LA Times: Surprise! 'Pro-business' policies hurt state economic growth

[Scuba]

Remember the Laffer Curve, what Paul Krugman calls "junk economics"? Well, Arthur Laffer's back with another deceitful piece of work, the ALEC-Laffer State Economic Index. The University of Wisconsin's Menzie Chinn has studied the Index and finds it upside down.


http://www.latimes.com/business/hiltzik/la-fi-mh-surprise-probusiness-20140506-column.html

Conservative economic pundits just love to justify "business-friendly" policies to state governments as keys to job growth, which after all is the whole ballgame in economic policy-making. As Menzie Chinn of the University of Wisconsin has now shown, the problem is that pro-business policies don't really contribute to economic growth. They just make the rich richer, which is not the same thing at all.

...

But does a high ALEC ranking translate into high growth? That's the question Chinn asked. He started by measuring private nonfarm job growth in four states--California, Wisconsin, Kansas, and Minnesota--dating to January 2011, when all four got new governors. Scott Walker of Wisconsin and Sam Brownback of Kansas were extremely ALEC-friendly, Jerry Brown of California and Mark Dayton of Minnesota were not.

Here's what he found, in a nutshell: "Kansas and Wisconsin, ranked 15th and 17th in terms of the ALEC-Laffer Economic Outlook Rankings, are doing equally badly relative to US employment growth. In contrast, Minnesota (ranked 46th) is outperforming the United States and those two states...What about California? It is ranked 47th by ALEC-Laffer, and yet is doing the best in terms of employment amongst the four states." Chinn's graph of the four states' job growth accompanies this post.

...

Indeed, when Chinn mapped the ALEC rankings for all 50 states against their economic growth, he found that, if anything, a higher index score correlates with a worse economic performance. That won't come as a surprise to anyone who has followed the ALEC follies over time: The Iowa Policy Project found the same negative correlation in 2012.

[scarletwoman]

1. I'm so glad I live in Minnesota!

[bpollen]

4. So you love Minnesota?

Do you feel quite as positively about the end of January? Dog knows I don't.

[scarletwoman]

9. Yes, I actually love winter.

This one was rough, but nothing I couldn't deal with.

I'm lucky in that I live in the woods, far from the Cities. I know that living in a city makes winter more unpleasant - I lived in Minneapolis off and on for 20 years.

[JDPriestly]

2. K&R. Share with friends and family.

[Beartracks]

3. "Pro-business" usually isn't "pro-employee." "But "pro-consumer"....

... is ALWAYS "pro-business."

You want to help businesses? Then help consumers.

====================

[bpollen]

6. True!

Consumers are the job-creators, not the 1%. If Apple comes out with the iPoodle and nobody buys the iPoodle, will they hire new Chinese employees to make more iPoodles? Will they add a whole raft of new "Geniuses" thanks to this total lack of sales? I doubt it.

Look at the Walton family... Rich as Croesus but who are they marketing to? Do you think Trump, Romney, Adelson, Dimon, Zuckerberg, Gates, and Stirling are shopping there?

Or how about Ray Kroc? (McDonalds, in case the name don't ring a bell.) Was he marketing to the Rockefeller or DuPont or Hearst family?

If a middle class worker get's a 10% raise, he/she is apt to spend a large portion of that. If Jeff Bezos gets 10% increase in income, the majority at least will go into stocks or bonds or some other financial instrument. If it goes to either Koch brother, they'll just buy a few more politicians (Buy now! Collect the whole set!) If you had to do away with one, would eliminating the middle class or the billionaires have a bigger impact on the American economy? I can't say which would have the bigger impact, but I know that without the middle class, there would be NO[/b] recovery!

[L0oniX]

11. Tell that to sweat shop workers in 3rd world countries.

[L0oniX]

12. You never "save" by spending.

Remember when we were encouraged to save?

[dsc]

5. correlation isn't causation

and especially if the correlation is as weak as this is.

[RainDog]

7. k&r n/t

[pansypoo53219]

8. voodoo economics. it never works.

but truthiness works on the bell curve sheeople.

[L0oniX]

10. In another related event ...gravity was discovered.

[alp227]

13. Too many people accept "capitalism at all costs"

which is why "pro business"/"business friendly" become effective marketing buzzwords for Republicans. It is so messed up that people get successfully brainwashed into seeing a false dilemma between a free market and regulations.