House of Eratosthenes

Blue states, like California, New York and Illinois, whose economies turn on finance, trade and knowledge, are generally richer than red states. But red states, like Texas, Georgia and Utah, have done a better job over all of offering a higher standard of living relative to housing costs. That basic economic fact not only helps explain why the nation’s electoral map got so much redder in the November midterm elections, but also why America’s prosperity is in jeopardy.

Red state economies based on energy extraction, agriculture and suburban sprawl may have lower wages, higher poverty rates and lower levels of education on average than those of blue states — but their residents also benefit from much lower costs of living. For a middle-class person , the American dream of a big house with a backyard and a couple of cars is much more achievable in low-tax Arizona than in deep-blue Massachusetts. As Jed Kolko, chief economist of Trulia, recently noted, housing costs almost twice as much in deep-blue markets ($227 per square foot) than in red markets ($119).

Worstall points out the obvious:

Yes, sure, income inequality might be important in a way, wealth inequality should have a place in our thoughts. But what really matters to people about how life is lived is consumption. Levels of consumption and also consumption inequality. That last is important in a political sense currently because consumption inequality just hasn’t widened out as much as income and wealth inequality have. And levels of consumption: well, that’s really what income or wealth is, the ability to purchase consumption. And if you’re in a place where prices are lower, leading to greater consumption (whether of food, or square feet of housing, or leisure, or whatever), well, then you’re richer, aren’t you?

And thus is our conundrum solved. The red states aren’t in fact poorer than the blue states. They’re richer: that’s why they vote more conservative and more right wing.

This is something that often gets ignored in the comparison between red-state and blue-state economies: $119 is just over half of $227, that’s a pretty big spread. What good does it do you to make $150k a year as opposed to $60k, if you can’t buy as much with it? And don’t these “poor” people who need the help from these blue-stater policies, have to live somewhere?

The blue-state/red-state split, these days, ultimately comes down to a conflict between immediate gratification and delayed gratification. We therefore should not show any surprise on learning of higher salaries in the part of the country that lusts after immediate gratification. It goes with the territory. Just as we shouldn’t be surprised to find a more self-sustainable economic system, in which consumers are empowered to do more consuming, in the part of the country where delayed gratification is more highly valued. That, also, goes with the territory.

I agree with you, but I’m not sure how much weight I want to put into salary disparities. Lots of people just don’t grok concepts like “cost of living.”

Example: One of the most frustrating things I’ve ever had to deal with was convincing a new hire to move away from California. “You’re asking me to uproot my family and move them halfway across the country for a lousy $2K raise?!” No, buddy, I’m asking you to do all that for a 40% increase in your standard of living. $75K per year in Silicon Valley gets you a two-bedroom house you have to share with three other guys to make rent; $77K in a red state gets you a very nice upper-middle-class life.

This was a tech guy, mind you. He had no problem comparing the numbers. He just didn’t grasp that not all sodas cost $8, that not everyone needs to break a twenty to buy a Big Mac, that not all states have taxes and registration fees that cost almost as much as the car itself, etc.
- Severian | 01/06/2015 @ 11:51

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Blue State, Red State: Which is Richer?Tuesday, January 6th, 2015

Blue State, Red State: Which is Richer?
Tuesday, January 6th, 2015