USA Outgrows China… Because of Florida?

for the first time in over three decades

the economy of the USA is growing faster

than the economy of China casting doubts

over the assumption that eventually

China will overtake the current Global

leader this strong growth in what is

already the largest and most diverse

economy in the world is particularly

remarkable when it's considered that a

large share of other advanced economies

around the world have been more or less

stagnant for more than a decade but zoom

in and get a closer look and even within

the USA the story is much the same a

majority almost 2/3 of US states are not

growing as fast as the USA itself what

this means is that just a handful of

areas are doing a lot of the heavy

lifting to prop up the world's biggest

economy and it's not just in outright

economic growth figures either which is

where we get to Florida Florida is home

to the fourth largest economy within the

USA having roughly the same economic

output as Mexico Indonesia or Spain

impressive considering it's just one of

50 states that make up the union but

Florida has attracted the attention of a

lot of economists for a reason other

than just its sheer size Florida is

growing much faster than the other major

states that round out the top four

California New York York and even Texas

and it's doing it in ways and with

industries that haven't typically been

associated with the Region's vibrant

history it's also gaining a lot of

attention because that success may or

may not be a net benefit to the USA as a

whole and to find out why we must as

always answer a few simple questions

what is driving Florida's rapid growth

today what are the potential problems

caused by these growth areas and finally

is this above average growth really

sustainable once we have done all of

that we can put Florida the fourth

largest economy within the USA on the

economics explained leaderboard to see

how it stucks up against other US states

and entire National

economies for an economy to function

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today I want to start this video off a

little bit differently with something of

a personal anecdote which I promise is

highly relevant to the economic

situation of Florida back when I was at

University doing my undergrad I had a

part-time job managing a shop where the

regional boss push me and all of the

other stores to make as many sales as

possible of course that's nothing

unusual but one day for whatever reason

my particular shop was allowed to put on

a big storewide discount for everything

for one day only to make the most of

this and to keep our big boss happy we

called all of our regular customers to

let them know about this in advance so

that we can make as much money as

possible on the day unfortunately we

well I actually got into a lot of

trouble for doing this because all that

really happened was that people did all

of the shopping they were going to do at

a discount in our store instead of

shopping like they normally would at all

of the stores in the area which made us

look good at the expense of the company

as a whole now don't feel too bad my

PTSD from working retailers mostly

passed but the point is on a much larger

scale Florida might be doing the exact

same thing and growing its economy at

the expense of other states that make up

the USA the economy of the state as it

exists today really got started as

something of a tourist destination for

people to travel to from colder regions

on the east coast of the USA while

technically the region that went on to

become the state was home to the first

Western City on the North American

continent it developed far slower than

regions to the North in large part

because of its terrible geography even

today the state is full of swamps

mosquitoes natural stor storms and

otherwise difficult to navigate terrain

so for most of its early history as its

own state it was just a place where

people went on holidays and even that

was limited this changed as railroads

were built into the area connecting its

Inland regions directly with major

industrial and population centers in the

north which not only opened up the area

to even more tourism it started to make

things like farming and even Light

Industry possible today these early

Industries still make up a significant

portion of the state's total economic

output but they have been joined by a

growing number of more modern economic

contributors the state has a

surprisingly large mining sector not

digging for metals or fossil fuels but

one of the world's largest reserves of

phosphorus which is a naturally

occurring chemical which is used

primarily as a fertilizer the USA has

the third largest agricultural industry

in the World Behind only China and India

with their massive populations and on a

per capita basis farming in the US is

far more productive than it is almost

anywhere else in the world the phosphate

dug out of the ground in Florida

supplies 3/4 of all fertilizer required

by farmers in the country which Beyond

just being a great Revenue Center for

Florida also means that the USA as a

whole is a lot less dependent than most

other countries on limited Global

suppliers of this resource for their

food security now these are all very

interesting but it's not what has been

driving the recent growth of the state

and those are more the industries

causing controversy Florida is a strange

place and part of its unique reputation

comes down to the economic factors that

attract people into the state from all

walks of life Florida has by far the

highest level of net migration within

the USA and more people are moving to

the state than even outliers like Texas

which has been making headlines in

recent years for the wave of people

moving there Florida has gained almost

as many new residents since 2020 as New

York has lost and unlike a lot of other

states that have seen big increases and

their number of new residents this

phenomenon isn't really anything new for

Florida now of course a lot of that

migration is just old people moving to

the state to retire which is why despite

consistently high levels of internal

migration into Florida the population is

still not growing as fast as a state

like Texas because well older residents

die just as quickly as they move in but

the population is still growing overall

which compared to other major US

economies like New York which has been

stagnant for more than a decade now and

California which is going backwards

population growth of any form is a

positive sign that there is something

attracting more than just retirees to

the state a lot of Florida's new

residents are young highly skilled

workers and weirdly enough both of these

two groups are moving to the state for

the same reasons taxes within the USA

are charged on a national level as well

as on a state level which means that

even within the same country some people

pay a higher rate than others because of

where they live Florida has no state

income tax which means people living in

other states like New York and

especially California can save a lot of

money by moving there for retirees this

is a good way to get their savings to

stretch a little bit further but

recently it's attracted a lot of people

in some of the state's newest booming

Industries low taxes nice beaches and a

lower overall cost of living than

centers like New York City Silicon

Valley and Los Angeles is great but

Florida wouldn't have been able to

attract some of the US's most skilled

and productive workers unless there were

jobs for them to do there fortunately

the state has seen a significant

increase in finance and technology

companies setting up major centers of

operation if not moving their

headquarters there entirely the highest

concentration of International Banks in

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

Miami and likewise a lot of tech

companies have set up shopp in the

state's bigger city because of its

relative ease of doing business of

course there have been some high-profile

cases of business interests in Florida

going head-to-head with government power

and instances like this can genuinely

have an impact on how desirable a region

is to invest work or set up a business

in but overall Florida is still

perceived as being much less restrictive

than other major centers like California

New York a large part of the reason why

average incomes in Florida have been

increasing so rapidly over the last

decade is not because the state itself

has become more productive it's because

already productive and highly paid

workers have been moving there either to

work remotely or to follow the large

companies that have also moved there

while this has been a huge positive

trend for the state itself it hasn't

necessarily been good for the economy on

a national scale or even the people of

Florida on an individual level now we've

covered the issue of capital flight and

brain drain many times on this channel

before but we've never really explored

it happening within a country and in

many ways this is where it can be most

intense now as always we don't want to

repeat too much here but brain drain is

what happens when the most skilled

participants in an economic region move

from one area to another for better

opportunities leaving the region they

are moving from worse off overall

because it loses its best workers

taxpayers and possibly has to face skill

shortages if a tech worker moved from

Silicon Valley in California Not only

would California miss out on their tax

revenues California based companies may

not be able to find the workers they

need to continue their operations and

eventually they'll have to move to where

they can find workers now a quick side

note is that a reasonable assumption

would be that the rise of remote work

could combat this now that there's no

need for certain workers to be

physically tied to a particular location

but the unfortunate truth is it's too

soon to tell it has the potential to

make the problem worse because at least

things like access to employment

opportunities added some friction to

productive workers moving to whatever

state city or country offered them the

best tax deal and living conditions

without that there is less standing in

their way especially if the receiving

economy is happy to house the them which

most normally are to wealthy and

productive workers it's probably not the

most consequential example but there's a

reason why so many people with online

businesses move to Dubai and it's not

because they're a fan of the

architecture Capital flight is similar

to brain drain but they are two distinct

problems Capital flight occurs when

people pull their Capital out of one

area and move it to another area capital

in economics really means anything that

isn't land or labor and can be used to

increase economic output so tools

infrastructure technology materials and

of course regular old cash if people

move they tend to bring their stuff with

them including their spending money

which denies capital from where they're

moving from and provides it to where

they're moving to this has been a major

problem for a lot of national economies

in modern history as moving

internationally has become more common

extreme examples like China and South

Africa have even impose restrictions on

how much Capital their people are

allowed to take with them if they leave

the country because the Exodus of

wealthy citizens could otherwise have

serious impacts on the economy now

within a Sovereign Nation like the USA a

country which famously values its

freedoms such restrictions would be

possible and this is why in certain ways

Capital flight and brain drain can cause

even more serious issues at this point

it's probably important to recognize

that while a lot of people are moving to

Florida from places like New York

California and Illinois in the past

dozens of other states across the USA

had the same problem with skilled

workers moving into the very same states

that are now losing workers to Florida

the USA itself is globally the greatest

beneficiary of skilled migration and

foreign Capital movements so there is

level of irony to States like Florida

and Texas now causing the same problems

but that doesn't mean those problems

aren't real now before getting into

these specifically it's important to

note that the Federation system of

states that makes up the USA has a lot

of advantages having multiple levels of

government adds a level of control and

redundancy to the National economy as a

whole making it more difficult for one

bad policy one bad leader or even one

bad idea to the economy it's not

just the USA other federations around

the world like Canada Germany

Switzerland Australia and the

Netherlands have all benefited from

their system of giving a level of

autonomy to distributed States but this

only works well if that level of

autonomy is just right too much

oversight and well it just becomes

another unitary country with an added

layer of bureaucracy and to little

oversight can cause the states within a

country to start competing with one

another not unlike a certain poor

student thinking they beat the system at

their part-time job if every state

within the USA starts competing with one

another to attract the most talented

workers and most valuable Industries

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

to the bottom on regulations tax

revenues and incentives in a way this is

already happening with cities fighting

with one another to get companies to set

up new headqu ERS in their metro area

shortterm this could be a boost to

Regional economic centers but it will

almost inevitably come at the expense of

overall economic stability businesses

policy makers and even economists love

to hate them but there are usually

reasons why certain policies exist

what's more is that competition between

supposedly United States can cause

something of a feedback loop where poor

states fall further behind richer States

because talented workers move to areas

where they can make more money and be

surrounded by the lifestyle that wealthy

people enjoy and in doing so they prop

up the wealthy state at the expense of

the poor State The Wider that Gap gets

the more pressure it'll put on highly

productive people from poor states to

move to the Richer ones extreme Regional

inequality will need to either be

addressed with cumbersome and

realistically politically unpopular

interventions or eventually it can get

so bad that separate states almost need

to be treated as two completely

different economies now the USA is a

long way from anything that extreme for

now but it's something that shouldn't be

completely ignored as its labor force

and Industrial centers become

increasingly mobile a problem this is

causing right now though is is that

regular people who already live in

States like Florida are finding it

harder to keep up financially with the

wealthy people moving into enjoy the

lower taxes nicer weather and

comparatively cheaper living expenses

governments at all levels should do what

is best for the people they represent

and achieving economic growth and

increasing incomes is a major part of

delivering those outcomes but when

headline figures like this are achieved

in ways that don't really improve living

standards for anyone apart from perhaps

a select group of wealthy internal

migrants headline economic success

doesn't always equate to genuine

economic success

okay now it's time to put Florida on the

economics explained leaderboard starting

as always with size Florida has a GDP of

roughly $ 1.4 trillion the small

disclaimer here is that just like every

other state within the USA the World

Bank and international monetary fund the

sources that we usually rely on for

macroeconomic figures do not produce

data for States within a sovereign

country so the numbers here don't use

exactly the same methodology even still

Florida's economic output is roughly

equivalent to Mexico's and if it was its

own independent country it would be the

14th largest in the world so it gets an

8 out of 10 GDP per capita is

$7,555 which is very good by global

standards and it's only improving but

despite all of its recent success this

number is still behind the average for

the USA as a whole which has a per

capita output of

$882,500 DC even still this leaderboard

ranks economies internationally where it

would get another 8 out of 10 stability

and confidence is quite quite strong

it's a major state in the world's

largest economy it uses the world's

reserved currency and despite the

occasional political maneuver that makes

headlines the state is incredibly stable

which is in large part why so many major

industries have been attracted there it

gets a 9 out of 10 only losing a point

because of the internal challenges the

state is facing and ongoing Geographic

issues like tropical storms which can

have a very tangible impact on the

economy's future growth has been one of

the strongest within the USA which has

itself been one of the fastest growing

major economies in the world over the

past decade the econom has roughly

doubled in size in the last 10 years

giving it a 9 out of 10 in this metric

even if that growth has come at the

expense of other areas of the economy

finally industry Florida even for such a

large economy has a well Diversified

economic base of Agriculture mining

tourism and now financial services and

Technology this is to say nothing of

Industries like construction which are

fantastic employeers and have been

booming thanks to new people moving into

the state overall the economy gets an 8

out of 10 again only losing two points

because a lot of these industries still

rely on the USA as a whole to feed them

rather than creating independent

homegrown industrial bases overall that

gives the economy of Florida an 8.4 out

of 10 which is exactly the same as the

state of Texas which despite having many

of the same demographic characteristics

as Florida arrived at this particular

score in a different and arguably more

sustainable way you should be able to

click to that video on your screen now

thanks for watching mate

bye