If California wasn't subsidizing the South, then they wouldn't have the fiscal problems they currently have. In 2005 alone, Californians paid $47 billion more to the Federal Government than they received in spending.
Considering California's annual budget is $100 billion, Californians could lower their taxes by almost [Edit] 40% and avoid their budget problems if they stopped subsidizing the red states.
First off, the South wasn't always "red" states and you would do well to not permanently brand an entire state as such. Georgia's current governor is the first Republican to hold the spot in 130 years!!
Now you point out this $47B overcharge. And what happens to the great California economy once the U.S. is developing economic cancers all over the rest of the country due to lack of funds? Who's left to buy the iPods? Like it or not, Cali is part of the U.S. All for one.
Seriously, if your looking for root problems, not fanning the flames of bubble economies is a good start. I've never heard of a bubble that ended well. Paying attention to state governance to not allow the spending to get this out of hand would help as well.
California (and New York, Texas, Illinois, Florida, etc) would be fine without subsidizing other states. In fact, they would probably be better off. When places become difficult to live in, people tend to move to better places. We spend money trying to make unproductive places viable places to live when that money would be used more efficiently in states with better infrastructure, both human and physical. The more people who move away from subsidized places, the more money they will make on average, and the more iPods will be sold.
Humans agglomerate because it makes us more productive. By subsidizing dying towns in the middle of nowhere (and Michigan), we're paying people to be less productive. I don't care where people choose to live, but I shouldn't have to pay for their choices.
Even if it were in the self-interest of productive places to subsidize non-productive places, our current method of doing so isn't the best approach. There are greater gains in productivity to be had for less money in Mexico, which would create wealthier neighbors for us to sell things to. This is simply another case of the tendency of majorities (which in the US may only be electoral, not real majorities) in democracies to take what they can from the minorities.
Those numbers would only be a fair comparison if they exclude military spending and entitlements. A air force base in Kansas or a submarine purchased from Misisippi is (in principle) defending the entire US.
Also, federal entitlements follow the person, not the state, and can't be counted against states. Simple example: a person works in CA (paying taxes) and then retires someplace cheaper like AZ (receiving taxes).
Maybe CA does subsidize the south. But the tax foundation numbers don't prove much, one way or the other.
I don't have statistics, but in "Cities and the Wealth of Nations" Jane Jacobs argued that what really happens in modern times is that cities end up subsidizing rural areas. So more urbanized areas would "subsidize" those less so.
Comments
If California wasn't subsidizing the South, then they wouldn't have the fiscal problems they currently have. In 2005 alone, Californians paid $47 billion more to the Federal Government than they received in spending.
Considering California's annual budget is $100 billion, Californians could lower their taxes by almost [Edit] 40% and avoid their budget problems if they stopped subsidizing the red states.
- http://www.taxfoundation.org/research/show/22685.html - http://www.bloomberg.com/apps/news?pid=20601087&sid=a5_S...
[Edit] A link to CA's budget: http://www.ebudget.ca.gov/pdf/Enacted/BudgetSummary/SummaryC...
First off, the South wasn't always "red" states and you would do well to not permanently brand an entire state as such. Georgia's current governor is the first Republican to hold the spot in 130 years!!
Now you point out this $47B overcharge. And what happens to the great California economy once the U.S. is developing economic cancers all over the rest of the country due to lack of funds? Who's left to buy the iPods? Like it or not, Cali is part of the U.S. All for one.
Seriously, if your looking for root problems, not fanning the flames of bubble economies is a good start. I've never heard of a bubble that ended well. Paying attention to state governance to not allow the spending to get this out of hand would help as well.
California (and New York, Texas, Illinois, Florida, etc) would be fine without subsidizing other states. In fact, they would probably be better off. When places become difficult to live in, people tend to move to better places. We spend money trying to make unproductive places viable places to live when that money would be used more efficiently in states with better infrastructure, both human and physical. The more people who move away from subsidized places, the more money they will make on average, and the more iPods will be sold.
Humans agglomerate because it makes us more productive. By subsidizing dying towns in the middle of nowhere (and Michigan), we're paying people to be less productive. I don't care where people choose to live, but I shouldn't have to pay for their choices.
Even if it were in the self-interest of productive places to subsidize non-productive places, our current method of doing so isn't the best approach. There are greater gains in productivity to be had for less money in Mexico, which would create wealthier neighbors for us to sell things to. This is simply another case of the tendency of majorities (which in the US may only be electoral, not real majorities) in democracies to take what they can from the minorities.
Those numbers would only be a fair comparison if they exclude military spending and entitlements. A air force base in Kansas or a submarine purchased from Misisippi is (in principle) defending the entire US.
Also, federal entitlements follow the person, not the state, and can't be counted against states. Simple example: a person works in CA (paying taxes) and then retires someplace cheaper like AZ (receiving taxes).
Maybe CA does subsidize the south. But the tax foundation numbers don't prove much, one way or the other.
I don't have statistics, but in "Cities and the Wealth of Nations" Jane Jacobs argued that what really happens in modern times is that cities end up subsidizing rural areas. So more urbanized areas would "subsidize" those less so.
You don't think that military bases and big federal contracts aren't just another form of welfare subsidized by blue states like California?