Has the Time Come to Break Up the Union?

Via Matt Yglesias at Slate, this map–originally posted at The Economist last year– shows fiscal transfers from wealthier states to poorer ones by means of taxes collected by the federal government and then distributed to states as Medicaid, unemployment insurance, and so on.

As Yglesias points out many of the states that get more back than they put in in taxes tend to be more conservative, but that’s not always the case. States that are lower in population also pay less in taxes and get more back. For example, North Dakota and Iowa are experiencing a great deal of growth and prosperity at present, but they still get more held from taxpayers in more populous states like New York, Connecticut, and Massachusetts.

Yglesias points out that the situation here in the U.S. is different from the Eurozone:

Two key points I would make about this in relation to the eurozone are that these transfers are both really big and extremely persistent. Mississippi and Alabama have lagged behind the rest of the nation in economic development for a very long time and I see no particular reason to believe they’ll ever catch up.

Making the obvious mental leap, Derek Thompson writes at The Atlantic:

Unlike the United States, the euro zone collects a teensy share of total taxes at the EU level and has no legacy of permanent fiscal transfers from the richer countries, like Germany, to the poorer countries, like Greece.

Would wealthy, populous states like New York and Texas be better off establishing their own currencies, Thompson asks?

On their own, they could spend a lot more. Today, the states can’t borrow money. But on their own, the richer ones might be able to borrow cheaply enough to eventually run persistent small deficits to make up for whatever infrastructure, education, and per capita health care spending they were receiving from Washington. Once they got in on NAFTA, they could trade freely with the other states as the dollar zone disintegrating into history.

Perhaps the northeastern states should secede and form their own union. Quite a prosperous country could be made up of MN, IL, IN, OH, PA, NY, MA, NH, ME, VT, DE, RI, and CT. Only IN, VT, and ME would be on the poor side. Other areas of the country could form their own coalitions.

Perhaps a more interesting question is whether the possibility of this happening might stimulate enough concern among conservatives in Congress for them to stop fooling around with the wars on women and science and start doing something about the real problems we’re facing in this country?

Desperate times call for desperate measures.