Chamath Palihapitiya, the CEO of Social Capital, is one of the most controversial figures in the investment world.
Once known as the “SPAC King”, he faced criticism for his comments human rights violations in China and it was too sued for misleading investors.
In June he wrote on Twitter from a screenshot of a Bloomberg article that said six southern states had contributed more to US gross domestic product than the northeast Washington-New York-Boston corridor for the first time in history.
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But it was his accompanying caption that sparked a heated debate: “Woke up, go broke,” he said, implying that the ongoing culture war and economic policies of the northeastern states had facilitated the migration of wealth and economic power to the South.
While tweeps weighed in with their own thoughts — including billionaire Mark Cuban — here's what the numbers actually show.
Wealth migration is taking place
Bloomberg's analysis of data from the Internal Revenue Service highlights that southern migration of wealth. Florida, Texas, Georgia, the Carolinas and Tennessee collectively added $100 billion in new net revenue from 2020 to 2021.
Meanwhile, the Washington, New York and Boston corridor lost $60 billion in revenue over the same period.
This was the first time the IRS has seen this kind of reversal since it began collecting this data in the 1990s.
Bloomberg attributes the shift to a “flood of transplants.” Of the 15 fastest-growing cities in 2021-2022, 10 of them were in the Southeast Corridor, according to the Census Bureau data. Part of this growth is likely attributable to a number of companies relocating their headquarters from the northeast to the south, bringing with them a huge number of jobs.
And it doesn't hurt that residents will experience “warmer weather, lower taxes, looser regulations and cheaper housing» in the South, as Bloomberg points out.
Read more: Super-wealthy Americans snap up prime properties abroad as U.S. housing plunges — but here is a steep way to invest without having to move abroad
But what about the “woke” thing?
Palihapitiya argued that there is a cultural layer to the debate. It claims “wake up” policies. it was also a driving factor in migration.
“Are the big differences between these two groups just ideology? Or is it something else like genetics, health, etc etc that I don't understand?' he asked his followers in X.
Several of those followers on the app agreed with Palihapitiya's conclusion, with one notable exception: billionaire Mark Cuban.
“Name me a woke company that broke,” Cuban, a self-proclaimed independent, replied to Palihapitiya.
Palihapitiya took Cuban up on his challenge, responding with a list of all the startups that had failed in the past few years and said some were likely to “wake up,” but Cuban wasn't satisfied: “A list of startups that fail she is weak and you know it Chamath.”
The Cuban venture Cost Plus Drugs, which aims to lower drug prices for Americans, is undeniably a “woke” company. Launched in 2022, the company delivers over 100 generic drugs to all 50 US states with a simple pricing structure: cost plus 15% markup, $3 pharmacy service fee and $5 shipping fee.
Where does this leave the discussion?
As more evidence comes in, the debate over America's ongoing rates of domestic immigration is sure to continue.
The IRS data Palihapitiya cited was based on statistics from 2020–2021, when remote work and pandemic lockdowns were at their peak. There they saw several office workers leaving expensive cities to find more space and affordable accommodation elsewhere.
More recent Census Bureau data shows a slight reversal of this trend. For example, Manhattan (New York County) had net domestic migration of 2,908 from 2021–2022 after net domestic migration of 98,566 the previous year.
Either way, it's safe to say that Palihapitiya and Cuban will both be eager to review the newer numbers when they become available to see if they support their claims or not.
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This article provides information only and should not be construed as advice. Provided without warranty of any kind.
