States (And Canadian Provinces) Are Not Real Economic Units

Discussing comparisons between living standards in New York and Ontario, Felix Salmon hits upon some of the inherent difficulties in making these kind of comparisons. I might add to his list that though U.S. states and Canadian provinces are important governance units, they’re not real economic units. He writes that “New York’s GDP is artificially raised by Wall Street — something which does little good for poor families upstate.”

That’s in part just because much of New York is so damn far from the financial district. New York’s number two city, Buffalo, is much closer to Ontario’s number one city, Toronto, than it is to NYC. But western portions of Ontario are closer to Minneapolis than they are to Toronto. It’s much more enlightening, I think, to try to look at cities and metropolitan areas than to these weird subnational units. How does the Greater Toronto Area compare to similarly sized American metro areas? I think you’ll see that quality of life comparisons end up depending a lot on what you care about. Toronto is, obviously, very cold compared to the similarly sized Miami. On the other hand, the murder rate is much lower.