The Economy of a Federation of Red-States would do Just Fine

Online you’ll come across people linking to studies showing that blue counties and blue states have a higher per capita GDP than others.

The per capita GDP of cities is artificially high because people commute to work there from outside the city limits, and from outside the county limits. Some cities, such as Chicago, get commuters from red states each morning. The productivity of these commuters is counted in the location they work in, not the location they live in.

UPDATE: The US government’s BEA calculates “Real per capita personal income,” which is each state’s per capita personal income adjusted for each state’s cost of living. In 2022, blue states only had 9% higher real income than red states. And the lower incomes mean they pay less income tax, so it’s not surprising that red states pay less to the feds than they get back. And the lower federal (and state) taxes is another reason the standard of living in red states is almost as good as in blue states.

If you adjust GDP per capita by the cost of living, Trump states do better than Hillary states. The reason GDP is more impressive in red states than income is: GDP in a red state is not necessarily income for a red stater, since some blue-state people (and foreigners) own companies and property in red states.

Another thing you’ll see online is the claim that red states are “dependent” on the federal government. But the federal subsidy is small, even for Mississippi, compared to total state GDP. Yes, a federation of red states would have slightly less federal spending on bureaucrats writing studies and issuing edicts, and less federal welfare spending. Is that a bad thing? The representatives these states sent to DC didn’t vote for socialism in the first place. What makes them think we’ll stay in the Union for its socialism?

Some websites try to calculate how much a state gives and gets from the feds. The idea is that a state is a “taker” if it gets more from the feds than it gives, but that’s missing some important context. The average state is a “taker” as long as the feds are spending more than they’re taking in. The feds are doing a ton of deficit spending (borrowing) now. But the states will have to pay back those loans, so the important thing is to compare how a state does compared to the US average.

The big picture is that red state economies will boom because they will use conservative principles to unshackle the economy and attract entrepreneurs.

UPDATE: The government of the State of New York commissions an annual report by the Rockefeller Institute on which states subsidize other states. My tabulation of their 2022 data shows that Texas subsidized the rest of the US by $37 billion in 2022, based on all federal taxes and spending. That’s $1226 per Texan. The eight-year average is $1681 per Texan annually. It varies with oil price, COVID-era federal spending, etc.

I also found that the average annual blue-state subsidy of the red states, based on all federal taxes and spending, including COVID-era spending, is $926 per person. That’s less than 2% of a red-state person’s annual income. We can guess that fedgov regulation restrains the economy by perhaps 20% of income, so this subsidy is negligible compared to the gains that would come from no longer being held back by fedgov. Much of the subsidy goes to the underclass and foreign families who will probably move to the blue states after a National Divorce The rest is spent on programs that Dems voted for, not GOP.

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Update: There are so many things that could be said about this topic. Most of the leading men who caused a city to become great were probably conservative. In terms of infrastructure etc, California became great when it was a red state. But great cities attract an influx of moochers. Cities attract families who can’t afford a car. Subsidized housing is in cities. Yes, cities have a higher cost of living if you want to own a house, but some neighborhoods have such high crime that the cost of housing is cheap.

Blue states have higher costs of living across the whole state as compared to red states, because of regulation and taxes. The higher cost of living doesn’t necessarily push out moocher families, because the taxpayer-funded wealth transfers are better in blue states. But this cost of living does push out working class families, and companies that rely on cheap labor. If red states were a separate country, the immigration laws would prevent the constant stream of working class families from blue state to red state. This would cause working class wages in red states to start to rise, so there would be fewer companies moving in for the minimum wage jobs.

The benefits of conservative economic policies is obscured by this population transfer between blue state and red state (not to mention federal policies that are bad for every state).

8 thoughts on “The Economy of a Federation of Red-States would do Just Fine

  1. Actually, both red states and blue states will probably benefit from a separation: after separation, our very expensive foreign involvement will be cut or eliminated.

    So all of that money poured into bases and wars in countries we can’t locate on a map will not be spent.

    The red states will probably also spend less on foreign aid — what Ron Paul said was taxing poor people in a rich country to send money to rich people in a poor country.

    And people who feel like they have more control over their own destiny will work harder and smarter. Being trapped in a system where a politically incorrect remark can get you fired is extremely demotivating.

  2. I never really hear anyone refute this point, in public or online. What a great point of view most people ignore. Also Dan is 100% correct on all of the above. Before I was old enough to vote I was a big fan of Ron Paul in his 2008 and 2012 presidential run.

    I would also like to add that another reason their GDP is larger is that most jobs created in their side of the country is filled with the service industry sector. A set of benign jobs given to only the most self-righteous and both culturally and morally bankrupt boring people. Utterly bland people stretching from Los Angles to New York City and any other unproductive shit hole just pumping out hedonistic schlock that American culture consistently consumes. Tired overused media with no originality and only relying on nostalgia as its driving market force. No one, in a culturally powerful or morally stable country, wants to see another 90s reboot or the six millionth marvel movie.

    Now I’m in no sense a socialist. The irony isn’t lost on me that many, if not most, of our problems, and in fact our biggest problem is tech censorship, comes directly from big business. Silicone Valley leading the charge and being followed by “woke capital.” I wouldn’t mind seeing antitrust laws for the NFL, Disney, Amazon, Google and many other big business. I’d rather have many competitive businesses under a free market than a few oligarchical companies under woke capitalism.

    It’s also ironic that many people do not realize that the term “capitalism” in of itself is in fact a Marxist word meant to describe the worst aspect of the free market. The unproductive “capitalist class” create a corrupt system from which capital is created by the exploited “proletariat class” only to be consumed by the unenlightened “bourgeoisie class”. We must learn to keep our markets free and allow innovation to prosper, while also realizing not give power to woke capitalism that can turn around and use our constitution against us. Do not fall for the phrase “it’s a private business, so they can censor if they want.” that kind of statement should be left to the current state of the loser republican party and the hedonistic libertarian party.

    God bless the working class American and the productive system where he may sell his personal innovations from the privately owned, yet God given, land he lives on.

  3. I am in agreement with this article and the comments. The red state secessionist movement is gaining momentum because at this point there is no sewing the Divided States of America back together again. We have lost OUR republic. If Constitutionalist Americans remain complacent and watch events unfold, soon every state will be turned into purple, then into blue, then into brown…(which is the color of socio-economic defecation like Venezuela for example). The Americanist Review has an excellent article on the subject of state secession at (it’s a free download in the online book store).

    1. I think the question you raise “What are the next steps?” is key.

      There are actually 2 primary questions: why do we want to secede, and how to do it?

      There are many, many strong answers to “why do we want to?”, and many are listed on this website alone. Being under the thumb of a hostile, essentially foreign elite is extremely motivating, but there are other reasons too: Leopold Kohr (1909-1994) wrote a whole book “The Breakdown of Nations” in 1957 outlining how large scale alone can crash a country.

      But the question you raise, “What are the next steps?”, is much harder.

      After all, your labor is valuable to your rulers, just as much as the land your ancestors developed is valuable to them. Our adversaries are capable and determined. But no purely human power is invincible.

      So these are my suggestions:
      (1) Do not cooperate with the propagandists. This means, in particular, not to buy news from the New York Times or similar.
      (2) Try not to be dependent on Big Tech, such as Google or Amazon. You may need to shop through Amazon, but if you are running a web site, do not depend on AWS. They can, and will, cut you off if you get traction. If you can, use Linux instead of Microsoft or Apple.
      (3) Become skilled in activities that a new Republic would need.
      (4) Associate with other secessionists if you can. Physical is ideal, but they exist on social networking sites also like MeWe, or CloutHub, or Slug. They exist on Facebook too, but Facebook likes to ban, so make sure to have a path off.
      (5) We will not vote our way out of this mess, but the existing political system is a tool we should use. If you are in Texas, support state representative Kyle Biedermann or others who are friendly to the Texas National Movement. Political activities shine a light and move the Overton Window even if they don’t pay off immediately. This website lists some existing state movements as well, and they are worth studying and supporting if you are a local.
      (6) Try to present our side as a win-win proposition to those we are trying to secede from. Most of them are not bad people anyway, although their media leadership is truly awful. If the red states secede, then the blue states will have to get smarter about they manage their resources. They will learn if they do not have red states to bail them out.
      (7) This list is incomplete, of course — please correct me where i’m wrong, and add to the list with more steps we can take. It’s worth thinking about a lot so that we don’t leave the next generations one step away from the stone age.

      🙂 🙂

  4. Texas secession movement can adopt Bitcoin as a currency. That would make Texas the First Nation to decentralize away from a central bank. No reserve currency of the USD, and introduce transparency in financial transactions. Being a first mover will ensure its solvency without a gold standard, not that it means anything anymore. Texans will still manage to trade globally without trying to establish another fiat currency.

    The fiat USD will fail in hyperinflation with the continued printing. The printing will hold the USD up temporarily, but it is inevitable. Once people understand fiat currency and how central banks work, they will reject the debt. This will likely not happen until taxes, energy prices, and food shortages make it painfully clear. It will inevitably happen

  5. It isn’t just about economics, or even mostly about economics. I don’t care if it were possible for the left’s ideas to be more profitable. I don’t want to live under their authoritarian tyranny. I also don’t particularly appreciate living in the country with the strongest economy because the wealth gap is larger, there’s more money in politics, and there is too much LEGAL immigration. I don’t want to attract a million entrepreneurs to my country. I want my country to create a fertile environment for its existing citizens to create a healthy economy, that need not be the most powerful in the world.

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