Those Pesky Senators

No, this post is not about confirmation hearings. It's about senators, and the fact that there are two of them from each State, be it never so insignificant. [For the record, I think that this leads to better government, and would not wish to see it changed.]

That this leads to an imbalance of per-head political power, favoring small States, is so obvious that it hardly bears stating. But two important and obvious consequences seem to generally go unnoticed.

The first is that the studies purporting to show that "red" States are subsidized are weaker than they seem. The small States are subsidized because their political power is disproportionate to the tax base they provide. A complaint that 7 of the 10 most-subsidizing states is pointless, unless we note that 4 of those 7 states are among the 10 most populous. [In fact, a cursory linear regression suggests that the red state subsidy is not fully explained by population; population alone, or electoral results alone, each can explain about 15% of the variation. The combined R^2 is only 22%, so either explanation seems weak. These results exclude D.C., which of course is off the charts along both axes.]

The second is that calls (such as this) for a "new blue Federalism" are off the mark; the only thing they can hope to control is the total size of the federal government. Given that, the small states will inevitably be subsidized to an extent commensurate with the total of federal expenditures. [Somewhat surprisingly, regressing on 1/population suggests that a Senator is only worth 0.19 representatives in budgeting.]

There should be no debate on whether to subsidize the small states; our Constitution guarantees that we will do so. Currently, I would guess that most of this comes in the form of agricultural subsidies and price controls, which are uneconomic and (given their impact on the Third World) immoral. How can we better subsidize the small states?