D. Dowd Muska


Some States Get It, Some Don’t

July 26, 2012

If you live in Connecticut, New Jersey, or Illinois, a little advice: Get out. Soon.

The latest in an unceasing gusher of policy studies confirms that a handful of states are careening toward death by fiscal stupidity. For several, it may be too late to reverse course.

Americans for Tax Reform’s annual “Cost of Government Day” report documents the exorbitant bill that “public servants” send to the suckers who still earn a buck in the competitive, accountable world. The average American, author Devin Bowen found, works until July 15 to cover the money spent and regulations enforced by government at all levels.

For those who love liberty, the immense expense of paper-shuffling bureaucracies, monopoly schools, dependency-breeding welfare programs, and a runaway military-industrial complex is an atrocity. America isn’t America anymore -- at least, it’s not the live-free-or-die exemplar its founding shopkeepers, farmers, lumberjacks, ranchers, fishermen, miners, industrialists, and homemakers built.

Some states, though, are so dedicated to Unlimited Government, one wonders if a supervillain has deployed a mind-control device to wreak their destruction. The Nutmeg State, “Joisey,” and the Land of Lincoln are first, second, and fourth, respectively, in Bowen’s calculations. Illinois was relieved of its burden July 26th. New Jersey will be free August 5th, and Connecticut gets released August 9th.

Lots of government, mountains of debt. In a 2011 analysis, the Institute for Truth in Accounting (ITA) named Connecticut, New Jersey, and Illinois its top three “sinkhole states.” (Each resident of The Land of Steady Habits owes $41,200 for liabilities not covered by assets.)

The repeat-offending trio is also found in the wrong section of the Tax Foundation’s list of federal-state-local obligations. Connecticut and New Jersey are the worst two, while Illinois is tied for fifth with Maryland and (oddly) Wyoming.

It’s difficult to find a spot that’s enjoying job-creation in the Great Depression Lite. So comparing the unholy trinity of bad policymaking to the nation, or a few freedom-friendly states, is problematic. One approach is to scan the numbers from the “Bush Recovery.” The dot-com recession ended in March 2001, and economic expansion, however mild, continued until December 2007. During that period, the U.S. saw employment growth of 4.4 percent. Connecticut (1.4 percent ) and New Jersey (2.2 percent) underperformed, and Illinois actually lost jobs.

Other states that rank abysmally in cost of government, debt, and tax take include California, New York, Massachusetts, and Maryland. Same old, same old -- educrats run wild, got a problem/get a program, wildly generous compensation for employees, weak commitment to reform and transparency.

Which states get it? It’s tempting to pick Texas as the best -- after all, 255,000 jobs have been created there since the present economic whirlwind struck nearly five years ago. But the Lone Star State notches some surprisingly subpar results in other metrics. It is not among the low-tax standouts, and its government pricetag is 17th. To its credit, Texas does have the wisdom to maintain two sound choices: it bans the payment of compulsory union tribute and refuses to enact an income tax.

Refugees from fiscal hellholes, take notice. On multiple measures of economic freedom and affordable government, two states excel: South Dakota and Tennessee. The Volunteer State is the champion of cheap “public services,” and the Mount Rushmore State isn’t far behind, with the fifth slot. Neither imposes a levy on wages, and the overall tax bite in both is relatively painless. Per ITA’s research, Tennesseans face a small long-term liability cost of $1,200; South Dakotans, a miniscule $300.

If you’re not attracted to the Northern Plains or country music, in addition to Texas, consider South Carolina, Missouri, Oklahoma, Alabama, or Iowa. They’re also states where government is kept in its proper place. Labor bosses, trial lawyers, and eco-loons don’t dictate legislation and dominate executive-branch rulemaking. As a result, in recent decades, incomes are rising and jobs are multiplying.

A final word about responsible and scofflaw states: Fiscal sanity appears to be inversely proportional to educational attainment. In other words, the “smarter” the population, the worse the government. Connecticut, New Jersey, and Illinois all feature citizenries that have a significantly higher-than-average number of college graduates. Guess old timers’ adage about the value of street smarts vs. book learnin’ is solid.

With one or two exceptions, states that wallow in moonbattery will continue to see their fortunes sink. Pampering politicians and bureaucrats benefits politicians and bureaucrats, not entrepreneurs, investors, and workers. In a globalized, hypercompetitive marketplace, the brightest futures belong to states that understand what not to do.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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