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What Would It Look Like If Red States Actually Seceded?

Our interconnected world makes an amicable divorce a bit more complicated than just breaking up the states.

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One possible solution would be to separate true “defense” from military spending. We could agree to a treaty that sets common defense spending at, say, half of current levels (or a third -- whatever) for a dedicated North American Defense Force, and then allow the two new countries to maintain their own “expeditionary forces,” based overseas, that would be barred from operating in North America. If one of the new countries wants to play World Police, it can do so and bear those costs.

What to do with our 700-plus foreign bases? I guess you'd divide them up like common assets in any other divorce.

Trade and Borders

If the idea is to pursue different ideas about the role of government in society, why would we want to give up the advantages that come with being the world's second largest economy? The best scenario would be to retain one big economic zone along the lines of the EU – two countries establishing their own domestic affairs, in a union with some common policy that facilitates the free exchange of goods, services and people. This would give citizens the opportunity to vote with their feet if they don't like living with their new model of governance.

But there are two problems here. First, we'd have to avoid having the red states become a maquiladora zone, with cheap labor and lax environmental regulations that blue state firms could take advantage of to manufacture products for sale in their domestic market. The second problem would be contraband goods flowing back and forth – what's the point of stricter gun laws in the North if a constant stream of AR-15s flows up from the South? (The opposite would be true if the blue states legalized marijuana and the red states maintained its prohibition.)

The first problem might be answered with some sort of tariffs that equalize labor costs and regulatory burdens, creating an even playing field for firms to compete without engaging in a race to the bottom.

The second problem is stickier. Would we want a high-tech, heavily guarded border with limited crossing points like we now have with Mexico? In the EU, nationals move freely across borders. Perhaps checkpoints could be established on the most heavily trafficked routes. Random vehicle searches – with penalties for trafficking in contraband goods – might be enough to manage the problem, at least to a significant degree, without having formal border crossings.

Taxes and Benefits

Here's another sticky issue. It's safe to assume that the blue states would tax their citizens a bit more and offer better benefits in return. How would we deal with these differences if we maintain an open-border policy, and people spend time living and working in both of the new countries?

The European Union might again provide an answer: a bilateral tax treaty. In the EU, people who spend more than half of a year working outside their home country are considered tax residents of that country. Those who spend less than half a year working in another country only end up paying taxes on their income in that country.

As far as retirement and health benefits go, as in the EU, you'd accrue benefits in the country where you worked, or, if you've worked in both countries, then you would be eligible for retirement benefits in both countries according to what you've paid into the system during your career.

Currency/Monetary Policy

Ideally, we'd maintain a common currency and avoid a lot of the hassles the EU has had by having a single central bank overseeing monetary policy (most of the EU has a single currency but no common fiscal policy, which has caused a lot of problems).

 
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