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Wednesday, December 21, 2016

the political welfare state: why conservatives oppose political laissez faire

I've made this argument before, but it is always fun to make it again.
The electoral college is mostly treated as a political and ideological question. However, from the neo-classical economics viewpoint, it is obviously simply a question of welfare.
First, voting is, like buying and selling, an action regarding a property.
Given the rule that every citizen in a republic has the right to vote, we can treat voting in the way we treat income or earnings. The state can either lower the tax on voting - which means treated every vote the same way - or it can tax and redistribute the value of the vote.
In the electoral college, successful states are like successful corporations. They are defined by having more people. Unsuccessful states are defined by having less people. This definition ignores other standards for success, but it is functionally sound, in that those states with more people are also states that generally have higher GDPs. This is only semi-circular - although more people indicate more production, other conditions could limit the production, and thus the GDP. As it happens, though, the distribution of GDP through the fifty states corresponds closely with the population of the states.
Thus, "poor states" - those with lesser populations - would not, without the federal government intervening, have any more power than is defined by their population.
But the Electoral College changes this. Those states, like California, that are successful are taxed at a high rate politically, and the tax is given to poor states. Vis a vis Wyoming, for instance, California residents pay a seventy five percent tax - or, in other words, every vote cast by a Wyoming resident is worth three cast by a Californian.
This political welfare system, viewed in good neo-classical terms, is bound to create a system of effects - that is, of perverse incentives. A state like Kansas or Nebraska protects itself in the political market place using the welfare it is given. It entrenches itself in behaviors that lead not to successful statehood - ie more population and greater GDP, but in behaviors that continue the benefits it gets as a welfare beneficiary. Welfare discourages labor - or at least the neoclassicals assume. Political welfare discourages political labor. Nebraska or Kansas or other politically poor states are encouraged not to invest in education, or to make their states attractive to incomers, and they extend that opposition on the national level, trying to undermine states like New York or Florida or California or Texas.
This model gives us a nice fat paradox: conservative politics in the US depends, increasingly, on political welfare. In a system of political laissez faire, California would and should have a greater say simply because it has been politically successful. But conservatives oppose political laissez faire.

As we would expect, the welfare system's distentions are becoming evident and intolerable. Eventually, there will come a crash. Trump is a sign that the crash is coming.

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