Wednesday, November 14, 2012

Puerto Rico joins the party and everyone leaves

In the recent election Puerto Rico passed a referendum that will display a preference to gain statehood. If congress and the President decide to recognize this preference it will have many interesting economic effects. US debt per capita will increase, not that that really matters, and millions of flags will need to be changed. But before you start picking your favorite 51 flag design a bill would actually have to pass granting Puerto Rico statehood. There is a strong (practical) government incentive to keep Puerto Rico as a territory though. Territories can be sold. With the "fiscal cliff' and the ever present debt crisis it might just be a good idea to find a good international realtor and ask China or Japan how much cheap labor and agricultural land are worth.
Perhaps fearing trade to a different authoritarian government (aren't they all?) all 50 states have started petitions to secede from the union. Perhaps that is Puerto Rico's goal, gain statehood and then use the constitutional right of secession to escape the clutches of the leviathan. At the time this is being written the lone star state is the only state to gain any real traction holding over 100,000 signatures on its online petition. Keep in mind that is less than 0.4% of the Texan population.

From an economic perspective is there a benefit to being a member of the union? For starters there is the credit rating associated with the largest economy in the world (not counting the EU), But that rating seems to be slipping. There is national defense  but that is kind of hard to quantify in economic terms other than the US must have the most. And there is federal money, for most states the ratio of tax allotments is between 1.5 times and 2 times the taxes collected by the federal government. So that isn't a good reason either.
After that is sovereignty, certainly many federal laws hinder economic growth for many states, but with the size of the us military and what happened 150 years ago it is unlikely to assume that the sovereignty would be respected.
So will any states secede? Likely no. But it wouldn't hurt to start looking at new flag designs, it really is hard to say what will result from the recent referendum.

I like this one.

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