The Patriot Post® · In Brief: The Culture War Between the States
Who’s doing better, red states or blue states? If “better” means employing more people and generally having a freer, pro-life climate, definitely red states. Steven Malanga, senior editor of City Journal, highlights the contrast:
For decades, states have competed with one another for businesses by touting local economic advantages in areas like taxation, development incentives, workforce quality, and regulatory policy. Occasionally, states would also pitch themselves to firms on more general principles like quality of life and public investment in schools and infrastructure. Now the battle for jobs and for wealthier residents has taken a new turn, reflecting the increasingly intense cultural wars playing out in America. Facing a steadily more difficult economic battlefield, governors of Democratic-led states are pitching businesses based on social issues: access to abortion, transgender rights, and voting laws. Blue-state officials are hoping to lure firms that object to red-state legislation restricting abortion, revising voting practices, or banning biological males from competing in female athletics. The stakes are high because business and residential migratory patterns, and the economic gains that go with them, have shifted massively toward Republican-led states in post-pandemic America.
Malanga notes that the Supreme Court decision overturning Roe v. Wade has galvanized Democrat governors to double down on the culture war. He gives a few examples, including Gavin Newsom’s recent ad in Florida, as well as the counterpunches from Republicans.
Whether this new twist on business outreach bears fruit remains to be seen, but blue states need to do something to stanch their losses. IRS data show that in 2020, as the pandemic raged and states enacted restrictions on activity, residents, businesses, and wealth overwhelmingly left Democratic-governed states. New York and California alone collectively lost nearly $40 billion in net wealth that headed out of state, while Texas and Florida captured some $30 billion net from residents moving in. The pattern is likely to show even greater gains for 2021. Economic performance, meantime, has shifted heavily toward Republican-led states. Moody’s compared states on 13 recent economic parameters and found the best-performing places dominated by Republican-led states, while eight of the ten worst economies were in blue states. Republican-led places have recovered all the jobs they lost during the pandemic and added 341,000 more; blue states are still short some 1.3 million positions.
Relocation news hasn’t been good for Democratic states, either. Giant hedge fund Citadel recently announced that it was moving from Chicago to Miami, while Caterpillar is shifting its headquarters to Texas from Illinois. Hewlett–Packard, a company synonymous with Silicon Valley, is relocating from San Jose to Houston, while hedge funds like Elliot Management and Point72 are shifting their headquarters from Manhattan and Connecticut, respectively, to Florida. As these moves suggest, the advantage post-pandemic that red states have on traditional economic and business issues seems to have widened. All ten of the states rated by business executives this year as top places to locate their firms were Republican-leaning, led by Texas and Florida, while all ten of executives’ least favored states trend solidly Democratic.
Malanga concludes:
Democratic governors have been encouraged, it seems, to take the next step. They are trying to recruit businesses based on cultural issues, in part because of the spread of “woke” attitudes in corporate America. Last year, Coca-Cola publicly criticized Georgia’s new voting law, sparking a confrontation with state Republicans, while Disney objected to Florida’s Parental Rights in Education bill, which limits discussions of gender in early grade school.
Even so, one of the ironclad rules of economic development in the United States, articulated by the late Citicorp chairman Walter Wriston, has been that “capital goes where it’s welcome, and stays where it’s well treated.” There’s little indication to suggest that in a highly competitive global economy, businesses have suddenly decided to revoke that rule.