Chamath Palihapitiya, the CEO of Social Capital, is one of the more controversial figures in the investing world.
In June he tweeted out a screenshot of a Bloomberg article that said six southern states had contributed more to U.S. gross domestic product than the northeast corridor of Washington-New York-Boston for the first time in history.
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But it was his accompanying caption that sparked a heated debate: “Go woke, go broke,” he said, implying that the ongoing culture war and economic policies of northeastern states had facilitated the migration of wealth and economic power to the South.
While tweeps weighed in with their own thoughts — including fellow billionaire Mark Cuban — here’s what the numbers show is really going on.
Wealth migration taking place
Bloomberg’s analysis of data from the Internal Revenue Service highlights the southern wealth migration. Florida, Texas, Georgia, the Carolinas and Tennessee collectively added $100 billion in new net income from 2020 to 2021.
Meanwhile, the Washington, New York and Boston corridor lost $60 billion in income in that same period.
This marked the first time the tax agency saw this type of reversal since it started collecting this data in the 1990s.
Bloomberg attributes the shift to a “flood of transplants.” Out of the 15 fastest-growing cities in 2021–2022, 10 of them were in the southeast corridor, according to Census Bureau data. Some of that growth is likely attributable to a number of corporations moving their headquarters from the Northeast to the South, bringing with them a tremendous number of jobs.
And it doesn’t hurt that residents will experience “warmer weather, lower taxes, looser regulation and cheaper housing” in the South, as Bloomberg points out.
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But what about the ‘woke’ issue?
Palihapitiya argued there’s a cultural layer to the debate. He claims “woke” policies were also a driving factor in the migration.
“Is the major differences between these two groups only ideology? Or is it something else like genetics, health, etc etc that I’m not understanding?” he asked his followers on X.
Several of those followers on the app agreed with Palihapitiya’s conclusion, with one noteworthy exception: billionaire Mark Cuban.
“Name me one woke company that has gone broke,” Cuban, a self-described independent, replied to Palihapitiya.
Palihapitiya took Cuban up on his challenge, responding with a list of all startups that had gone bankrupt in recent years and said some were likely to be “woke,” but Cuban wasn’t satisfied: “A list of STARTUPS failing is weak and you know it Chamath.”
Cuban's venture Cost Plus Drugs, which aims to lower drug prices for Americans, is arguably a “woke” corporation. Launched in 2022, the company delivers over 100 generic medicines across all 50 U.S. states with a simple pricing structure: costs plus 15% markup, a $3 pharmacy service fee and a $5 shipping fee.
Where does that leave the debate?
As further data comes in, the debate over America’s ongoing domestic migration rates is sure to rage on.
The IRS data Palihapitiya cited was based on 2020–2021 statistics, when remote work and pandemic lockdowns were at a peak. That saw a number of office workers fleeing expensive cities to find more space and affordable living elsewhere.
More recent Census Bureau data points to a slight reversal of this trend. For instance, Manhattan (New York County) had a net domestic migration of 2,908 from 2021–2022 after net domestic outmigration of 98,566 the prior year.
Either way, it’s safe to say Palihapitiya and Cuban will both be eager to review the newest numbers when they're available to see if it backs up their assertions or not.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.