Politics and Prosperity: A Natural Experiment

Although the central government’s tentacles reach deep into every State’s economy, there is still latitude for State and local action — or lack thereof. Republican-controlled States should have somewhat freer economies than Democrat-controlled ones. (See, for example, the Tax Foundation’s 2018 Business Climate Tax Index.) Republican-controlled States should therefore be more growth-prone than Democrat-controlled ones. Regional statistics support this hypothesis:


Constructed from the regional data tool of the Bureau of Economic Analysis, starting here.

The red lines represent regions that are dominated by Republican-controlled States; the blue lines, regions dominated by Democrat-controlled States. The constituent States of each region are as follows:

Southwest — Arizona, New Mexico, Oklahoma, Texas

Rocky Mountain — Colorado, Idaho, Montana, Utah, Wyoming

Far West — Alaska, California, Hawaii, Nevada, Oregon, Washington

Plains — Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota

Southeast — Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia

New England — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont

Mideast — Delaware, DC, Maryland, New Jersey, New York, Pennsylvania

Great Lakes — Illinois, Indiana, Michigan, Ohio, Wisconsin

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