Secession Diaries, Part II: Irrational Exuberance

"It's time for us to throw off the bad baggage of the old system. You remember the Red States used to be the slave states, right? That kills me"

Mental Health Minister Garofalo, 2007

The United States of Canada's Constitutional Convention of 2006 dragged on into 2007, and eventually into 2008.

This is Part II of the History of North America after the Great Secession of 2007.

When the final document was released, the 200 page Constitution (that was actually the average length of the versions released - California refused to ratify the Immigrants Rights sections of the charter) guaranteed the Rights of speech, press, assembly, housing, security, food, family leave, reproductive choice, family configuration, self-esteem, a balanced budget, healthcare, mental healthcare, education, voting/education/medical care rights for immigrants regardless of documentation status, a living wage, as well as freedom from religion, hate, and harassment.

The first 100 days were tumultuous for both of the new nations. Since the two nations couldn't agree on foreign commitments, all US troops were withdrawn from overseas, and the US Army, Navy and Air Force were in effect disbanded. Shortly thereafter, Peace Minister Kucinich inaugurated the new "Peace Force", a small paramilitary "peacekeeping" force that was completely integrated into the UN command.

The "Red" US, realizing that neither its tax base nor its organic commitments required a large military, retained a small Coast Guard using former USCG cutters, an enhanced Border Patrol, and a National Guard. "If there's one thing we don't need to worry about, it's those Blue Staters invading us", said Red Secretary of Defense Jeff Nguyen.

As tumultuous as foreign policy was, domestic relations were even moreso. The Prime Minister's Press Secretary, John Stewart, was quoted on "Meet the Press Branch" early in '07: "We have all the industry, all the media, all the people, all the brains, restaurants, all the love..."

The Red states had most of the food, of course - as well as a lot of thriving commercial and industrial areas. While they'd always been overshadowed by Silicon Valley, a number of small, decentralized commercial, development, scientific and industrial centers had been developing in places like Idaho, North Carolina, Utah, Florida, Texas and Colorado.

Many economists, including the New York Times' Spleetor Fandingding (nee Paul Krugman, who had changed his name under peculiar circumstances in late 2004), predicted that things would basically stay the same; "It's in eveyone's self-interest to keep things in a sort of stasis".

But things started changing; the changes were small, but they came on fairly quickly.

The Red Boom

The non-agribusiness sector in the US took off much more quickly than expected. There were many reasons - there was so much work to do to basically build a national infrastructure where none had existed, plenty of work awaited. A massive selloff of federal lands owned by an extranational federal government brought in billions of dollars of non-agribusiness currency. And the US didn't lack for any industrial infrastructure - the new nation had access to the many, many maquiladoras in Mexico that had been briefly idled by the USoC's "closed border" policies (of which more below). Las Vegas, Miami, and Orlando raked in extra billions, both for the gambling, tourism and entertainment markets and in foreign exchange fees. And the trips to Aspen and Vail that had entertained the Blue State elite during the old days were now overseas trips, complete with international fees and exchange taxes.

The New US abandoned the Income Tax for a radical, but reasonable, National Property Tax. Individuals and corporations - domestic and foreign - paid a small, flat annual tax on real and fiscal property holdings. The revenues were more than sufficient to pay the budget of the drastically-shrunken Federal Government. Further revenues came from taxes on "foreign" property and investment holdings in the US, notably the large tracts of former federal land that were bought by USoC nationals and European and Asian buyers.

"Corporate Welfare" was abolished; companies were no longer subsidized.

The healthcare system introduced a system of health savings accounts. Low-income catastrophic care was augmented by a small national subsidy in the form of a nationally-underwritten catastrophic care risk pool for low-income workers.

The tax revenue went to paying down the US's minimal combined state deficits, and ameliorating the readjustment in the agriculture business. Absent Washington's subsidies, the price of American agricultural products plunged. But again, without the subsidies, most of the major agribusiness conglomerates confined their business to the USoC, where subsidies and higher-margin crops made their operations more profitable. As a result, farming in the "Red States" underwent a bit of a shake-out - but not nearly as severe as had been predicted.

Freed of Washington's politics, the new USA negotiated lucrative agricultural trade agreements with much of the third world.

But the real revolution was electronic. As a money-saving and reliability-boosting measure, the US Government adopted the LINUX operating system as its software backbone. This created a massive, internal market for development work to support the sudden, vast divestment from imported Microsoft and IBM software. Massive development efforts occupied most of the US software development market, as companies worked overtime to supply the needs of government, business and an immense private sector. "Times have never been so good", said Tad Rawaljindipur of Boise's "Vishnuware", which provided the software that powered the new banking industry that arose to replace the largely "blue-state" banks who were frozen out of the US market. "Before the split, we had been developing a RecipeMinder for PalmOS. Today, our OpenBanc application tracks billions of dollars of EFT payments per day".

The New US defied predictions, and came right out of the gate with a booming economy.

The Blue Bust

The left-leaning USoC started out with big economic and social plans, immediately ratifying a French-Canadian/UN-sponsored "Bill of Universal Economic Liberties". The Bill included:

• A comprehensive single-payer healthcare, essentially transposing the Canadian system to the new nation. The system included comprehensive addiction and psychological care.
• A national "Living Wage", set at 84 francs per hour ($12/2004 US)
• A family leave bill that allowed new and adoptive parents six months of mandated leave
• Complete, mandatory domestic partner benefits
• An acceleration of the old agriculture and dairy price supports.
• Punitive energy consumption taxes on larger private vehicles.
• As a gesture of solidarity to the oppressed workers of Central America and Asia, as well as a sop to the AFL-CIO and the Teamsters, high tariffs on manufactured goods went into effect immediately.

These tariffs cut the legs out of under much Central American industry. US companies rushed in to fill the gap with the newly-cheap capacity - which caused a UN/USoC resolution condemning the exploitive industrial practices practiced in the new US. "Just like a bunch of former Slave States!", crowed Fairness in Labor Minister Arianna Piffle-Schwartzwald-Van Beek.

The tariffs brought retributive tariffs on USoC agricultural products from Central America and Eastern Europe - opening a large market for US agricultural goods to all of those markets.

Piffle-Schwartzwald-Van Beek instituted a punitive tariff against US agricultural goods. In response, the US enacted its first tariff - a 5% surcharge on all goods "imported" to the US from the USoC.

The effects were subtle, but started immediately.

• "Exports" of cars from Detroit to its major export market - the US - dried up immediately, as Japanese and German companies, leveraging their market position with their Red-State factories in the South and West gobbled up market share. The Volkswagen Maverick replaced the Ford F150 as the top-selling pickup in the US, while Toyota, Honda and Mazda's US operations - operating as domestic companies - picked up near-exclusive market share.
• The tariff on food cause the price of pasta - a staple in New York and Boston - to skyrocket. A government effort to encourage New York and Boston Italian-USoCians to eat rice backfired, culminating in the Semolina Riot of 2008, where a rumor of a pasta shortage caused by massive hording of precious "pre-tax" pasta led to nine deaths and $40 million in property damage in New York, Boston, Philadelphia and Newark.

The obvious lesson of the riots, in hindsight, was that the tariffs were a disaster. The less obvious lesson was that troops from the federal Ministry of Peace were unable to quell the riots, and the government's efforts to rebuild the damage were late, and hideously expensive.

Still, at the end of 2008, the situation was fairly impressive; the "Red" US was growing ("From what?" scoffed Minister of Intellectual Development Maureen Dowd), while the USoC's economy was stable.

Not all the news was good:

• Christmastime layoffs at Ford and GM plants in Michigan and New Jersey made for a brown holiday season
• tariff-induced inflation in food and fuel prices sparked a slight uptick in the USoC's inflation index
• Violent crime rates experienced a sharp spike in the major metropolitan areas in the USoC, despite the five-year phased confiscation of all non-hunting firearms that had begun 12 months earlier. Minister of Safety Niles Throckmorton announced a plan to accelerate the confiscation, and proposed banning hunting weapons as well. "We need to disarm all the potential criminals", said Entertainment Minister John Tesh in kicking off the Safety Ministry's "Disarm for Peace" ad campaign in late November.
• The Ministry of Entertainment noted that it had been the worst Broadway season on record in New York. "No Frickin' Tourists", said Associate Minister of Culture Vito Scungili. "Frikkin' Red-State Rubes ain't comin' here and spendin' their frickin' money! Whadya think they're doing in f****ng Flyoverland - making Twine balls, going to tractor pulls and grooming each other's frickin' mullets? Jeeezus H Christ, tell those hicks that Broadway is still frickin' here! Jeez, we're dying here!"

Still, as people in the US sat down for Christmas, Hanukkah and Kwanzaa dinner (and families in the USoC celebrated Solstice) and 2009 loomed, everything was looking pretty good in both the Red and Blue states.

But nobody had seen a year like 2009 in recent human memory.

Part IV - World of Hurt
Part III - Death and Taxes

Part I - Push Comes to Shove

Posted by Mitch at November 10, 2004 02:02 PM | TrackBack