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Trading Places

Have you ever wondered why it is so uncommon for political bodies to make exchanges of political jurisdictions? While it is a regular occurrence for the owners of real property to swap deeds and claims to property, I am not very familiar with how common this is among the U.S. states.

For example, there are a whole slew of towns and villages along the New York / Pennsylvania border near where I live. And logic suggests that there is at least one geographic area in each state that might make more sense if it were governed by the other. After all, when the boundary lines were first “drawn” this is what the decision had to be based on, no? So why do we see so little shuffling around of “property” after those initial boundary lines are drawn?

I suppose you can talk about political gerrymandering and changing school-district authorities as a simple counter-example to my question, but I am thinking more along the lines of: “Pennsylvania trades the city of Bradford to NY in exchange for the city of Olean.” Of course there are enormous transactions costs, as there are in any trade – but that does not mean that some trades are not “worth” enough to overcome such costs.

Any ideas? And would you want to live in a city if you knew it could be “traded” away to another state some time in the future?

3 Responses to “Trading Places”

  1. Harry says:

    Great question, Wintercow.

    Thank goodness William Penn got his charter, and you are stuck, not I with a Cuomo.

    My own county abuts Philadelphia, and I have had more than casual thoughts about how wonderful it would be to divide the northern half and southern half. True, we would have to set up our own courthouse. But ours would be less busy, and we might decide we did not need any of the people occupying offices in Norristown. Then the other half of the county could decide how many servants they can afford, and how much debt they wish to bear for whatever stupid project they desire.

    Now, when the border between Pennsylvania and New Amsterdam was drawn, which was before George III, it was a vague idea conceived in an English parlor. After the American Revolution all of that country was wilderness. Not virgin wilderness, because King George cut down all the big trees and shipped them back.

    You raise an interesting economic speculation about trading one side of the border for another. Think of the investment banking opportunities in brokering a deal for trading south Philadelphia for Phillipsburg. The dealmakers could make hay by putting Princeton in play, and then there would hundreds of hours billed on both sides arguing the worth of Princeton. Do we include the University in the deal, or are we talking about the out of town real estate?

    Now that Obama is in India, he ought to get in the spirit, and discuss such matters. Like, ” I’ll consider Manhattan above 14th street to Bronxville and Long Island east of Massapequa for rights to running the concessions in Mumbai airport, but you also have to assume California’s debt, and I’ll throw in Marin and Sonoma counties.

    This is not complicated.

  2. Harry says:

    Yes, the transaction costs would be huge, some seen and many unseen.

    One of the seen costs would be the investment banking fees. If I were the investment banker, I would propose .0035 percent of the value of the total value of the transaction, knowing that the other side does not comprehend that number. OK Tim Geithner would see through my ploy, but would he want to call a halt to the party? My fallback percentage would be .0001 percent of the value of the deal, assuming we could agree on the net value of Princeton as being not zero, net net.

  3. chuck martel says:

    Michigan might want to deed over its economically moribund upper peninsula to Wisconsin but the Badger State probably wouldn’t take it.

    What seems curious, however, is that the small counties in the states east of the Mississippi have never seen fit to consolidate. Set up as they were in an era of primitive transportation it seems ridiculous now that there should be such duplication of services in adjoining areas, where two county seats might be ten miles apart. Schools have been forced by economic circumstances to consolidate but counties have yet to consider that step. Soon they may be forced to do so.

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