Countries Versus States

I’ve been meaning for some time to explore the myth and reality of national boundaries, and a post over at Cafe Hayek has prompted me to bring out a piece of it.

Don Boudreaux takes on Samuelson on immigration, and points out that there’s nothing about transnational migration that is different in principle from intranational migration. In other words, there’s nothing you can say about immigration of foreigners that doesn’t apply to Mississippians:

Consider California. It is completely open to people from Mississippi. California’s median household income is a whopping 54% higher than is Mississippi’s. […] Californians enjoy environmental and social amenities — beautiful beaches, snow-capped mountains, fabulous weather, big and exciting cities, professional sports franchises — that Mississippians lack. And yet, despite being free to move to California en masse, Mississippians don’t do so. Nor do West Virginians, or Arkansans, or Alabamians.

The reason is that prices and other economic data govern immigration. Most significantly, immigrants must rent or buy living quarters, and each must find remunerative employment (or live with family members). As demand for living quarters increases, rents and real-estate prices rise — putting a natural economic (and non-coercive) break on immigration. Likewise with job opportunities: if the supply of labor rises and thereby lowers employee pay in those jobs experiencing especially rapid increases in labor supply, the urge to immigrate will be dampened.

You can broaden the argument: any interaction between countries that is governed primarily by non-political forces is going to behave much the same way as interactions between regions inside a country. There’s nothing magical about a country-to-country boundary: you have different political rules among U.S. states, yet the District of Columbia (not even a state) has never emptied out , infested the commonwealth of Virginia, and TOOK AHR JAHRBS.

Similarly, jobs moving from New York to South Carolina are, from the point of view of New Yorkers, identical to those same jobs moving to China. The only difference is that federal taxes are recouped on the (lower) wages paid to South Carolinians but not to Chinese workers. Everything else is the same, except the likely racial makeup of the replacement workers–which provides a hint about the fundamental revulsion people feel about offshoring. Corporate profits are still taxed, and any consumption taxes on the product or service are still collected. Since most of the government services that immediately affect New Yorkers come from state and local taxes rather than federal money, the South Carolina relocation is nearly identical to the Chinese case (and since I once lived in South Carolina, I can tell you the factory workers are equally likely to spend their newfound wealth on a vacation to New York City).

There is only one thing that distinguishes trans-national relations from trans-locality relations: the lack of an authoritative governing legal structure. This makes it harder to sue someone in Bangladesh for negligence. Anything else, up to and including armed conflict, can occur equally between localities within a country. The Sudan is proof of that. Just because New York and New Jersey rarely come to physical violence over their disagreements doesn’t mean intra-national fighting doesn’t occur. You could equally give the example of the U.S. and Canada to “prove” that fighting between nations doesn’t occur.

So the only times that your thinking about borders between countries should differ from your thinking about borders between localities is when the lack of a supra-national governing body (and no, the U.N. doesn’t count) makes some fundamental difference. The more you think about it, the less you’ll find that applies.

One thought on “Countries Versus States

  1. Excellent points. I confess that all of the “us vs. them” talk of the campaign always leaves me a bit bewildered, because in the world I inhabit, nations and personalities are so intermingled across borders. A small web site will have visitors from 50 countries; a small RFP will attract bids from a dozen countries; the last conference I went to had participants from 200 countries. If one hasn’t travelled and lives in a homogenous demographic environment, maybe the “us vs. them” makes more sense. But to anyone else (such as those of us in blue states 🙂 ), the reaction is “huh?”


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