That's what's happening now, isn't it? "Blue" states are paying in more so "red" states can pay in less?

I suspect it isn't only because of the relative poverty of "red" states. Rather, it's an unavoidable compromise among states with different political preferences. The reason that "red" states will agree to greater entitlement spending than their voters prefer is because they are bribed to do so. The reason "blue" states will agree to the bribery is because it helps them fulfill their voters' preferences.

If decentralization ends this cooperative arrangement, it won't be a disaster. "Red" states will have to reorganize their spending priorities. "Blue" states will have a little more money to spend on whatever. Life will go on, but just a bit differently in South Dakota than in Oregon.

> That's what's happening now, isn't it? "Blue" states are paying in more so "red" states can pay in less?

Do you think it'd happen without a federal government?

It's an interesting question. Keeping in mind the levels of "foreign" aid we maintain now, I would suspect... yes? Is there a transition that American politics makes from the state level to the federal level, that makes us more generous? Is there a reason for that transition, or is it simply magical?

In the case of California specifically, the difference between federal taxes paid and federal money received represents about 7% of the state budget. Foreign aid is about 1% of the federal budget, though. Why would California spend more? (Edit: Of course its budget might have to triple if it didn't get all that federal money, so there you go.)

Foreign aid is just a tool in the soft diplomacy spectrum. It's not usually given out of generosity, but to influence local politics, develop markets etc...

Is there any reason to believe that those factors would not apply?

One good reason of a stable relationship (as in states of a single country) is not needing to spend time and energy with diplomacy, freeing those resources for use abroad.

If the military-industrial complex could be coopted into building schools, roads, railroads and hospitals instead of weapons, soft diplomacy could change the face of the planet.

For a fraction of current prices.

Doesn't the EU do that all the time, to develop the less developed members? (Read: Mostly Poland)

http://msp.gov.pl/en/polish-economy/economic-news/4015,dok.h...

> The value of total European Union funds allocation for particular EU member states, according to the EU budget for 2014-2020, as agreed during the EU summit in Brussels on February 8, 2013