Monday, January 05, 2015

Red States, Blue States

Richard Florida wrote about income inequality, comparing the various states in yesterday's NY Times. There is apparently quite a lot of it in the "Blue" states.  Are they "blue" because of greater inequality or do we get inequality from progressive policies and leadership?

Unfortunately, it is not simple. In a Bootleggers and Baptists world, it is hard to settle on the role of the state in the U.S. (all levels of government, all taxes as well as expenditures) as a force for greater or less inequality. Crony capitalism rewards cronies and the cronies are everywhere: left, right and center.

This morning's LA Times reports "After two-year delay, construction on California's bullet train is set to start".  This is the kind of blue-state stuff that will do nothing for the state's poor people.

In fact, the latest wrinkle in the California HSR story is that dedicated revenues will be made available from the State's cap-and-trade program. Leave aside the merits of the program, will higher prices for fuel have a progressive effect on the state's Gini coefficient?  Gasoline taxes, for example, are keyed to purchases and not the income of the purchaser. California is the 6th most unequal state in Florida's ranking. But give them time.


Brad DeLong comments on the Florida article.  One of his take-aways is that Blue states must invest more in infrastructure.  California is hell-bent on doing so in a big way.  Does the HSR nuttiness mean we will have less to invent in the mythical "infrastructure" that everyone seemingly prays for?

In a better world, every time that some well-meaning person prescribes "infrastructure", this book falls out of the sky -- and, we hope, does not hit him or her on the head.