The blue state depression
The latest Department of Labor employment data confirm that when it comes to the economy, America is two nations: red and blue. As the post-coronavirus shutdown era begins, blue states are losing jobs at record paces and red states are starting to gain them.There is a reason why blue states are losing population and it is liberalism and its failures. High taxes and high regulations stifle economic opportunity. It also seems clear that control freak lockdowns were not effective in limiting the impact of the virus. What we have found is that smarter dealing with the most vulnerable population reduced the mortality from the virus.
Here is what the data is telling us: 10 states had unemployment rates in May above 15%. They are all states with Democratic governors, with the exception of deep-blue Massachusetts with its liberal Republican governor, Charlie Baker.
Ranked from highest to lowest they are Nevada (25.3%), Hawaii (22.6%), Michigan (21.2%), California (16.3%), Rhode Island (16.3%), Massachusetts (16.3%), Delaware (15.8%), Illinois (15.2%), New Jersey (15.2%), Washington (15.1%).
The five states with the lowest unemployment rates are all red states – most of which never shut down at all. These are Nebraska (5.2%), Utah (8.5 %), Wyoming (8.8%), Arizona (8.9%), and Idaho (8.9%). (Emphasis added.)
This is exactly as Arthur Laffer and I predicted in a study we conducted back in March on the economic effects of lockdowns. States with very strict business shutdown and stay-at-home orders would be facing a much tougher recovery period than states that never shut down, like Utah and Wyoming, and states that rapidly reopened, such as Arizona. This would be a bifurcated red state, blue state recovery – and so it is, so far.
This is not a coronavirus recession. It is a blue state lockdown recession. Democrats say they have shut down their economies to maintain the safety of their citizens. But that is a stretch. Studies are now finding that the negative health effects from the lockdown (suicide, delayed treatments for cancer and heart problems, depression, spousal abuse, alcohol and drug overdoses, to name a few) could easily match the saving of lives from lockdowns.
But there is a much bigger problem with this argument. It is factually untrue that blue states did a better job than red states in keeping their citizens safe. They didn’t. The 10 states with the highest death rates from coronavirus (as a percentage of the state population) are all states with Democratic governors. A blue state resident was twice as likely to die from the virus as a red state resident even though the red states were not heavy-handed in locking down their economies. (Population density likely factored in as well.)
The tragedy for blue state America is that these states – especially in the Northeast and Midwest – were already seeing major outmigration of families, businesses, and capital before the pandemic. The blue state governors’ mishandling of the crisis has only put these states in deeper holes.
Of course, the Democrats are now saying that the caseloads are climbing in the red states. That’s true, but caseloads don’t tell us much of anything. If going outside and gathering in public while ignoring social distancing orders is the reason for the increase in cases (and in some cases hospitalization rates) then we would expect to see a surge in cases in New York, Los Angeles, Chicago, Portland, Seattle, Minneapolis, and Washington, D.C. That is where the largest, and most prolonged, George Floyd protests took place.