As California sinks slowly into the West, let’s take a look at what makes the difference in states that are successful and those that are suffering. CEO Magazine conducts an annual survey of about 600 CEOs on a broad range of issues, including regulation, tax policies, education, quality of living, and infrastructure. In the 2009 survey, for the fourth consecutive year, the bottom five states for job growth and business climate were California, New York, Michigan, New Jersey, and Massachusetts. On the upside, Texas ranked #1 for the fourth year in a row, followed by North Carolina, Florida, Georgia, and Tennessee. (Incidentally, Texas added more jobs in the past year than all other states combined!) There is no magic in this; a couple of observations are instructive. The states that are at the bottom of the list have been models of “progressive” policies that have been touted for their wealth creation potential: high tax rates on the rich, high levels of government “investment”, heavy unionization, and a large government role in health care. The worst impact of these policies are in taxation and business regulation. So how is it working for them? And doesn’t this strongly resemble what is in store for us as we spread the progressive model nationwide?
Here is another analysis. Yale economist Ray Fair has studied the impact of partisan political results on the economies of each state. The result is that the more consistently a state has voted Republican in the Presidential election since 1980, the lower their average unemployment rate and the more robust the growth and business climate over that period by a significant margin. Conversely, the reliably Democratic states with the more “progressive” fiscal policies experienced the greater negative impact of downturns in the economy. Is the nation going down the California road? Is there some instruction here for our national political leadership?
