My revenue sharing plot is centralizing

 A cute word I picked up somewhere in wiki math, about the Chinese remainder.

My plot favors states that have about five districts. The losses from hard bounds are minimized when they are expensed.  Vermont and Alaska grow, but California is stuck, yet again; it will pay a price for being out of balance, as will Texas. There will always be a free gain from government by acting like a five to one state, like a free pass on the inflation tax. And migration flows with the tide.

But it is better than any other non Pareto plot.

Can it be cheated?  The bet is ratio an amount.  Now, for example, the bet is that the Californians get as very nice ratio on a very small amount. Two to one for the House, they getting a lot of cross over votes from mid sized states with excess districts. The one to three  district states leading the charge to lower the total grant. It is a bound, smooth surfacer with no decodeable features except cold hard calculations once a year. There is carry over, an opportunity to hedge from year to year. Good stuff, which is why it got canceled in the 70s, hysterics.

The inflation tax grows when the sharing amount shrinks, I think. The idea is that the optimum sharing recovers the most ex ante reserves. Less than optimum means unaccounted losses.  But gains and losses are asymmetric on the revenue sharing. There are finite solutions around states with five to one ratios, so the ratio will switch back and forth on the margin. Hence, a tendency to zero cross enough balances the hedge. 

This is a portfolio balancing problem, three sector, the absolute losses, residual,  estimated per cycle.  Look at the current seigniorage fees, minus covid. That is one and a half points there, call that nominal for this Law, and release that mean to Treasury, to expense it over the contract. That is Treasury  duty, natural government losses are not part of the central bank, except when renewing its monopoly fee.

And well measured I keep repeating, it is calculated and delivered at the central bank. What is the problem? There is a bottom noise variance called government natural losses.