USA Outgrows China… Because of Florida?

Economics Explained
12 Mar 202415:23

Summary

TLDRThe US economy is growing faster than China's, with Florida's economy outpacing other major states. Florida's rapid growth is driven by high net migration, particularly of young, skilled workers, and booming industries like finance and technology. However, this growth may be at the expense of other states, leading to capital flight and brain drain. Florida's lack of state income tax and lower cost of living attract talent, but the state's success may not be a net benefit for the US as a whole, as it could exacerbate regional inequality.

Takeaways

  • 🌟 The US economy is growing faster than China's for the first time in over three decades, challenging the assumption of China's inevitable global economic leadership.
  • πŸ“ˆ While the US economy is performing well overall, nearly two-thirds of US states are not keeping pace with the national growth rate, indicating regional disparities.
  • πŸ† Florida has the fourth largest economy among US states, comparable to countries like Mexico, Indonesia, or Spain, highlighting its significant economic clout within the nation.
  • πŸš€ Florida's rapid growth outpaces other major states like California, New York, and Texas, raising questions about the sustainability and impact of this growth on the US as a whole.
  • 🌴 Historically a tourist destination, Florida's economy has evolved to include significant contributions from agriculture, mining, and emerging sectors.
  • πŸ“Š Florida's economic success is driven by high levels of net migration, attracting both retirees and young, highly skilled workers.
  • πŸ’Ό The state's lack of state income tax and lower cost of living are major factors drawing people and businesses to Florida.
  • πŸ”„ Florida's growth may be indicative of capital flight and brain drain from other states, raising concerns about the equitable distribution of economic prosperity within the US.
  • πŸ”„ The influx of productive workers and businesses to Florida may benefit the state but could negatively impact other regions by depleting skilled labor and tax revenues.
  • πŸ™οΈ The competition between US states for talent and industries could lead to a race to the bottom in terms of regulations and tax incentives, potentially destabilizing the national economy.
  • 🌐 Despite its internal challenges, Florida's economy is robust, with a strong GDP, high GDP per capita, and a diversified economic base, ranking it alongside other powerhouse states like Texas.

Q & A

  • How does the current economic growth rate of the USA compare to that of China?

    -For the first time in over three decades, the economy of the USA is growing faster than that of China, casting doubts over the assumption that China will eventually overtake the USA as the global economic leader.

  • What is notable about the economic growth within the USA despite its overall strong performance?

    -Despite the strong growth of the USA's economy, almost two-thirds of US states are not growing as fast as the country itself, indicating that a handful of areas are doing most of the heavy lifting to support the world's largest economy.

  • What is Florida's position in terms of economic output within the USA?

    -Florida has the fourth largest economy within the USA, with an output roughly equivalent to that of Mexico, Indonesia, or Spain.

  • How does Florida's economic growth compare to other major states in the USA?

    -Florida is growing much faster than other major states such as California, New York, and Texas, and it's doing so in ways and with industries that haven't typically been associated with the region's vibrant history.

  • What are some of the traditional industries that contribute to Florida's economy?

    -Traditional industries that contribute to Florida's economy include tourism, agriculture, and mining, particularly the extraction of phosphorus, a chemical used primarily as fertilizer.

  • What is attracting a large number of people to move to Florida?

    -Florida is attracting a large number of people due to its high level of net migration, with no state income tax, lower overall cost of living, and job opportunities in booming industries such as finance and technology.

  • What potential problems could arise from Florida's rapid growth?

    -Potential problems include capital flight and brain drain, where skilled workers and valuable capital move from other states to Florida, potentially harming the economies of the states they leave and causing regional inequality within the USA.

  • How might the rise of remote work affect the issue of brain drain?

    -The rise of remote work could potentially exacerbate the problem of brain drain, as it removes the need for workers to be physically tied to a location, making it easier for productive workers to move to states that offer better tax deals and living conditions.

  • What is the impact of Florida's economic growth on the national economy of the USA?

    -While Florida's economic growth has been a positive trend for the state itself, it hasn't necessarily been good for the national economy, as it may lead to increased regional inequality and competition between states for skilled workers and valuable industries.

  • How does Florida's economy rank on the 'Economics Explained' leaderboard?

    -Florida's economy ranks an 8.4 out of 10 on the 'Economics Explained' leaderboard, which is the same score as Texas, despite having different approaches to achieving this score.

  • What factors contribute to Florida's strong economic stability and confidence?

    -Florida's strong economic stability and confidence are due to it being a major state in the world's largest economy, using the world's reserved currency, and having a stable political and economic environment, despite occasional challenges.

  • What are the key industries that make up Florida's diversified economic base?

    -Florida's diversified economic base includes agriculture, mining, tourism, financial services, technology, and construction, which have been booming due to the influx of new residents and businesses.

Outlines

00:00

πŸ“ˆ US Economic Growth Surpassing China

The US economy is growing faster than China's for the first time in over three decades, raising questions about the assumption that China will overtake the US as the global economic leader. This growth is notable as many advanced economies have been stagnant for more than a decade. However, within the US, nearly two-thirds of the states are not keeping pace with the national growth, indicating that a few areas are disproportionately contributing to the economy.

05:01

🌴 Florida's Rapid Economic Growth

Florida, with the fourth largest economy in the US, is growing much faster than other major states like California, New York, and Texas. This growth is driven by factors beyond traditional industries and has attracted attention due to its potential impact on the US economy as a whole. Florida's success may not be a net benefit if it's drawing resources and skilled workers from other states, leading to a potential 'brain drain' and 'capital flight' within the country.

10:02

🌟 Florida's Attraction to Skilled Workers

Florida's high net migration, particularly of young, highly skilled workers, is attributed to its lack of state income tax, lower cost of living, and job opportunities in booming industries like finance and technology. While this has rapidly increased average incomes in Florida, it raises concerns about the national impact, as it may lead to a loss of skilled workers and capital in other states, exacerbating economic disparities within the US.

15:02

πŸ† Florida's Economic Performance Ranking

Florida's economy ranks highly in comparison to other US states and global economies. With a GDP equivalent to Mexico's and the 14th largest in the world, it has a high GDP per capita and strong stability. Its economic growth has been robust, doubling in size over the past decade. The state has a diversified economic base including agriculture, mining, tourism, financial services, and technology. However, some of these industries are still reliant on the broader US economy.

Mindmap

Keywords

πŸ’‘Economic Growth

Economic growth refers to the increase in the production of goods and services in an economy over a certain period. In the context of the video, it highlights the USA's economy growing faster than China's, and Florida's rapid growth within the USA, which is particularly notable given the stagnation of other advanced economies.

πŸ’‘Global Leader

A global leader is a country or entity that holds a dominant position in a particular field or aspect on a worldwide scale. In this video, it refers to the assumption that China would eventually overtake the USA as the world's largest economy, a prediction that is being questioned due to recent economic trends.

πŸ’‘Diversified Economy

A diversified economy is one that has a wide range of industries and sectors contributing to its economic output, reducing reliance on any single sector. The video emphasizes Florida's diversified economy, which includes agriculture, mining, tourism, financial services, and technology, as a factor in its strong growth.

πŸ’‘Net Migration

Net migration refers to the difference between the number of people moving into an area and the number of people leaving it. The video points out that Florida has the highest level of net migration in the USA, indicating a strong attraction for residents and contributing to its population and economic growth.

πŸ’‘State Income Tax

State income tax is a tax levied by individual U.S. states on personal and corporate income. The absence of state income tax in Florida is highlighted in the video as a significant factor attracting people and businesses to the state, as it lowers the overall tax burden and cost of living.

πŸ’‘Brain Drain

Brain drain is the emigration of highly skilled or educated individuals from one region to another in search of better opportunities. The video discusses brain drain in the context of skilled workers moving to Florida, potentially harming the economies of states they leave behind by depriving them of valuable human capital.

πŸ’‘Capital Flight

Capital flight refers to the large-scale withdrawal of financial resources, investments, or capital from one area to another. In the video, capital flight is discussed as a concern for the USA as a whole, as wealth and investment move to states like Florida, potentially leading to economic disparities between states.

πŸ’‘Phosphorus Mining

Phosphorus mining is the extraction of phosphorus, a naturally occurring chemical primarily used as a fertilizer in agriculture. The video highlights Florida's significant role in phosphorus mining, which contributes to its economy and reduces the USA's dependence on global suppliers for this critical resource.

πŸ’‘Tourism

Tourism is the industry of attracting visitors to a particular place and providing facilities for them. In the video, tourism is identified as a traditional economic driver for Florida, originating from its history as a destination for people from colder regions seeking warmer climates.

πŸ’‘Remote Work

Remote work refers to a work arrangement where employees work outside of a central office, typically from home or another location of their choosing. The video explores the impact of remote work on economic migration, suggesting that it could exacerbate brain drain and capital flight as workers are no longer tied to specific locations for their employment.

πŸ’‘Economic Stability

Economic stability refers to a state where an economy is relatively free from fluctuations in output, employment, and prices. The video praises Florida's economic stability, which is attributed to its status as a major state within the world's largest economy and its use of the world's reserved currency.

Highlights

The US economy is growing faster than China's for the first time in over three decades.

Almost 2/3 of US states are not growing as fast as the US economy itself.

Florida's economy is the fourth largest within the USA, comparable to Mexico, Indonesia, or Spain.

Florida is growing much faster than other major states like California, New York, and Texas.

Florida's rapid growth may not be a net benefit to the USA as a whole.

Florida's economy initially grew as a tourist destination for people from colder regions.

Florida has a large mining sector, primarily for phosphorus, which is used as fertilizer.

Florida has the highest level of net migration within the USA.

Florida's population growth is positive, unlike stagnant growth in New York and negative growth in California.

Florida has attracted young, highly skilled workers due to low taxes and a lower overall cost of living.

Finance and technology companies are setting up major centers of operation in Florida.

Florida's lack of state income tax is a significant factor attracting people from high-tax states.

The rise of remote work could potentially exacerbate brain drain and capital flight within the USA.

Brain drain occurs when skilled workers move to another area for better opportunities, leaving their original region worse off.

Capital flight happens when people move their capital from one area to another, impacting economies.

Florida's economic output is roughly equivalent to Mexico's, making it the 14th largest in the world.

Florida's GDP per capita is $7,555, which is very good by global standards.

Florida's economy has doubled in size in the last 10 years.

Florida has a well-diversified economic base including agriculture, mining, tourism, financial services, and technology.

Transcripts

00:00

for the first time in over three decades

00:02

the economy of the USA is growing faster

00:04

than the economy of China casting doubts

00:06

over the assumption that eventually

00:07

China will overtake the current Global

00:09

leader this strong growth in what is

00:11

already the largest and most diverse

00:12

economy in the world is particularly

00:14

remarkable when it's considered that a

00:15

large share of other advanced economies

00:17

around the world have been more or less

00:18

stagnant for more than a decade but zoom

00:20

in and get a closer look and even within

00:22

the USA the story is much the same a

00:24

majority almost 2/3 of US states are not

00:27

growing as fast as the USA itself what

00:30

this means is that just a handful of

00:31

areas are doing a lot of the heavy

00:33

lifting to prop up the world's biggest

00:34

economy and it's not just in outright

00:36

economic growth figures either which is

00:38

where we get to Florida Florida is home

00:40

to the fourth largest economy within the

00:41

USA having roughly the same economic

00:43

output as Mexico Indonesia or Spain

00:46

impressive considering it's just one of

00:47

50 states that make up the union but

00:49

Florida has attracted the attention of a

00:51

lot of economists for a reason other

00:52

than just its sheer size Florida is

00:55

growing much faster than the other major

00:57

states that round out the top four

00:59

California New York York and even Texas

01:01

and it's doing it in ways and with

01:02

industries that haven't typically been

01:04

associated with the Region's vibrant

01:06

history it's also gaining a lot of

01:08

attention because that success may or

01:09

may not be a net benefit to the USA as a

01:12

whole and to find out why we must as

01:13

always answer a few simple questions

01:16

what is driving Florida's rapid growth

01:17

today what are the potential problems

01:19

caused by these growth areas and finally

01:22

is this above average growth really

01:23

sustainable once we have done all of

01:25

that we can put Florida the fourth

01:27

largest economy within the USA on the

01:28

economics explained leaderboard to see

01:30

how it stucks up against other US states

01:32

and entire National

01:33

economies for an economy to function

01:35

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today I want to start this video off a

02:43

little bit differently with something of

02:45

a personal anecdote which I promise is

02:47

highly relevant to the economic

02:48

situation of Florida back when I was at

02:50

University doing my undergrad I had a

02:52

part-time job managing a shop where the

02:53

regional boss push me and all of the

02:55

other stores to make as many sales as

02:56

possible of course that's nothing

02:58

unusual but one day for whatever reason

03:00

my particular shop was allowed to put on

03:01

a big storewide discount for everything

03:03

for one day only to make the most of

03:05

this and to keep our big boss happy we

03:07

called all of our regular customers to

03:08

let them know about this in advance so

03:10

that we can make as much money as

03:11

possible on the day unfortunately we

03:13

well I actually got into a lot of

03:15

trouble for doing this because all that

03:16

really happened was that people did all

03:18

of the shopping they were going to do at

03:19

a discount in our store instead of

03:21

shopping like they normally would at all

03:22

of the stores in the area which made us

03:24

look good at the expense of the company

03:26

as a whole now don't feel too bad my

03:28

PTSD from working retailers mostly

03:30

passed but the point is on a much larger

03:32

scale Florida might be doing the exact

03:34

same thing and growing its economy at

03:36

the expense of other states that make up

03:38

the USA the economy of the state as it

03:40

exists today really got started as

03:41

something of a tourist destination for

03:43

people to travel to from colder regions

03:45

on the east coast of the USA while

03:47

technically the region that went on to

03:48

become the state was home to the first

03:50

Western City on the North American

03:51

continent it developed far slower than

03:53

regions to the North in large part

03:54

because of its terrible geography even

03:57

today the state is full of swamps

03:58

mosquitoes natural stor storms and

04:00

otherwise difficult to navigate terrain

04:01

so for most of its early history as its

04:03

own state it was just a place where

04:04

people went on holidays and even that

04:06

was limited this changed as railroads

04:09

were built into the area connecting its

04:10

Inland regions directly with major

04:11

industrial and population centers in the

04:13

north which not only opened up the area

04:15

to even more tourism it started to make

04:17

things like farming and even Light

04:19

Industry possible today these early

04:21

Industries still make up a significant

04:22

portion of the state's total economic

04:24

output but they have been joined by a

04:26

growing number of more modern economic

04:28

contributors the state has a

04:29

surprisingly large mining sector not

04:31

digging for metals or fossil fuels but

04:33

one of the world's largest reserves of

04:34

phosphorus which is a naturally

04:36

occurring chemical which is used

04:37

primarily as a fertilizer the USA has

04:39

the third largest agricultural industry

04:41

in the World Behind only China and India

04:43

with their massive populations and on a

04:44

per capita basis farming in the US is

04:47

far more productive than it is almost

04:48

anywhere else in the world the phosphate

04:50

dug out of the ground in Florida

04:51

supplies 3/4 of all fertilizer required

04:54

by farmers in the country which Beyond

04:56

just being a great Revenue Center for

04:57

Florida also means that the USA as a

04:59

whole is a lot less dependent than most

05:01

other countries on limited Global

05:02

suppliers of this resource for their

05:03

food security now these are all very

05:06

interesting but it's not what has been

05:07

driving the recent growth of the state

05:09

and those are more the industries

05:10

causing controversy Florida is a strange

05:14

place and part of its unique reputation

05:15

comes down to the economic factors that

05:17

attract people into the state from all

05:19

walks of life Florida has by far the

05:21

highest level of net migration within

05:23

the USA and more people are moving to

05:25

the state than even outliers like Texas

05:27

which has been making headlines in

05:28

recent years for the wave of people

05:30

moving there Florida has gained almost

05:32

as many new residents since 2020 as New

05:34

York has lost and unlike a lot of other

05:36

states that have seen big increases and

05:37

their number of new residents this

05:39

phenomenon isn't really anything new for

05:41

Florida now of course a lot of that

05:43

migration is just old people moving to

05:45

the state to retire which is why despite

05:46

consistently high levels of internal

05:48

migration into Florida the population is

05:50

still not growing as fast as a state

05:51

like Texas because well older residents

05:54

die just as quickly as they move in but

05:56

the population is still growing overall

05:58

which compared to other major US

05:59

economies like New York which has been

06:01

stagnant for more than a decade now and

06:03

California which is going backwards

06:05

population growth of any form is a

06:06

positive sign that there is something

06:08

attracting more than just retirees to

06:09

the state a lot of Florida's new

06:11

residents are young highly skilled

06:13

workers and weirdly enough both of these

06:15

two groups are moving to the state for

06:17

the same reasons taxes within the USA

06:19

are charged on a national level as well

06:21

as on a state level which means that

06:23

even within the same country some people

06:24

pay a higher rate than others because of

06:26

where they live Florida has no state

06:29

income tax which means people living in

06:30

other states like New York and

06:32

especially California can save a lot of

06:34

money by moving there for retirees this

06:36

is a good way to get their savings to

06:38

stretch a little bit further but

06:39

recently it's attracted a lot of people

06:41

in some of the state's newest booming

06:42

Industries low taxes nice beaches and a

06:45

lower overall cost of living than

06:46

centers like New York City Silicon

06:47

Valley and Los Angeles is great but

06:49

Florida wouldn't have been able to

06:50

attract some of the US's most skilled

06:52

and productive workers unless there were

06:54

jobs for them to do there fortunately

06:56

the state has seen a significant

06:57

increase in finance and technology

06:58

companies setting up major centers of

07:00

operation if not moving their

07:01

headquarters there entirely the highest

07:03

concentration of International Banks in

07:05

the USA is not in New York City it's in

07:07

Miami and likewise a lot of tech

07:09

companies have set up shopp in the

07:10

state's bigger city because of its

07:11

relative ease of doing business of

07:13

course there have been some high-profile

07:15

cases of business interests in Florida

07:16

going head-to-head with government power

07:18

and instances like this can genuinely

07:20

have an impact on how desirable a region

07:21

is to invest work or set up a business

07:23

in but overall Florida is still

07:25

perceived as being much less restrictive

07:27

than other major centers like California

07:29

New York a large part of the reason why

07:31

average incomes in Florida have been

07:32

increasing so rapidly over the last

07:34

decade is not because the state itself

07:36

has become more productive it's because

07:38

already productive and highly paid

07:39

workers have been moving there either to

07:41

work remotely or to follow the large

07:42

companies that have also moved there

07:44

while this has been a huge positive

07:45

trend for the state itself it hasn't

07:47

necessarily been good for the economy on

07:49

a national scale or even the people of

07:51

Florida on an individual level now we've

07:54

covered the issue of capital flight and

07:55

brain drain many times on this channel

07:57

before but we've never really explored

07:59

it happening within a country and in

08:01

many ways this is where it can be most

08:03

intense now as always we don't want to

08:05

repeat too much here but brain drain is

08:07

what happens when the most skilled

08:08

participants in an economic region move

08:10

from one area to another for better

08:11

opportunities leaving the region they

08:13

are moving from worse off overall

08:15

because it loses its best workers

08:16

taxpayers and possibly has to face skill

08:18

shortages if a tech worker moved from

08:20

Silicon Valley in California Not only

08:22

would California miss out on their tax

08:24

revenues California based companies may

08:26

not be able to find the workers they

08:27

need to continue their operations and

08:28

eventually they'll have to move to where

08:30

they can find workers now a quick side

08:32

note is that a reasonable assumption

08:34

would be that the rise of remote work

08:35

could combat this now that there's no

08:37

need for certain workers to be

08:38

physically tied to a particular location

08:40

but the unfortunate truth is it's too

08:42

soon to tell it has the potential to

08:44

make the problem worse because at least

08:46

things like access to employment

08:47

opportunities added some friction to

08:49

productive workers moving to whatever

08:50

state city or country offered them the

08:52

best tax deal and living conditions

08:54

without that there is less standing in

08:56

their way especially if the receiving

08:58

economy is happy to house the them which

08:59

most normally are to wealthy and

09:01

productive workers it's probably not the

09:03

most consequential example but there's a

09:05

reason why so many people with online

09:06

businesses move to Dubai and it's not

09:08

because they're a fan of the

09:09

architecture Capital flight is similar

09:11

to brain drain but they are two distinct

09:13

problems Capital flight occurs when

09:15

people pull their Capital out of one

09:16

area and move it to another area capital

09:19

in economics really means anything that

09:21

isn't land or labor and can be used to

09:22

increase economic output so tools

09:24

infrastructure technology materials and

09:26

of course regular old cash if people

09:29

move they tend to bring their stuff with

09:30

them including their spending money

09:32

which denies capital from where they're

09:33

moving from and provides it to where

09:35

they're moving to this has been a major

09:37

problem for a lot of national economies

09:39

in modern history as moving

09:40

internationally has become more common

09:42

extreme examples like China and South

09:44

Africa have even impose restrictions on

09:45

how much Capital their people are

09:47

allowed to take with them if they leave

09:48

the country because the Exodus of

09:49

wealthy citizens could otherwise have

09:51

serious impacts on the economy now

09:53

within a Sovereign Nation like the USA a

09:55

country which famously values its

09:57

freedoms such restrictions would be

09:59

possible and this is why in certain ways

10:01

Capital flight and brain drain can cause

10:03

even more serious issues at this point

10:05

it's probably important to recognize

10:07

that while a lot of people are moving to

10:08

Florida from places like New York

10:10

California and Illinois in the past

10:12

dozens of other states across the USA

10:14

had the same problem with skilled

10:15

workers moving into the very same states

10:17

that are now losing workers to Florida

10:19

the USA itself is globally the greatest

10:21

beneficiary of skilled migration and

10:22

foreign Capital movements so there is

10:24

level of irony to States like Florida

10:26

and Texas now causing the same problems

10:28

but that doesn't mean those problems

10:29

aren't real now before getting into

10:32

these specifically it's important to

10:33

note that the Federation system of

10:34

states that makes up the USA has a lot

10:36

of advantages having multiple levels of

10:38

government adds a level of control and

10:40

redundancy to the National economy as a

10:42

whole making it more difficult for one

10:44

bad policy one bad leader or even one

10:46

bad idea to the economy it's not

10:48

just the USA other federations around

10:50

the world like Canada Germany

10:52

Switzerland Australia and the

10:53

Netherlands have all benefited from

10:55

their system of giving a level of

10:56

autonomy to distributed States but this

10:58

only works well if that level of

10:59

autonomy is just right too much

11:02

oversight and well it just becomes

11:03

another unitary country with an added

11:05

layer of bureaucracy and to little

11:07

oversight can cause the states within a

11:08

country to start competing with one

11:10

another not unlike a certain poor

11:11

student thinking they beat the system at

11:13

their part-time job if every state

11:15

within the USA starts competing with one

11:17

another to attract the most talented

11:18

workers and most valuable Industries

11:20

then it's just going to end up as a race

11:21

to the bottom on regulations tax

11:23

revenues and incentives in a way this is

11:25

already happening with cities fighting

11:27

with one another to get companies to set

11:28

up new headqu ERS in their metro area

11:30

shortterm this could be a boost to

11:32

Regional economic centers but it will

11:34

almost inevitably come at the expense of

11:36

overall economic stability businesses

11:38

policy makers and even economists love

11:40

to hate them but there are usually

11:41

reasons why certain policies exist

11:44

what's more is that competition between

11:46

supposedly United States can cause

11:47

something of a feedback loop where poor

11:49

states fall further behind richer States

11:51

because talented workers move to areas

11:52

where they can make more money and be

11:54

surrounded by the lifestyle that wealthy

11:56

people enjoy and in doing so they prop

11:58

up the wealthy state at the expense of

11:59

the poor State The Wider that Gap gets