The General Economics Thread

Much depends on how complete the breakup is. If every state decided to pursue complete political and economic independence, then the effects would be hideous.

The world economy would probably collapse as the dollar ceased to be a stable currency. The U.S. would undergo a period of rapid economic devolution, with a catastrophic exodus from the major cities as their sources of food and power were cut off or mired in red tape. You'd see mass migrations in search of available resources, limited only by the decisions of individual states to allow or disallow border movement.

Major national and multinational corporations may or may not survive depending on whether they are able to exercise a dominating political influence in the states where they are headquartered; certainly their supply chains would be disrupted to devastating effect, and most of their customers would be cut off by the new national borders.

In this scenario, the farm states would survive due to self-sufficiency, but would have to mount a defense against the hordes of urban refugees that would overwhelm them.

What would inevitably happen would be that certain states, to avoid being literally overrun and ground out of existence, would form economic and political alliances, resulting in a series of smaller nations. Some of these nations might war over territory; certainly they would be antagonistic towards each other. But the scenario of fifty completely independent states is too unstable to last.

edited 19th Sep '14 8:23:58 AM by Fighteer

How come? I mean, for this whole scenario. Like, could you go into detail? I'm okay with a Wall of Text; in fact, I crave detail.

I don't feel up to writing a massive missive about it right now, though I may take a shot at it later. Consider, as homework, the effect if no state is able to print dollars, but they are all still using the dollar as currency. In this scenario, the Federal Reserve would cease to exist, as there would be no Federal government to run it.

Also, what state(s) would Washington, DC become a part of? If its functions were removed, where would all its residents go?

Who would enforce contracts between the newly independent states? How would a company that does business across state lines be able to receive payment for its goods? Who would maintain the highway system (currently paid for largely by federal dollars)?

If the power plant that generates my home's electricity is in Maryland and I live in Pennsylvania, do I have to pay for my electricity in "Marybucks"? How do I know how many Marybucks my Pennshekels are worth?

Will a truck driver from Kansas delivering sides of beef to Manhattan have to deal with six (I think?) border crossings, with customs agents and fees, all in different currencies? Will his product spoil before he makes it there?

edited 19th Sep '14 8:43:46 AM by Fighteer

Note that this is all a hypothetical worst case scenario, given that the more modern climate is better about easing precisely these problems when dealing internationally.

Not that I don't think The Divided States Of America would be a good thing at all, mind.

Edit: thought that was a trope.

edited 19th Sep '14 8:54:31 AM by Ogodei

Remove the "The".

I suppose another question relevant to the red-staters who are so enamored of secession is: Who would protect America from the evil immigrants/Islamists/Europeans/atheists if there is no centralized government to field a military? State militias won't cut it against an organized attacker.

edited 19th Sep '14 9:05:22 AM by Fighteer

Who'd control our nukes?

Ohai◊.

I suppose that one positive effect of the Divided States of America would be that a lot of wealth that is currently tied up in intangible assets like bonds, stocks, bank accounts, and so forth, would simply vanish, devastating the wealthy far more effectively than any tax could. Small consolation given the mass deaths that would occur shortly thereafter, but wealth inequality would take a huge hit.

I mean, before the thing could even happen, if it looked likely, the stock market and currency markets would take a nosedive that would make the Great Depression look like a picnic in the daisy fields. Trillions of dollars of value would be gone in the blink of an eye, and long before the newly appropriated National Guard units marched to close the borders, the major financial hub cities would have to hire extra street sweepers to scrape up the bodies plummeting from windows.

Of course, the sweepers would be too busy joining everyone else in the largest bank run in history, so they'd probably lie there for a while. All credit markets would freeze, all banks would close, there would be no money to buy food with and nobody would be willing to take your money anyway. Rioting and looting would break out in all cities; when the food ran out, people would flee to the countryside, stripping it bare. Without operating hospitals, disease would run rampant, wiping out a good chunk of those who didn't die from starvation.

Before anyone suggests the idea, there isn't nearly enough physical gold in the United States to take up where the dollar left off, even assuming that gathering it all up and re-minting it into coinage could be feasible.

All the nations that depend on the U.S. economy for their own commerce would collapse shortly thereafter as payments ceased being made. Ships already in transit would be unable to offload their goods as there would be nobody manning the ports to receive them, and a shortage of trucks to take them to their destinations regardless. Most would turn around and head home. With the international trade in dollars ceasing, everyone would scramble to find a replacement reserve currency, and economic panic would ensue.

U.S. exports would cease as well, and we have way more of those than most people realize.

Our largest currency trading partner, China, which also happens to depend on the U.S. for its trade surplus, would suffer a complete economic collapse as its credit markets seized up, with corresponding bank runs and such. It would devolve into chaos, with martial law instituted, mass protests, mass civilian killings, etc.

edited 19th Sep '14 9:34:05 AM by Fighteer

What they are really trying to escape from is the effect that the federal security net has on their taxes. In their view, the feds take their money away, and give it to poor people who dont want to work. And by "poor" they mean "blacks". So what they really want to succeed from are poor, urban black communities.

edited 19th Sep '14 9:33:10 AM by demarquis

Secession because they don't like black people.

Hmmm.

Yeah, you get it.

That's really it. The secessionists are generally ignorant of economics; they simply don't want the gub'mint taxing them to support "those people".

But the red states take more in benefits than they give in taxes, for the most part. Only swing state with a bad record on that is Florida and blue-leaning New Mexico. Most of the "takers" in that regard are red states.

They would have a humanitarian crisis on their hands as their own poor lose aid.

Now you're assuming these people know that.

Or care.

Or are rationally thinking sane people in the first place.

They are both rational and sane, they simply have different values from us, and a different set of facts to work from. They arent thinking in terms of "states", they look at their own pocketbooks, and doing a simple calculation: succeed from the US, and I get all my federal taxes back." It isnt true, but you wouldnt expect your average Joe on the street to realize that.

A note for those joining the conversation: "succeed" and "secede" are very different words.

Check out the arguments given by the secessionists. The people there are overwhelmingly rightists. I see almost no leftists or centrists who wish to secede. And there's a ton of "the blue states will collapse from their fiscal mismanagement" and "it's a myth that the blue states subsidize the red states".

Anyone want to post some sanity there and see if anyone bothers to respond? At least let those who are reading give something to think about.

Or address some of the things they're saying here?

Because the conservatives respect the constitution. And because countries with lots of social programs, like Ireland and the Nordic countries, are totally failing.

edited 19th Sep '14 12:50:33 PM by BonsaiForest

There's nothing to be said there, and no point in arguing with them.

Part of me wants to let that happen and laugh as they implode. But that's probably a bad idea.

Maybe.

What ARE the differences between the red and blue states anyway? From everything I read time and time again, the blue states are more educated, wealthier, and take better care of their poor.

The comments on that article are insane. You get the occasional person who tries to point out that the conservative states are very poorly off and that their secession dream will make things worse, not better, but such voices of reason are drowned out.

Sad.

At least, what do you think would likely happen if the US split into the "United" States and the "Confederate" States, and why?

Awesome. Someone who gets it!

The secessionist talk is, I imagine, because lots of people are pissed at corruption. I sure as hell am. I want my net neutrality, I want Comcast broken up, not made bigger, and I would like to see our country treat the poor as well as Canada does. These are all left-wing things, that we are not getting, because of greed and corruption in government and/or idiocy among the populace.

edited 19th Sep '14 1:03:37 PM by BonsaiForest

Still missing the point, though. Sucessionists (thanks Fighteer!) couldnt care less what happens to their state. Let it burn. They just want to raise their crops and their kids on their own farm compounds without outside interference like the original 'mercans did.

It's important to remember that, while "greed and corruption" are endemic to both business and government in all their forms, since the 1930s our nation has done better both economically and in terms of public satisfaction with government under Democratic administrations. It's not a universal correlation, but it serves well enough. Also, it's only been since the 1970s that the tide of conservatism surged back and started actively trying to break things in order to discredit the government: the "starve the beast" methodology.

We aren't Sweden or Greece. We're somewhere in the middle.

On your previous question, if we did have a "red state America" vs. "blue state America", you'd find most of the money and technological industry in the blue states and most of the land and agriculture in the red states. As I said earlier, this suggests an economic model roughly akin to the current relationship between the United States and Central/South America. The blue states buy the red states' food and the red states buy the blue states' technology. That this would be a vastly unequal relationship should be obvious.

edited 19th Sep '14 1:59:59 PM by Fighteer

Another thing is Red States (Sunbelt) is known for lower paying work, but also less costly property. Meanwhile Blue States have a tendency of leaning towards higher grade jobs (again Fighteer's technology comment), but the Coasts on average have MUCH higher cost of living than the Sunbelt.

I'm simplifying a fair bit, but that also comes into play.

edited 19th Sep '14 1:43:13 PM by PotatoesRock