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Monday, March 30, 2009

Rich State, Poor State

ALEC has released the 2nd edition of their Economic Competitiveness Index - Rich States, Poor States - which looks at which policies drive economic growth among states, and which states are winners and losers:

The governments in the Northeast are already about one-fifth more expensive than in the rest of America – $6,400 versus $5,200 of state spending per resident. Only in recent years has the gap between the New England states and the rest of the nation been narrowing (see Table 2). However, an average-income family of four still saves $4,000 a year by moving to just an average tax state and more like $6,000 a year by moving to Florida. Because the Northeastern states tend to have highly progressive tax systems, the incentive for wealthy families to relocate is greater.

Meanwhile, the Northeast is becoming increasingly inhospitable for employers. Labor costs are about 30 percent above the national average in this region. Of the 22 right-to-work states, a grand total of zero are in the Northeast. Other than taxes, this is arguably the greatest factor impeding economic competitiveness
in the region.
As usual, Pennsylvania ranks among the worst states in the union - 46th in terms of economic performance, and 42nd for economic outlook; here is the Pennsylvania profile.  This may be a stunning report for Gov. Rendell, who continues to demand praise for "creating jobs", despite evidence that spending more taxpayer money on "economic development" undermines economic growth.

The Heritage Foundation further points out that the federal stimulus rewards states that have adopted failing economic policies:
As the report notes, states that want to pursue statist policies do not have their own version of a Berlin Wall to prevent people from leaving. They do, however, have something almost as powerful. They’ve got a Congress that’s willing to undermine this important feedback (i.e., accountability) mechanism by handing out $200 billion plus in bailout money to the states. States that get bailed out by the feds have less of a need to face the failures of their own policies. Could the declining fortunes of states governed by liberal policies also explain the desire of the White House to exercise greater control over the conduct of the next Census?

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