An article published on July 10 by the editorial board of the Wall Street Journal (“The States in America Where Incomes Grow Faster”) raises an interesting debate on regional economic policies in the United States and their impact on income growth.
When analyzing the behavior of income between the first quarter of 2022 and the first of 2023, the reported growth was 5.4 percent.
But an analysis by state shows that those governed by Republicans grow significantly faster than those led by Democrats. New York (2.6%), California (2.9%), Connecticut (3.4%), Rhode Island (3.6%), Maryland (4%) New Jersey (4.3%), Oregon ( 4.5%) and Illinois (4.6%), traditional strongholds of the Democratic Party, are growing below the national average.
North Dakota (9.7%), New Mexico (9.6%), Nevada (9.1%), Florida (9.1%), Nebraska (8.6%), South Carolina (8%) , Alaska (7.9%) and Texas (7.7%), traditionally Republican, register growth above the national average.
To conclude that politics determines income growth would be rash. Behind these results there are several factors that can also explain them.
The most important is the migratory dynamic that for decades has favored southern states such as Florida or Texas where the climate is less hostile.
This promotes in these states the construction that generates employment. Certain activities such as technology have had strong negative adjustments in recent times, which affects states such as California or New York.
The truth is that wages grow faster than inflation in red states while they grow 2 to 3 percent below inflation in democratic states.
A less limited measurement should include other indicators such as the quality of social services, environmental policies, subsidies to the most disadvantaged or income disparities.
Blue (Democratic) states generously subsidize low-impact industries, have ambitious support programs for the poorest, and unions are more active. Taxes also tend to be higher. In the red (republican) states, the rules are more favorable to entrepreneurship and there are fewer legal restrictions.
It is also true that the red states have stricter security and justice policies than the democrats.
Recent years have seen an extreme polarization of opinion in the United States.
What seems to be happening is an economic fracture between states along the same lines.
The tricky thing is that many Americans are “voting with their feet” and are migrating from low-growth states to states with better opportunities.
Tagline: The government has shown great political courage by raising the price of gasoline and closing the FEPC deficit. The increase of the ACPM is coming, whose economic and social impact will be much stronger.
MIGUEL GOMEZ MARTINEZ
Dean of Economics
Rosario University
[email protected]
2023-07-19 06:01:00
#economic #polarization
