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Utah Won’t Budge from Dominance of Economic Ranking

By: Rebeca Morla - @RebecaMorla - Apr 9, 2015, 9:50 am

EspañolMaking it a sweep of eight years running, the American Legislative Exchange Council (ALEC) has awarded Utah the best economic outlook in the United States. That’s according to its 2015 edition of Rich States, Poor States report, released on Wednesday, April 8.

The annual study performed by the free-market association of legislators — written by the prominent economists Arthur Laffer, Stephen Moore, and Jonathan Williams — ranks the 50 US states based on 15 variables, including taxes, spending, and regulatory measures.

According to the authors, these are “areas that have proven, over time, to be the best determinants of economic success.” They zero in on various tax rates and burdens, labor mobility (such as right-to-work laws), debt-servicing expenses, workers’ compensation, and the minimum wage.

Rounding out the top 10 of this edition is are: North Dakota (2), Indiana (3), North Carolina (4), Arizona (5), Idaho (6), Georgia (7), Wyoming (8), South Dakota (9), and Nevada (10).

However, the biggest winners this year are Kentucky (30), which rose nine spots in the ranking, and Illinois (40), which managed to rise eight places in the list, escaping the bottom 10 spots for the first time.

The authors of the report explain that Kentucky’s improvement is based on its reform of workers’ compensation. Nebraska (35), Arkansas (22), and Alaska (14) are also receive mentions as the cases that advanced the most since last year.

2015 Economic Outlook Rankings. Source: ALEC.
2015 Economic Outlook Rankings. (ALEC)

On the other hand, New York remains stuck in last place, as it has been for the past seven years. The remaining 10 worst are Vermont (49), Minnesota (48), Connecticut (47), New Jersey (46), Oregon (45), California (44), Montana (43), Maine (42), and Pennsylvania (41).

The greatest losers in this edition are Michigan (24), which fell 12 spots, after raising its minimum wage in 2014. Similarly, Delaware (38) lost 11 places, while Pennsylvania (41) and South Dakota (9) fell eight and seven spots in the ranking, respectively.

States Are Learning

Regarding this new edition, co-authors Arthur Laffer and Jonathan Williams assert that they have seen how some states make deliberate turn “in a pro-growth way,” as they embrace the “message of tax-cut and competitiveness.”

“We have 31 governors now that are clearly trying to be pro-growth,” Laffer writes, arguing that “it’s not [about being] a Republican or Democrat, it’s whether you are pro-growth or not.”

Moreover, Stephen Moore points out that local tax burdens are lower than they were eight years ago, and states are paying more attention to issues like workers compensation and the right to work.

“The evidence is irrefutable … Tax rates do matter, the right to work matters, and the capital is flowing to those states that realize this,” he says.

The authors also highlight the importance of leadership and how it reflects in terms of the results obtained by the states. Governors that have reduced taxes and allocated budgets more efficiently, they assert, have shown significant economic improvement.

Such is the case of Indiana and North Carolina, which ranked 24th and 26th in 2011, and have risen up to the third and fourth positions this year, respectively. Furthermore, North Dakota and Ohio occupied the 18th and 47th positions in 2008, and have climbed to places 2 and 23 in 2015.

“The most amazing statistic,” Moore adds, “is that for every job that was created in California and New York over the last 15 years, Texas has created three.” This, however, wasn’t enough for Texas to rank in the the top 10.

ALEC No Stranger to Detractors

The Center for Media and Democracy (CMD), a key critic of ALEC’s publication, have released a follow-up to their publication ALEC Exposed, and this year it appears to be as confrontational as ever.

According to the CMD, Laffer “is sold to the press as an objective, academic measure of state good economic performance.” But they contend that he is actually a lobbyist “ranking states on the adoption of extreme ALEC policies that have little or nothing to do with good economic outcomes.”

In addition, they claim that ALEC is financed by the Bradley Foundation, the Searle Foundation, the Claude M. Lambe Foundation, among other corporations, aiming to promote “breaks for corporations, steep budget cuts, and attacks on unionized workers.”

Finally, CMD points out that ALEC’s methodology “has been debunked,” and that their recommendations are “a recipe for economic inequality, declining incomes, and undermining public infrastructure and education that really matter for long-term economic growth.”

Edited by Fergus Hodgson.

Rebeca Morla Rebeca Morla

Based in Guayaquil, Ecuador, Rebeca Morla works as an editorial assistant with the PanAm Post. She is a political scientist and an Executive Board member of EsLibertad. Follow @RebecaMorla.