The rise of the red state

In by Poor RichardLeave a Comment


Even several months after the election, we are still hearing reports in the media about the demise of the GOP. But the rumors of the GOP’s death have been greatly exaggerated. The reason? The laws of economics. It seems that certain red states within the aptly nicknamed named “growth corridors” are outperforming their blue neighbors by leaps and bounds, leaving them blue indeed.

From the WSJ:

In the wake of the 2012 presidential election, some political commentators have written political obituaries of the “red” or conservative-leaning states, envisioning a brave new world dominated by fashionably blue bastions in the Northeast or California. But political fortunes are notoriously fickle, while economic trends tend to be more enduring.

These trends point to a U.S. economic future dominated by four growth corridors that are generally less dense, more affordable, and markedly more conservative and pro-business: the Great Plains, the Intermountain West, the Third Coast (spanning the Gulf states from Texas to Florida), and the Southeastern industrial belt.

Overall, these corridors account for 45% of the nation’s land mass and 30% of its population. Between 2001 and 2011, job growth in the Great Plains, the Intermountain West and the Third Coast was between 7% and 8%—nearly 10 times the job growth rate for the rest of the country. Only the Southeastern industrial belt tracked close to the national average.

Historically, these regions were little more than resource colonies or low-wage labor sites for richer, more technically advanced areas. By promoting policies that encourage enterprise and spark economic growth, they’re catching up.

Such policies have been pursued not only by Republicans but also by Democrats who don’t share their national party’s notion that business should serve as a cash cow to fund ever more expensive social-welfare, cultural or environmental programs. While California, Illinois, New York, Massachusetts and Minnesota have either enacted or pursued higher income taxes, many corridor states have no income taxes or are planning, like Kansas and Louisiana, to lower or even eliminate them.

The result is that corridor states took 11 of the top 15 spots in Chief Executive magazine’s 2012 review of best state business climates. California, New York, Illinois and Massachusetts were at the bottom. The states of the old Confederacy boast 10 of the top 12 places for locating new plants, according to a recent 2012 study by Site Selection magazine.

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This is staggering and it’s truly why federalism is so important. Our founders set up a nation full of little laboratories that will help us determine what laws work and what laws don’t. And while the federal government continues to cripple the nation as a whole with its burdensome regulations, high taxation and out of control spending, it is the prerogative of the states to add more of these things or less of them. Consequently, the relatively low-tax, low-regulation states do well (i.e. red states) and the high-tax, high-regulation states do poorly (i.e. blue states). The laws of economics always win.