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The artificial safety net provided to states as opposed to corporations is for the fact that it is important for all states, even the most underperforming to ha

by orky56 6y ago

The artificial safety net provided to states as opposed to corporations is for the fact that it is important for all states, even the most underperforming to have a standard level of infrastructure and overall competitiveness. The whole concept of republic like the US is partly based on bringing up the rear. This is why poorer states have less leverage and must offer more incentives to businesses to induce economic activity. Richer states already have advantages of being the incumbent including various resources to draw and keep businesses. These same states (often blue) have higher taxes to fund their barriers to entry with surpluses that give them the capital to weather aberrant situations like these. In addition, it is difficult to argue that constituents will vote for their economic best interests if social issues are more top of mind in redder states. This will only exacerbate the problems without a federal solution in place.

bhupy 6y ago
> The artificial safety net provided to states as opposed to corporations is for the fact that it is important for all states, even the most underperforming to have a standard level of infrastructure and overall competitiveness. The whole concept of republic like the US is partly based on bringing up the rear. This is why poorer states have less leverage and must offer more incentives to businesses to induce economic activity. Richer states already have advantages of being the incumbent including various resources to draw and keep businesses. This is a great ideal, in theory, but the flip-side of it is that in reality if we don't have any sort of negative consequence for unsustainable policy-making, you have a moral hazard, and institutional corruption and rot. Heaven knows there is a lot of that at the State and local level. You ultimately need some creative destruction in the long-run to ensure that we have the best possible governments. I heavily caveated that we must make sure that, in the short run, the poorest are taken care of. Insofar as one would be in support of allowing States to fail in a "good faith" way, it would be if the Federal policy ensured that the poorest among us are bailed out and taken care of in the short run. > These same states (often blue) have higher taxes to fund their barriers to entry with surpluses that give them the capital to weather aberrant situations like these. Sure, and a lot of Blue states will be fine and not have to go into packaged restructuring / bankruptcy. For a lot of States (both Red and Blue), the most worrisome line item is the defined-benefit pensions — they promise a certain return that has never happened and will never happen. These pensions will _never_ be solvent. Most people in Illinois under the age of 50 know that they will probably never see a dime of these pensions, and that's terrible. You would want to push States to more sustainable pension systems, maybe a Sovereign Wealth Fund like Singapore / Scandinavian countries, or just raw publicly funded 401(k)s. If those same pension plans instead put the annual contributions into the S&P500, they would have been more solvent than they are today. > In addition, it is difficult to argue that constituents will vote for their economic best interests if social issues are more top of mind in redder states. I mean, you have to let constituents look out for themselves in a democracy. If they don't vote in their economic best interests, then that means those societies favor different outcomes. All of these states have republican forms of government with checks and balances to ensure that democracy doesn't turn into mob rule. Letting Blue states go into bankruptcy might even be better off for Blue states and worse off for Red states, but the underlying idea is that we need to let States test out different approaches to welfare and infrastructure and prevent long-term institutional rot. > This will only exacerbate the problems without a federal solution in place. Yes, hence my caveat to bailing out individuals.

by orky56 6y ago

bhupy 6y ago

> The artificial safety net provided to states as opposed to corporations is for the fact that it is important for all states, even the most underperforming to have a standard level of infrastructure and overall competitiveness. The whole concept of republic like the US is partly based on bringing up the rear. This is why poorer states have less leverage and must offer more incentives to businesses to induce economic activity. Richer states already have advantages of being the incumbent including various resources to draw and keep businesses. This is a great ideal, in theory, but the flip-side of it is that in reality if we don't have any sort of negative consequence for unsustainable policy-making, you have a moral hazard, and institutional corruption and rot. Heaven knows there is a lot of that at the State and local level. You ultimately need some creative destruction in the long-run to ensure that we have the best possible governments. I heavily caveated that we must make sure that, in the short run, the poorest are taken care of. Insofar as one would be in support of allowing States to fail in a "good faith" way, it would be if the Federal policy ensured that the poorest among us are bailed out and taken care of in the short run. > These same states (often blue) have higher taxes to fund their barriers to entry with surpluses that give them the capital to weather aberrant situations like these. Sure, and a lot of Blue states will be fine and not have to go into packaged restructuring / bankruptcy. For a lot of States (both Red and Blue), the most worrisome line item is the defined-benefit pensions — they promise a certain return that has never happened and will never happen. These pensions will _never_ be solvent. Most people in Illinois under the age of 50 know that they will probably never see a dime of these pensions, and that's terrible. You would want to push States to more sustainable pension systems, maybe a Sovereign Wealth Fund like Singapore / Scandinavian countries, or just raw publicly funded 401(k)s. If those same pension plans instead put the annual contributions into the S&P500, they would have been more solvent than they are today. > In addition, it is difficult to argue that constituents will vote for their economic best interests if social issues are more top of mind in redder states. I mean, you have to let constituents look out for themselves in a democracy. If they don't vote in their economic best interests, then that means those societies favor different outcomes. All of these states have republican forms of government with checks and balances to ensure that democracy doesn't turn into mob rule. Letting Blue states go into bankruptcy might even be better off for Blue states and worse off for Red states, but the underlying idea is that we need to let States test out different approaches to welfare and infrastructure and prevent long-term institutional rot. > This will only exacerbate the problems without a federal solution in place. Yes, hence my caveat to bailing out individuals.