Mississippi’s position of being compared unfavorably to the United Kingdom has caused significant embarrassment for the state. Last week, the Financial Times published an article titled “Is Britain Really as Poor as Mississippi?” This comparison, which has become known as “the Mississippi Question,” has sparked much discussion among Brits, particularly those residing in Jackson, Mississippi where I currently live.
The initial shock of comparing the UK’s wealth to Mississippi’s, considered to be a symbol of underdevelopment, occurred approximately nine years ago when Fraser Nelson, editor of The Spectator, proclaimed that the UK was poorer than any US state except Mississippi. This revelation was met with discontent from many in Britain who cling to outdated stereotypes about Mississippi and the Deep South. Subsequent comparisons have only further fueled the Britons’ determination to refute the data.
While there isn’t a uniform and up-to-date set of data to definitively answer the Mississippi Question, one can obtain a fairly accurate figure for GDP per capita by dividing Mississippi’s most recent GDP figure by its population. The same calculation can be done for the UK using total GDP data divided by the population, resulting in two comparable numbers.
Based on my calculations, the UK’s per capita GDP in 2022 was $45,485, while Mississippi’s was higher at $47,190. If Britain were to become the 51st state in the US, its citizens would rank at the bottom in terms of per capita GDP. Detractors argue that a comparison of national wealth should consider the cost of living, as expenses tend to be higher in the UK compared to Mississippi. They propose using a tool called “purchasing power parity” (PPP) to adjust the raw figures. When PPP adjustments are made, the UK does appear wealthier than Mississippi. However, adjusting the numbers to reflect the purchasing power within Mississippi itself challenges the notion of the UK’s superiority.
What’s more intriguing than the specific calculations for any given year is the growing gap between Mississippi and Britain. Even if we disregard PPP adjustments, a comparison of GDP per capita in current dollars for the early part of 2023 reveals that Mississippi’s economic output is growing at a faster rate than Britain’s.
Over the past three decades, several southern US states, such as Texas and Nashville, have experienced rapid economic growth, rivalling California and Chicago. North Carolina, Georgia, Tennessee, and even Alabama have flourished as well. Unfortunately, Mississippi was left behind. That is, until recently.
Mississippi’s business landscape was historically burdened by heavy regulations, with licenses required for even the most routine professions. However, the state has now deregulated the labor market, lifting many of these restrictions. The American Legislative Exchange Council reported that Mississippi has significantly reduced its public payroll, decreasing the number of public employees from 645 per 10,000 people in 2013 to 607 in recent times. Furthermore, Mississippi enacted the largest tax cut in its recent history, reducing the income tax rate to a flat 4 percent.
These positive policy changes were inspired by the State Policy Network’s successful initiatives in various states. Labor market deregulation drew inspiration from Arizona and Missouri, while Tennessee provided guidance on income tax elimination. Florida’s effective deregulation efforts served as an example for reducing bureaucratic red tape.
The gradual influx of investment has transformed Mississippi from a trickle to a steady flow. Visible signs of growth can be observed in prosperous areas along the coast and around thriving university towns, even though pockets of deprivation in the Delta persist.
The reluctance of many in Britain to accept Mississippi’s economic progress may stem from the outdated perception of the state as a land of cotton fields and poverty, inhabited by individuals relying on their faith, firearms, and Southern cuisine. However, perhaps Britons’ resistance to acknowledge changing economic realities reflects their own unwillingness to confront the truth about their country.
Many Brits believe they live in a prosperous free-market society but fail to realize the encroaching regulatory burdens imposed on their lives. Stringent regulations for landlords have caused many to exit the rental market, resulting in a severe shortage of available accommodations. Corporate diversity requirements have also increased costs in the financial services sector without providing tangible benefits for bank customers.
While each individual regulation may seem insignificant, their cumulative impact stifles innovation and growth. Brits have become desensitized to government red tape, oblivious to the pervasive burden it imposes on their economic and social lives.
To acknowledge that their country has operated on a flawed premise for three decades is undoubtedly challenging. Having to confront the fact that Britain is now poorer than Mississippi, the poorest state in the US, could be a catalyst for long-overdue self-reflection.
Britain’s preoccupation with the Mississippi Question reveals more about the country’s state of mind than just its GDP. Rather than confront uncomfortable truths, many Brits reject the data and instead attribute their economic challenges to Brexit or external factors like the conflict in Ukraine. While Vladimir Putin’s actions in Ukraine have certainly impacted energy prices, they alone cannot explain Britain’s overall economic performance. Similarly, while some commentators, who initially opposed Brexit, now blame it for the country’s struggles, they fail to acknowledge that the UK has outperformed much of Europe since its vote to leave the EU.
Since 2016, the UK economy has grown by 5.9 percent, surpassing Germany’s growth rate of 5 percent. In addition, the UK has so far managed to avoid a recession. Contrary to expectations of reduced trade, the UK has experienced a surge in exports, particularly in the service sector, after leaving the EU trade block. Service exports grew by nearly 23 percent in real terms between 2018 and 2022, the highest growth rate among G7 countries.
In conclusion, the ongoing debate surrounding the Mississippi Question sheds light on Britain’s mindset and economic reality. Rather than dismissing the data, it is essential for Brits to confront the consequences of misguided public policies and outdated perceptions. Only then can they strive towards a more prosperous future.
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