I've lived all over the US (including the midwest) and it's the same everywhere: the message is that /our/ arbitrarily-shaped state has a unique and amazing culture, and if you don't like it you can move to ${our_major_sports_rival}. It's an easy way to move merchandise like bumper stickers and beer koozies, and a low stakes thing to incorporate into a (consumption-based) personal identity: wearing a Michigan State sweatshirt is a noop in contrast to wearing a hijab, which is possibly a quite dangerous thing to do. This kind of thing (e.g. lawn signs that say rude things about other college football teams) is mainly harmless IMO, but the real deficiencies you've identified are true of all of North America (Canada and Mexico included).
It's not Minnesota that has a vastly inflated sense of its success as a liberal democracy, it's the whole continent. Americans have phrases like "manifest destiny," and "American exceptionalism" that speak to this. I can't speak to the specifics of how this works in Canada and Mexico, but I know it does.
It's not Minnesota that willfully ignores the centuries of horrifying genocide and slavery that underlie our every footstep, it's the whole continent. Any attempt to inject a little more verisimilitude into the stories in our school history books (the most recent notable one being the 1619 Project) is rabidly opposed by white supremacists who eventually "compromise" with actual history by adding a sidebar or a separate few chapters about the middle passage or Algonquin culture /without/ ever actually stating the central point that /the purpose of America always was, and functionally still is, to enslave and steal from black and native people for the benefit of (historically exclusively white and male) elites/. Again, this is a USA-centric view but my understanding is that similar dynamics play out in Canada and Mexico.
Florida, California, Texas, New York, and to a certain degree the unique states, Alaska, Hawaii, do have, "something special," about them due to their sheer size or uniqueness.
What does Iowa, Wisconsin, Minnesota, Michigan have? They need to be really attractive places to live because they aren't inherently (though some parts are, they are really far away from population centers). People don't go on, "vacation to the Midwest," they go to other, better landscapes. I'm sure there are outliers and I know there are outlier locations, I'm speaking in generalities here. I have driven over a significant portion of the Midwest, it's few and far between. You can't arbitrarily make beautiful mountains pop up in Iowa, and it's cold. At least if you're in Arkansas, it's got the Ozarks, warm weather pretty much year-round.
So really the only thing we midwestern states can do is look deeply inward and improve ourselves, that's really the only thing, other massive or more interesting States can rest on their laurels for a bit because people are inherently going to want to move there. Can you tell I'm not running to be the Governor of Minnesota any time soon? ;-)
It's not Minnesota that has a vastly inflated sense of its success as a liberal democracy, it's the whole continent. Americans have phrases like "manifest destiny," and "American exceptionalism" that speak to this. I can't speak to the specifics of how this works in Canada and Mexico, but I know it does.
It's not Minnesota that willfully ignores the centuries of horrifying genocide and slavery that underlie our every footstep, it's the whole continent. Any attempt to inject a little more verisimilitude into the stories in our school history books (the most recent notable one being the 1619 Project) is rabidly opposed by white supremacists who eventually "compromise" with actual history by adding a sidebar or a separate few chapters about the middle passage or Algonquin culture /without/ ever actually stating the central point that /the purpose of America always was, and functionally still is, to enslave and steal from black and native people for the benefit of (historically exclusively white and male) elites/. Again, this is a USA-centric view but my understanding is that similar dynamics play out in Canada and Mexico.