Hah! I wish I didn't even have to guess (i.e. I wish nobody were so blindly dogmatic). Your answers make it clear you are certainly not one of those blind free-

Hah! I wish I didn't even have to guess (i.e. I wish nobody were so blindly dogmatic). Your answers make it clear you are certainly not one of those blind free-market dogma folks. I think your Nash Equilibrium point is spot on, but it's fair to describe a breakdown in that as turning into a race-to-the-bottom. > why unions exist. But that won't work when we're talking about states. Oh, but that could. There's no inherent reason why states can't coordinate. They could do so in a weak fashion (i.e. recognize the need to maintain the equilibrium and just all do the right thing) or a strong fashion (lobby the federal government to step in and bar this sort of behavior). As to your last paragraph, you could definitely convince me of that. I have seen evidence, however, that some places realize that they can refuse to play this losing game. A state can reject the growth-ponzi-scheme ( see https://www.strongtowns.org/the-growth-ponzi-scheme/ https://www.strongtowns.org/the-growth-ponzi-scheme/ ) for example and just let the other states play the race-to-the-bottom while they encourage positive economic activity through other means. That's like a store refusing to slash their prices to compete and instead finding some other way to convince customers to stay loyal and not just focus on price (perhaps service is better, experience is better overall, etc). In the case of states, they can get great education, quality of life, protect the environment, and realize that they will prosper long-term and refuse to join the race-to-the-bottom. Enough states refusing to play race-to-the-bottom can bring back an equilibrium eventually.