or did they take possession of the land before WY became a state? No matter what the case how many of the 500,000 people in WY make a living or partial living by the money that the Fed is pumping into 'the land'? That money is coming from NY and CA taxpayers (plus Asian central banks loaning the Treasury money to finance the deficit).

In theory the Fed could grant or sell WY all its land and let WY go on its way as an independent country. In theory the person collecting welfare down the street could take two low paying jobs and be financially independent as well. Unless that happens, however, the fact remains both are being subsidized by taxpayers from Blue states.

The blue states do have input to what is done with federal land in WY. In no way should that definitively suggest that people in WY are some sort of welfare queens. Social security payments are also used in these calculations. These payments are not welfare; people that collect it paid money into that SS system. If a blue state has a younger population than a red state then the nature of the pay-as-you-go system skews the numbers.

I agree that argument is silly. The 'welfare queen' comment is just a little rhetorical way to slap some reality in Red Staters who may be a bit to eager to imagine themselves as bold individualistic, self-sufficient Americans bolding fighting the battle against the weak, 'always looking for a handout' Blue states. Even the best of us, like Arnold Kling, occassionally need a little jolt.

IN reality it makes sense for red states to be net receivers of tax dollars.

1. In sparsly populated areas, a few Federal dollars going to manage parks, reserves and other lands will inflate the 'Federal $ per person' metric.

2. These areas are likely to have low cost of livings but also fewer job opportunities. This would be a push for young people to hit blue state areas and would be a magnet for retired people who do not have to worry about finding work but would like to stretch their retirement dollars as much as possible. No matter how you want to count social security the result will be production happening in Blue states to feed consumption in Red ones.

3. Another factor is the disportionate representation in the Senate causes Red states to have more influence over Federal dollars. Most here will agree this results in some very blatently bad policies that almost exclusively benefit the Red states such as farm subsidies, 'ethanol' mandates and so on.

Mr Ed.

If you are stating that the "blue policies" that reach to the border of the Bronx and Queens and end there are the same as the policies in the neighboring communities of Westchester, Nassau and beyond that vote red, you're trying to kid somebody in a big way. And I dare say the same about East St. Louis, DC, San Francisco, etc

My point was that even if NY is blue only because of the distortion caused by NYC's heavy left-wing population the state itself is likely to have 'blueish policies' rather than red. In rural areas, ironically, a 'Red' local government is unlikely to be much of an economic factor when compared to the state government or Federal.

Bernard Yomtov writes:

So, that is much more accurately measured by county than state, right?

Wrong.

And if you continue calling everything in New York north of the Bronx an "empty field" even the Democrats up there will get annoyed at you.

Jim,

You are really grasping at straws.

Westchester County went 58 Kerry, 40 Bush, and 2 Nader.

Second, while zoning matters somewhat, statewide policies on tax, regulations, etc., matter more. Boonton is correct on that point.

Third, the cities have high per capita incomes. New York, Boston, DC, and San Francisco - the ones I checked - all are well above national averages. If you want to pretend that only the South Bronx voted for Kerry go ahead, but don't expect to be taken seriously. He got 82% in Manhattan, for example.

Finally, the empty fields I mentioned are not in NY but Wyoming and the like. I'm tired of being shown ridiculous maps about how much of the country by area voted for Bush. You may feel it proves something important, but it doesn't.

Lancelot Finn writes:

The thing about the red/blue rural/urban divide is that the cities are rentier societies in a way that the rest of the country is it. Meaning that land is extremely expensive, which shows up first of all in housing prices but also in many other ways; stuff you buy costs more because you have to pay the land-driven overhead costs of the retailer; the streets are public, but what goes on there affects the value of the land so there ending up being more restrictions on guns, fireworks, street performers, whatever. The regulated life sets in. That's why it's not surprising that the red states grow faster, but established cities have huge advantages because society faces coordination problems.

The economist Paul Krugman (may he rest in peace) once did some fascinating exploration of economic geography. He noted the odd fact that the populations of major cities in any country show an uncanny tendency to follow the Zipf distribution: thus (as best I remember) if the largest city has a population of 16m (New York) the next-largest will have a population of (1/2)*16m=8m (Los Angeles) and the next-largest will have a population of (1/3)*16m=5.33m (Chicago); and so on. He offered no explanation, but it provides a fascinating example of the patterns that emerge in urban concentration.

I've sometimes thought it would be nice for smart, conservative people from the East Coast and California to pull up stakes and move en masse to cheaper, warmer/greener, less left-leaning places, like the Appalachians in Tennessee, and start a new civilization center to displace Boston/Harvard/Manhattan/Washington et al. But it would involve solving a huge coordination problem. Historically, the intellectual and commercial capital of Europe migrated a few times, usually in response to political calamities or religious fervor of one kind or another. It takes something big.

In the meantime, the periphery does the breeding and the producing, while the blue-state city centers enjoy concentrations of the elites.

spencer writes:

I now live in a Boston surburb but am originally from a little county in Kentucky that has some interesting history. The population peaked in 1890 -- it is the classic case of every time a baby is born a young man leaves town. It grew in the 1930s when the depression forced people like my Grandfather to return to the farm and in recent years when people have returned there to retire. Years ago -- I do not know if it is still true -- if you added up all the federal transfer payments -- social security, farm support, welfare --over half the income in the county came from such transfer payments.

Now if you want to compare that to the Bronx in many ways it would be a good comparison. Rural poverty is spread out so it does not appear so obvious as urban poverty but it is just as bad.
But the rural great plains is not the only area suffering depopulation.

But this is more the red-blue comparison you should be discussing because this county is much more representative of the red states then the urban centers like Atlanta or Dallas. When I first moved to New England I was surprised to see how much New Hampshire was like Kentucky -- even the accents were similiar.

What brought this up was the idea of people moving to such areas. I can now live any where I want, but I stay in the Boston area because it is
just so much more an interesting place to live.
I could not go back to Ky for anything even though I could easily realize a half to a million dollars in home equity profits. Moreover, what makes Boston an exciting vibrant place to live are exactly the things that make it expensive.

Jim Glass writes:
Jim, You are really grasping at straws. Westchester County went 58 Kerry, 40 Bush, and 2 Nader.
Bernard, speaking of grasping at straws, Westchester County -- where I was born and raised until I moved into the very heart of deepest blueness -- has had Republican-controlled legislatures and executives for most of the last several decades, and that's what sets lasting economic policy. Even the Redsters have moderate policy along those lines in order to be competitive and get elected occassionally.

All very different from the blue monopolies in the cities, as the article linked previously detailed. Monopoly is as bad for consumers in politics as elsewhere. Worse.

Second, while zoning matters somewhat,
Bah -- too disingenuous by half. The issue with killing the stores and all those jobs had nothing to do with zoning, the areas are zoned for such stores.

If you'd bothered to follow the links, you'd know tre reason is calculated blue politics -- as even the store-killers are proud to admit:

Among those committed to vote "no" was Helen Diane Foster ... Ms. Foster acknowledged that her decision was based on the fact that BJ's employees are not unionized. To her, the issue of jobs was unimportant, as she claims minority communities were often "bamboozled into falling for jobs." Ms. Foster would rather see the vast army of Bronx unemployed "trained for careers."
"Bamboozled into falling for jobs." !?

Geeze, now even you've got to admit that's a notably blue political attitude, eh?

statewide policies on tax, regulations, etc., matter more. Boonton is correct on that point.
Really, he is? More important than, say, city taxes that double the state tax rates, rent and price controls that exist only in the city to destroy housing and raise consumer prices, city regulations on construction that increase costs by 30% compared to over the border, politicians who block all large stores in the city and drive them over the border? Because they don't want the unemployed to become "bamboozled by new jobs"?

These are all less important than the lack of such outside the city? That seems a rather subjective belief -- I'd like to see some empirical support for that belief!

Now let's stay on topic, Bernard. The specific claim was that people who live in areas that vote blue are better off by "almost every measure of economic well being". Yet...

Nearly a decade ago, when Home Depot opened its first Bronx store, more than 15,000 applicants sought the 400 jobs. When a supermarket opened a couple of years ago, thousands applied for a handful of new jobs ...

The Bronx is the poorest of the state's 62 counties...

But that's 1.3 million people, more than most large US cities! How is it possible that so many who vote so blue are the poorest??
Third, the cities have high per capita incomes. New York, Boston, DC, and San Francisco - the ones I checked - all are well above national averages. If you want to pretend that only the South Bronx voted for Kerry go ahead, but don't expect to be taken seriously. He got 82% in Manhattan, for example.
Ah, well, if you want to support the claim that people in areas that vote blue are better off by "almost every measure of economic well being" by cherry-picking just my neighborhood of Manhattan and the Kennedy compound, omitting 3 million people in the Bronx and Brooklyn (and the likes of East St Louis) looking at just income (not the NYC cost of living!) ... and omitting the unemployment rate in NY v Kansas, the crime rate in DC and E. St L. etc, public school graduation rates, and various other measures of welfare, then be my guest. But that's not very persuasive as to the claim.
I'm tired of being shown ridiculous maps about how much of the country by area voted for Bush. You may feel it proves something important, but it doesn't.

And I'm tired of being shown ridiculous blue-red maps, the borders of which are arbitrarily drawn at the state level, to prove absurd claims that blue area residents enjoy superior welfare in virtually every way. Except for a million people here and two million there, whom we'll ignore. Ha, ha.

What the county-level map proves is one thing: a counterfactual that shows how dim-witted those claims based on the state maps are. Other than that I never claimed the county map proved anything.

Now, if you really didn't like dumb claims based on blue-red maps ISTM you'd be even more critical of the dim claims based on the state maps than the county ones.

But you seem to think this blue-red welfare business is the real deal on state maps, yet somehow not on county maps which are much more accurate at showing blue-red political divisions. Go figure.

Nonetheless, the fact is that there's precious little wrong with Kansas.

BTW, if you really wish to believe that high total income in places like NYC (drawing on Manahttan) and DC (drawing on government workers coming from all over to live in Georgetown) is the result of superior blue policy, you really should first examine cause and effect.

E.g. Is NYC high-income because of today's blue policies? Or did NYC build its high-income and wealth and the institutions that sustain them through a long history of what certainly would be considered red economic policy by today's standards -- enabling today's blue city politicians to extract from that income and wealth for their own benefit, as political rent seekers?

The direction of cause and effect should always be examined when we see a claim: "we have X policy and thus Y condition".

Rick Stewart writes:

One can't usefully compare per capita incomes per state unless one considers purchasing power parity. My daughter lives in Manhattan and earns 2.5 times per year what I do, living in Iowa. When I visit her in Manhattan, however, I must still pick up the dinner bill.

Bernard Yomtov writes:

Jim Glass speaks:

All prosperous areas are that way because of past or present "red" policies, as needed to support my claims.

All poor areas are that way because of present "blue" policies.

More broadly, the direction of causation is always red=> prosperity.

The fact that blue states tend to be rich and poor ones red (see Alabama, Mississippi, etc.) has no bearing on this whatsoever.

County borders matter except when they don't.

Forget I mentioned Washington, DC.

The only parts of blue cities worth talking about are the poorest parts.

Wilson writes:

Name a single developed country without an effective government providing large scale education, healthcare and infrastructure, including law.

America during the latter half of the 19th century.

The international market is also developed without a government that provides education, helthcare and infrastructur. And the law that it produces can be safely ignored.

Marcus Welch writes:

Which developed country comes closest to a free-market model?

Gwartney puts Hong Kong, Singapore, New Zealand, and Switzerland (in that order) at the top of the list of economic liberty. Gwartney's rankings are the results of a weighted aggregate of several factors (size of government, soundness of money, security of property rights, rule of law, soundness of the legal system, freedom of international trade, and so on and so forth) not just public spending as a percentage of GDP.

http://www.freetheworld.com

Fortunately, people like Gwartney have done the heavy lifting and we have a ranked list. Unfortunately, lists like this (Heritage also produces one) often neglect other vital factors that measure a free market. Is the press free? Can people freely assemble? Is there a War on Drugs? And so on and so forth.

Assuming a ranking system that would be even more comprehensive than the one used by Gwartney, I would guess that Switzerland is at the top.

Paul N writes:

If you split the US into Miltonia and Hillaria, in 20 years I bet they'd look awfully similar.

I tend to think that peoples' political attitudes are more an effect of policy than a cause.

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