While it is true that mileage varies in many blue states which tend to do much, much worse than overall averages, that is not a 2025 unique issue either (about which more below).
Real disposable income, per capita, on the other hand, appears flat, as it has since February 2023:
As of December 2025, real disposable personal income was $52,856 per capita, a 1.38% increase from the previous year. Not exactly a figure to wet the bed over.
So, one might be forgiven for wondering why everyone is suddenly gassing about an affordability crisis?
A cynical answer might be “projection.”
When asked for the “change in private sector real disposable income in red states versus blue states over last five years,” here is what was returned:
“Over the past five years, red states have experienced stronger growth in private sector real disposable income compared to blue states, driven by higher population growth, business income gains, and lower tax burdens. As of 2024, Republican-led states outperformed blue states in real GDP growth, with 10 of the top 15 states in real GDP growth having Republican governors, and business income rising significantly in states like Tennessee, Florida, and Texas.
This trend is linked to lower tax rates and more favorable business climates in red states, which have attracted both high-income individuals and businesses, contributing to higher disposable income.
Red states have seen stronger job growth, income growth, and population increases compared to blue states, with no-income-tax states experiencing double the jobs growth rate and double the population increase over high-income-tax states.
The average per capita disposable income in red states was $50,462, compared to $61,606 in blue states, indicating a persistent income gap even after adjusting for taxes.
Despite this, blue states contribute a disproportionate share of federal tax receipts—nearly 60% from 2018 to 2022—while receiving only 53% of federal spending, resulting in a net transfer of over $1 trillion to red states, which may partially offset income disparities.
However, the higher cost of living in blue states, particularly in housing and utilities, which are 52% and 45% more expensive than in red states, respectively, reduces the real purchasing power of higher nominal incomes.”
Interestingly, one possible explanation for the wealth transfer from blue to red states might be that the latter have a greater percentage of their labor force employed in government:
“Based on the available data, red states generally have a higher concentration of government employees per capita compared to blue states. States with Republican leadership, particularly in the Great Plains and southern U.S., tend to have higher rates of non-educational public employees per 10,000 residents. For example, Wyoming, a red state, had approximately 450 non-educational full-time equivalent (FTE) workers per 10,000 residents in 2012, the highest rate in the nation.
Alaska, another red state, ranked second with about 392 FTEs per 10,000 residents.
This trend is attributed to factors such as a higher number of public hospital and health employees, extensive highway and infrastructure maintenance needs, and larger corrections staff in rural and conservative states.
In contrast, states with lower concentrations of government workers, such as Arizona, Michigan, Nevada, and Illinois, are more likely to be politically left-of-center.
While education employees are excluded from these comparisons, the overall pattern indicates that red states maintain a larger public workforce relative to their populations.”
So, maybe everything is not as simple as it might seem.
1) A structure that brings money into a state at the feds expense (ACA, Medicaid) is a recipe for explosive growth. The foxes are guarding the henhouse.
2) As I expected, Virginia's turn to the right was a limited COVID affair and we are back on track to be a state run by anti-white communists that literally want to kill my children.
3) Capitalism for developers and communism for landlords does feel like something of a natural equilibrium. Baltimore for instance seemed perpetually stuck in that norm (high property taxes for general residents, special temporary tax breaks for companies willing to relocate HQs there).
Its long run viability is questionable, but the short run incentives make a lot of sense.
Question: what do housing, healthcare, childcare, and education all have in common? Hint, the answer isn't expensive or restrictive regulation. Housing in most of rural and smaller town America isn't costly because of regulation. In much of america it isn't even expensive unless we are talking about mcmansions. Same goes for childcare. In-home childcare is expensive too.
You have a different guess?
Ok, they are all labor intensive in an economy that is seeing productivity gains and reduced mg labor inputs in almost every other sector. Labor is becoming increasingly expensive and these four expenses still require lots of labor.
Yes, housing also requires land that is increasing faster the inflation in most locations seeing high housing cost.
Electricity is maybe more of a regulation issue but given the massive demand increases from data centers, it's not at all clear the situation would be much better with less/better regulation.
Google tells me, of my state: data center connection requests grew from 63 gigawatts in 2024 to 233 GW in 2025. This demand “fueled by AI, could double the state's peak electricity usage by 2030”.
From ERCOT (which doesn’t even cover the whole state!): “grid planners in Texas are assessing more than 233 GW of large load interconnection requests, with more than 70% coming from data centers, an official said at a Dec. 9, 2025 board meeting.
“The total capacity exploring grid interconnection near the end of 2025 increased almost 300% over the 2024 year-end total, ERCOT Vice President of System Planning and Weatherization Kristi Hobbs said.”
Is it so little girls’ texts and TikToks can be preserved forever? I’m going to insert whatever I want until somebody gets around to saying what it is for.
Yes, AI. I am alone evidently in not considering the word, this “ability”, an end, nor an end to the question of why we *need* to double our power usage.
I'm not entirely sure what you words mean but plenty of people question the benefit of AI for a long list of reasons both good and bad, and include mg the power usage, not that I know which are good or bad.
I really wanted to see what Dan Williams wrote about Emily Ostrom and Mancur Olson. There's no mention of either on his piece you link to; perhaps you got the link wrong?
We need Arnold & McGinnis to offer alternatives, not merely cessation of subsidizing demand & restricting supply, which would be done more if they were politically popular. Locally they are unpopular.
Trump is active in buying mortgage bonds.
He should push special tax credits to the builders who completed house construction in 2025, like $30,000 credit per house. One key power of the free market is rewarding success, the Feds can reward successful builders with tax credits to better incentivize supply.
Here’s a great tweet on how the rich use assets to borrow money & buy more assets with paying far less in taxes than a worker using labor income. Taxes helping the rich get richer must faster need revision.
"Inner “friendliness” or “altruism” but from complex, precarious systems of monitoring and incentives that align self-interest"
In a healthy socioeconomic environment, the line between friendliness or altruism and self-interest is mostly non-existent. It is only when things go awry that they diverge.
Interesting. The City Journal piece has a cute link in the sentence about how making houses more energy efficient doesn’t result in “savings” which a reader would guess means, the subsidized individuals concerned see no reduction in energy use. Now, writ small, this perhaps is the old thing about how we should never have made our old fridges more energy efficient, and instead should have foreseen that video gaming on big TVs would eat up all the “savings”.
But it’s not. It’s an observation that energy use increases. No mention of population. What this has to do with old or otherwise crappy houses is deeply, deliberately unclear lol.
I guess under that logic, you keep the old fridge and lose the big TV, which admittedly has a certain appeal.
But surely only a fool would suppose that those things were connected.
Anyway, is it or is it not better to have fridges that use less energy? Given that your old latching fridge would be dead by now anyway.
If as a society, we cannot answer questions like these in the affirmative, then we may as well throw in the towel.
Well, perhaps we already have.
City Journal: you already have taxpayers subsidizing other consumers “up to 150% of the federal poverty rate” and you presumably always will - because that’s not the sort of thing libertarians care about.
As such, it should be a matter of indifference to you whether that takes the form of a pure transfer, or decreased energy costs for heating or AC. The latter at least throws somebody some business, and makes an investment in people’s future comfort and very likely extends the life of their home, keeping it available so that we don’t have to build expensive (and “energy-efficient” public housing - yes, dear libertarians, we still are building such, see the replacement for the vintage Rosewood Courts in Austin).
No, that’s not going to change, an connecting it to “climate” is a weird flex that I guess helps you sleep at night - pretend one thing is another so you can avoid thinking about the first thing?
Anymore than we are going to “withdraw subsidies that artificially inflate demand” - the ultimate subsidies that is, all those that support the presence of so many immigrants and their progeny in this country.
The evidence for the advent of an affordability crisis in 2025 seems to be mixed at best.
Just looking at the last 5 years of CPI change, 2025 doesn’t stand out particularly:
https://fred.stlouisfed.org/series/CPIAUCSL#
Nor does 2025 stand out for housing price change:
https://fred.stlouisfed.org/series/USSTHPI#
Nor does 2025 stand out for healthcare price change:
https://fred.stlouisfed.org/series/CPIMEDSL#
Nor for childcare/education:
https://fred.stlouisfed.org/series/CUSR0000SEEB#
Nor for electricity:
https://fred.stlouisfed.org/series/CUSR0000SEHF01#
While it is true that mileage varies in many blue states which tend to do much, much worse than overall averages, that is not a 2025 unique issue either (about which more below).
Real disposable income, per capita, on the other hand, appears flat, as it has since February 2023:
https://fred.stlouisfed.org/series/A229RX0#
and real private earnings have been bouncing around in the same range as previously:
https://fred.stlouisfed.org/series/CES0500000011#
As of December 2025, real disposable personal income was $52,856 per capita, a 1.38% increase from the previous year. Not exactly a figure to wet the bed over.
So, one might be forgiven for wondering why everyone is suddenly gassing about an affordability crisis?
A cynical answer might be “projection.”
When asked for the “change in private sector real disposable income in red states versus blue states over last five years,” here is what was returned:
“Over the past five years, red states have experienced stronger growth in private sector real disposable income compared to blue states, driven by higher population growth, business income gains, and lower tax burdens. As of 2024, Republican-led states outperformed blue states in real GDP growth, with 10 of the top 15 states in real GDP growth having Republican governors, and business income rising significantly in states like Tennessee, Florida, and Texas.
This trend is linked to lower tax rates and more favorable business climates in red states, which have attracted both high-income individuals and businesses, contributing to higher disposable income.
Red states have seen stronger job growth, income growth, and population increases compared to blue states, with no-income-tax states experiencing double the jobs growth rate and double the population increase over high-income-tax states.
The average per capita disposable income in red states was $50,462, compared to $61,606 in blue states, indicating a persistent income gap even after adjusting for taxes.
Despite this, blue states contribute a disproportionate share of federal tax receipts—nearly 60% from 2018 to 2022—while receiving only 53% of federal spending, resulting in a net transfer of over $1 trillion to red states, which may partially offset income disparities.
However, the higher cost of living in blue states, particularly in housing and utilities, which are 52% and 45% more expensive than in red states, respectively, reduces the real purchasing power of higher nominal incomes.”
Interestingly, one possible explanation for the wealth transfer from blue to red states might be that the latter have a greater percentage of their labor force employed in government:
“Based on the available data, red states generally have a higher concentration of government employees per capita compared to blue states. States with Republican leadership, particularly in the Great Plains and southern U.S., tend to have higher rates of non-educational public employees per 10,000 residents. For example, Wyoming, a red state, had approximately 450 non-educational full-time equivalent (FTE) workers per 10,000 residents in 2012, the highest rate in the nation.
Alaska, another red state, ranked second with about 392 FTEs per 10,000 residents.
This trend is attributed to factors such as a higher number of public hospital and health employees, extensive highway and infrastructure maintenance needs, and larger corrections staff in rural and conservative states.
In contrast, states with lower concentrations of government workers, such as Arizona, Michigan, Nevada, and Illinois, are more likely to be politically left-of-center.
While education employees are excluded from these comparisons, the overall pattern indicates that red states maintain a larger public workforce relative to their populations.”
So, maybe everything is not as simple as it might seem.
1) A structure that brings money into a state at the feds expense (ACA, Medicaid) is a recipe for explosive growth. The foxes are guarding the henhouse.
2) As I expected, Virginia's turn to the right was a limited COVID affair and we are back on track to be a state run by anti-white communists that literally want to kill my children.
https://virginiamercury.com/2025/10/05/beyond-disqualifying-jay-jones-controversy-jolts-virginias-pivotal-2025-elections/
I'm glad I left.
3) Capitalism for developers and communism for landlords does feel like something of a natural equilibrium. Baltimore for instance seemed perpetually stuck in that norm (high property taxes for general residents, special temporary tax breaks for companies willing to relocate HQs there).
Its long run viability is questionable, but the short run incentives make a lot of sense.
Question: what do housing, healthcare, childcare, and education all have in common? Hint, the answer isn't expensive or restrictive regulation. Housing in most of rural and smaller town America isn't costly because of regulation. In much of america it isn't even expensive unless we are talking about mcmansions. Same goes for childcare. In-home childcare is expensive too.
You have a different guess?
Ok, they are all labor intensive in an economy that is seeing productivity gains and reduced mg labor inputs in almost every other sector. Labor is becoming increasingly expensive and these four expenses still require lots of labor.
Yes, housing also requires land that is increasing faster the inflation in most locations seeing high housing cost.
Electricity is maybe more of a regulation issue but given the massive demand increases from data centers, it's not at all clear the situation would be much better with less/better regulation.
Google tells me, of my state: data center connection requests grew from 63 gigawatts in 2024 to 233 GW in 2025. This demand “fueled by AI, could double the state's peak electricity usage by 2030”.
From ERCOT (which doesn’t even cover the whole state!): “grid planners in Texas are assessing more than 233 GW of large load interconnection requests, with more than 70% coming from data centers, an official said at a Dec. 9, 2025 board meeting.
“The total capacity exploring grid interconnection near the end of 2025 increased almost 300% over the 2024 year-end total, ERCOT Vice President of System Planning and Weatherization Kristi Hobbs said.”
https://www.utilitydive.com/news/ercots-large-load-queue-jumped-almost-300-last-year-official/808820/
Dang those energy-efficient windows! That and wildlife conservation the cause of all our problems!
Planet Money had a pretty good podcast on electric demand from data centers a few weeks ago.
Is it so little girls’ texts and TikToks can be preserved forever? I’m going to insert whatever I want until somebody gets around to saying what it is for.
Bigger power uses at data centers include video streaming (which includes tiktoks), gaming, crypto mining, and AI. Not texts.
I don't know how accurate it is but I saw an estimate that over 90% is AI. For the purposes of this conversation, I'd bet that's close enough.
Yes, AI. I am alone evidently in not considering the word, this “ability”, an end, nor an end to the question of why we *need* to double our power usage.
I'm not entirely sure what you words mean but plenty of people question the benefit of AI for a long list of reasons both good and bad, and include mg the power usage, not that I know which are good or bad.
An implication of the excerpt from Barro's piece is that the housing market in NYC is stuck in a bad entrenched equilibrium.
I really wanted to see what Dan Williams wrote about Emily Ostrom and Mancur Olson. There's no mention of either on his piece you link to; perhaps you got the link wrong?
We need Arnold & McGinnis to offer alternatives, not merely cessation of subsidizing demand & restricting supply, which would be done more if they were politically popular. Locally they are unpopular.
Trump is active in buying mortgage bonds.
He should push special tax credits to the builders who completed house construction in 2025, like $30,000 credit per house. One key power of the free market is rewarding success, the Feds can reward successful builders with tax credits to better incentivize supply.
Here’s a great tweet on how the rich use assets to borrow money & buy more assets with paying far less in taxes than a worker using labor income. Taxes helping the rich get richer must faster need revision.
https://twitter.com/KurtSupeCPA/status/2009613376087851117
"Inner “friendliness” or “altruism” but from complex, precarious systems of monitoring and incentives that align self-interest"
In a healthy socioeconomic environment, the line between friendliness or altruism and self-interest is mostly non-existent. It is only when things go awry that they diverge.
Interesting. The City Journal piece has a cute link in the sentence about how making houses more energy efficient doesn’t result in “savings” which a reader would guess means, the subsidized individuals concerned see no reduction in energy use. Now, writ small, this perhaps is the old thing about how we should never have made our old fridges more energy efficient, and instead should have foreseen that video gaming on big TVs would eat up all the “savings”.
But it’s not. It’s an observation that energy use increases. No mention of population. What this has to do with old or otherwise crappy houses is deeply, deliberately unclear lol.
I guess under that logic, you keep the old fridge and lose the big TV, which admittedly has a certain appeal.
But surely only a fool would suppose that those things were connected.
Anyway, is it or is it not better to have fridges that use less energy? Given that your old latching fridge would be dead by now anyway.
If as a society, we cannot answer questions like these in the affirmative, then we may as well throw in the towel.
Well, perhaps we already have.
City Journal: you already have taxpayers subsidizing other consumers “up to 150% of the federal poverty rate” and you presumably always will - because that’s not the sort of thing libertarians care about.
As such, it should be a matter of indifference to you whether that takes the form of a pure transfer, or decreased energy costs for heating or AC. The latter at least throws somebody some business, and makes an investment in people’s future comfort and very likely extends the life of their home, keeping it available so that we don’t have to build expensive (and “energy-efficient” public housing - yes, dear libertarians, we still are building such, see the replacement for the vintage Rosewood Courts in Austin).
No, that’s not going to change, an connecting it to “climate” is a weird flex that I guess helps you sleep at night - pretend one thing is another so you can avoid thinking about the first thing?
Anymore than we are going to “withdraw subsidies that artificially inflate demand” - the ultimate subsidies that is, all those that support the presence of so many immigrants and their progeny in this country.
Care to connect the latter to “climate”?