Chalk up another victory for the Founding Fathers. In a nation now continental in scope and 50 states strong in composition, federalism is more useful than ever. It not only allows states to adjust to the specific cultural contours of their populace, but also allows competing visions of public policy to play out throughout the country, with the ultimate results documenting what works and what doesn’t.
Thankfully, the American Legislative Exchange Council (ALEC) has remedied that deficiency with its study “Rich States, Poor States,” the fifth annual edition of which was released earlier this month. Authored by famed supply-side economist Arthur Laffer, Wall Street Journal economic guru Stephen Moore and ALEC’s own Jonathan Williams, the 100-plus page report looks at economic competitiveness among the 50 states in exacting detail.
The conclusion of the most recent edition: States that embrace free-market principles are beating jurisdictions that prefer big government to within an inch of their lives. As the authors themselves put it, “If we had to summarize the findings of this publication and our comparative analysis of state policy in one sentence, it would be this: Be more like Texas and less like California.”
Riddled with data, “Rich States, Poor States” gives striking testimony to the virtues of unobtrusive government on nearly every page. A comparison between the nine states with the highest and lowest tax burdens, for instance, shows remarkable disparities.
During the decade that ended in 2010, GDP in the low-tax states grew by 20 percent more than in the high-tax jurisdictions; Population growth in the low-tax states was nearly four times greater than in the high-tax states. And the low tax rates didn’t exactly make paupers out of the states that embraced them either; those jurisdictions actually realized substantially larger increases in the growth of state and local tax revenue than did their more confiscatory brethren.
Tax policy wasn’t the only variable that affected the capacity for human flourishing. The authors also compared and contrasted the performances of right-to-work states with states where union membership is compulsory. The results: GDP growth was more than 10 percentage points higher in right-to-work states. Personal income growth was higher by an almost identical margin. And population growth in the right-to-work states was nearly double.
Any time such disparities in performance are pointed out, liberals are quick to argue that non-political factors – weather or natural resources, for example – are the real culprits. But comparing the numbers in “Rich States, Poor States” gives the lie to that claim.
Warm-weather states throughout the Sunbelt (such as Florida, Texas, Arizona and Georgia) may have been among the top states for domestic immigration, but if climate were the dominant explanation one wouldn’t expect such a dismal performance from temperate California (which came in 49th in the category). Similarly, if frostbitten Massachusetts could blame its travails on the weather (the Bay State was 43rd for immigration), you’d expect neighboring New Hampshire (a low-tax paradise) to do a lot worse than number 22 in the rankings.
No matter how you slice the numbers, the outcome is always the same: states that embrace conservative policies – low taxes, restrained regulation, free labor markets, a friendly business environment – consistently outperform states where big government carries the day.
Consider this statistic: The 10 states that saw the biggest domestic immigration in the previous decade gave their electoral votes to the Republican candidate for president 76 percent of the time during those years; exclude Washington state (primarily the beneficiary of emigration from liberal basket case California) and the number increases to 85 percent.
On the flip side, the states that attracted the least new citizens gave their electoral votes to the Democratic candidate 83 percent of the time; exclude Louisiana, whose population loss owed primarily to Hurricane Katrina rather than economic policy, and the number jumps to an astonishing 93 percent.
Liberal Democrats are fond of touting themselves as believers in science, rationality and empiricism. With the results of “Rich States, Poor States” in hand, we now know that to be false. If it were true, they’d have to be conservatives.