D. Dowd Muska

 

Is Big Government the Key to State Prosperity?

August 07, 2014

Between 1992 and 2012, leftists waged a ruthlessly relentless and astoundingly successful campaign to increase state budgets.

Crunching the U.S. Census Bureau’s data reveals that per capita, and adjusted for inflation, states augmented expenditures by an average of 45.6 percent. Each of the “laboratories of democracy” spent more -- i.e., not one boosted efficiency.

It’s a development that pleases apologists for “public investments,” because states devote most of their revenue to goodies that the unlimited-government lobby claims make life worth living. In 2012, five categories -- schools (pre-K to Ph.D.), welfare, health/hospitals, utilities (including “mass transit”), and roads/highways -- accounted for 68 percent of costs. They totaled $1.3 trillion, or 8.3 percent of America’s gross domestic product.

However counterintuitive it seems, the wildest spenders weren’t consistently blue. With stagnant populations and sagging entrepreneurship, New Jersey, New York, Connecticut, and Rhode Island lacked the ability to bring in the loot, and thus, clustered toward the bottom of the roster. At the budget-busting apex were an eclectic five: Mississippi (86.8 percent), Vermont (80.6 percent), Arkansas (79.2 percent), North Dakota (75.6 percent), and Kansas (63.8 percent).

How did big spending alter the big spenders? It’s a challenging assessment to make, and worthy of a lengthy policy paper. But few would argue with the reasonableness of two broad metrics: social conditions such as crime, poverty, and educational attainment; and economic indicators such as unemployment, job creation, and median household income (MHI).

Vermont was affluent, highly educated, and all but violence-free in 1992. It remained so in 2012. (Its expenditures ballooned due to an asinine scheme to restructure the funding of school districts.) North Dakota’s spending was largely driven by the fracking revolution, a phenomenon that is radically altering the state. (Crime is rising, as young, unattached males flock to the Bakken. Time will tell if NAEP and SAT scores stay high.) Mississippi and Arkansas stand out for their placement in the top five, though, because supernovas of spending did not produce turnarounds. Achievement by primary- and secondary-school students at government institutions in both states was well below the national mark in 1992, and nothing had changed two decades later. The same was true for college completion -- subpar in 1992, equally inferior in 2012. As job-creators, the two underperformed in the period. Private-sector employment increased by 24.7 percent nationally. In Mississippi, growth was 20.2 percent; in Arkansas, 14.3 percent. The Magnolia State expanded its MHI by 8.1 percent -- significantly exceeding the figure for the country as a whole -- while its Razorback counterpart saw MHI fall. Both saw poverty rates persist at abysmally high rates.

What about the states that spent the least? The stingiest five were Washington (20.2 percent), Rhode Island (17.5 percent), Hawaii (11.1 percent), Alaska (10 percent), and Nevada (5.6 percent). It’s dodgy to lump the non-contiguous states in with the “Lower” 48, since the pair’s economies and cultures are so unique. Let’s look at Washington, which committed two of liberalism’s mortal sins: not only did it spend in a miserly fashion, it refused to impose a tax on personal income.

By nearly every barometer, between Bill Clinton’s election and Barack Obama’s reelection, life in the Evergreen State got better. Job growth in the accountable sector was prodigious -- almost 30 percent higher than the nation. Washingtonians were an educated lot in 1992, and stayed that way. The violent-crime rate, which started scant, fell by 44.7 percent, close to the decline posted by the entire U.S. At 10.8 percent, the hike in MHI was stellar.

Nevada’s results are mixed, but one conclusion is certain: Paltry spending on “services” did not repel newcomers. Quite the opposite -- the Silver State’s population doubled, fed by relocating retirees and private-sector job creation of just below 80 percent. Nevada’s moonbats whine about workers’ wages, and it’s a valid gripe. MHI fell by 9.3 percent. Poverty, once beneath the national rate, rose above it. Student achievement on standardized tests continued to be lousy, but college completion improved. Robberies, rapes, murders, and assaults remained far too common.

In February, Gallup released its annual survey of state-level “well-being,” which examines “life evaluation, emotional health, work environment, physical health, healthy behaviors, and access to basic necessities.” Woeful high-spenders included Mississippi, Arkansas, Missouri, and Kentucky. Chipper skinflints included Hawaii, Idaho, Nebraska, and Washington.

Leftists rightly consider state capitols rich targets for the marketing of “universal preschool,” bloated train and bus systems, enhanced subsides to universities, and Medicaid metastasization. The real-world consequences of these costly measures? Proponents aren’t interested.

Taxpayers should be.

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

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