{"id":3533,"date":"2011-05-22T20:48:20","date_gmt":"2011-05-23T00:48:20","guid":{"rendered":"http:\/\/www.philpaine.com\/?p=3533"},"modified":"2026-01-27T23:55:14","modified_gmt":"2026-01-28T04:55:14","slug":"sunday-may-22-2011-conservative-fiscal-policies-and-economic-performance-at-state-level","status":"publish","type":"post","link":"http:\/\/www.philpaine.com\/?p=3533","title":{"rendered":"Sunday, May 22, 2011 \u2014 Conservative Fiscal Policies and Economic Performance at State&nbsp;Level"},"content":{"rendered":"<p><span style=\"color: #000000;\">Last month some high\u00adly illu\u00admi\u00adnat\u00ading research was pub\u00adlished among the Tulane Uni\u00adver\u00adsi\u00adty Eco\u00adnom\u00adics Work\u00ading Papers[*1].&nbsp;The authors, James Alm and Janet Rogers, are respect\u00aded experts in the neglect\u00aded (by the pub\u00adlic and leg\u00adis\u00adla\u00adtors) field of tax pol\u00adi\u00adcy out\u00adcomes.&nbsp;They under\u00adtook to sys\u00adtem\u00adat\u00adi\u00adcal\u00adly study the 48 con\u00adtigu\u00adous U.S. States between 1947 and 1997, employ\u00ading 130 explana\u00adto\u00adry vari\u00adables, to find cor\u00adre\u00adla\u00adtions between State tax and expen\u00addi\u00adtures and long-term eco\u00adnom\u00adic performance.<!--more--><br>\n<\/span><\/p>\n<p><\/p>\n<p><\/p>\n<p><span style=\"color: #000000;\">I was not sur\u00adprised by the results.&nbsp;Those states that pur\u00adsue Con\u00adser\u00adv\u00ada\u00adtive fis\u00adcal poli\u00adcies, with over\u00adwhelm\u00ading con\u00adsis\u00adten\u00adcy, have the poor\u00adest eco\u00adnom\u00adic per\u00adfor\u00admance.&nbsp;States with long-term Repub\u00adli\u00adcan admin\u00adis\u00adtra\u00adtions con\u00adsis\u00adtent\u00adly stag\u00adnate or under-per\u00adform eco\u00adnom\u00adi\u00adcal\u00adly.&nbsp;States that are not com\u00admit\u00adted to Con\u00adser\u00adv\u00ada\u00adtive ortho\u00addoxy are gen\u00ader\u00adal\u00adly more suc\u00adcess\u00adful in over\u00adall eco\u00adnom\u00adic per\u00adfor\u00admance. Suc\u00adcess\u00adful states, for exam\u00adple, have rel\u00ada\u00adtive\u00adly high cor\u00adpo\u00adrate tax\u00ades and high\u00ader tax\u00ades on upper brack\u00adets, while using that tax mon\u00adey to finance improve\u00adments in edu\u00adca\u00adtion, health care and pub\u00adlic trans\u00adporta\u00adtion.&nbsp;These invest\u00adments repay hand\u00adsome\u00adly in gen\u00ader\u00adal eco\u00adnom\u00adic health, just as a well-run shop\u00adping mall with good facil\u00adi\u00adties, fix\u00adtures, secu\u00adri\u00adty and ambiance will attract ten\u00adants at high rents.&nbsp;How\u00adev\u00ader, states that invest pri\u00admar\u00adi\u00adly in high\u00adways to the neglect of \u201csocial\u201d invest\u00adment do not share that kind of suc\u00adcess. The greater their com\u00admit\u00adment to social equi\u00adty, the more eco\u00adnom\u00adi\u00adcal\u00adly suc\u00adcess\u00adful states are.&nbsp;Such poli\u00adcies do not, it has been demon\u00adstrat\u00aded, gen\u00ader\u00adate any out-migra\u00adtion of entre\u00adpre\u00adneur\u00adial tal\u00adent or wealthy tax\u00adpay\u00aders.&nbsp;The states with the least com\u00admit\u00adment to Con\u00adser\u00adv\u00ada\u00adtive ortho\u00addoxy are in fact net gen\u00ader\u00ada\u00adtors of new mil\u00adlion\u00adaires [*2].&nbsp;Equi\u00adty was, after all, the key to Amer\u00adi\u00adca\u2019s orig\u00adi\u00adnal suc\u00adcess: reject\u00ading aris\u00adtoc\u00adra\u00adcy as the prin\u00adci\u00adple of social orga\u00adni\u00adza\u00adtion, it became the first land in which ordi\u00adnary cit\u00adi\u00adzens pros\u00adpered. After <span class=\"caps\">WWII<\/span>, its pros\u00adper\u00adi\u00adty \u201cran deep\u201d, a fact that was not lost on the under\u00adclass\u00ades of the world, no mat\u00adter how much their aris\u00adto\u00adcrat\u00adic intel\u00adlec\u00adtu\u00adals rant\u00aded against it.&nbsp;The Unit\u00aded States man\u00adu\u00adfac\u00adtured the best prod\u00aducts and dom\u00adi\u00adnat\u00aded world indus\u00adtry pre\u00adcise\u00adly because it evolved an egal\u00adi\u00adtar\u00adi\u00adan ethos and a seri\u00adous con\u00adcern for the pub\u00adlic inter\u00adest, not because it gave tax breaks to bil\u00adlion\u00adaires.&nbsp;Every third-rate back\u00adward hell-hole in the world is very nice for its rich people.&nbsp;<\/span><\/p>\n<p><span style=\"color: #000000;\">But that aspect of the Amer\u00adi\u00adcan spir\u00adit has been reject\u00aded and aban\u00addoned by the cur\u00adrent gen\u00ader\u00ada\u00adtion. On the nation\u00adal lev\u00adel, the Unit\u00aded States has been dom\u00adi\u00adnat\u00aded by Con\u00adser\u00adv\u00ada\u00adtive eco\u00adnom\u00adic ide\u00adol\u00ado\u00adgy since the \u201cRea\u00adgan Rev\u00ado\u00adlu\u00adtion\u201d of 1980.&nbsp;The result \u2015 and in my view the Con\u00adser\u00adv\u00ada\u00adtive agen\u00adda \u2015 has been the destruc\u00adtion of the Unit\u00aded States econ\u00ado\u00admy and the trans\u00adfer of much of America\u2019s wealth to the Com\u00admu\u00adnist Par\u00adty, which now holds much of America\u2019s bloat\u00aded debt.&nbsp;Spec\u00adtac\u00adu\u00adlar waste, spend\u00ading and debt are the hall\u00admarks of Con\u00adser\u00adv\u00ada\u00adtive ascen\u00adden\u00adcy.&nbsp;The spend\u00ading spree \u2015 vir\u00adtu\u00adal\u00adly all of it on non-pro\u00adduc\u00adtive activ\u00adi\u00adties \u2015 began the sec\u00adond Rea\u00adgan came into office and con\u00adtin\u00adued to accel\u00ader\u00adate in the Bush Sr. years.&nbsp;The Clin\u00adton hia\u00adtus saw some claw\u00ading back and greater fis\u00adcal restraint, but Clin\u00adton and his entourage were essen\u00adtial\u00adly con\u00adverts to Con\u00adser\u00adv\u00ada\u00adtive fis\u00adcal ide\u00adol\u00ado\u00adgy (if not Con\u00adser\u00adv\u00ada\u00adtive social ide\u00adol\u00ado\u00adgy), and left most of the Rea\u00adgan-Bush poli\u00adcies in place.&nbsp;Gov\u00adern\u00adment spend\u00ading was restrained, but Wall Street was left to itself to devise new frauds.&nbsp;Con\u00adser\u00adv\u00ada\u00adtive icon Alan Greenspan&nbsp;\u2014 whose recent remarks reveal that he nev\u00ader both\u00adered to read Adam Smith \u2014 remained in charge of the Fed\u00ader\u00adal Reserve.&nbsp;When Bush, Jr. came into pow\u00ader, the Com\u00admis\u00adsars in the White House announced that \u201cdeficits don\u2019t mat\u00adter\u201d and pur\u00adsued destruc\u00adtive eco\u00adnom\u00adic poli\u00adcies with a cav\u00ada\u00adlier fanati\u00adcism sur\u00adpassed only by the Sovi\u00adets in the Brezh\u00adnev era.&nbsp;The results were, to put it sim\u00adply, sim\u00adi\u00adlar to the Sovi\u00adet expe\u00adri\u00adence.&nbsp;The Unit\u00aded States is now spi\u00adral\u00ading towards self-anni\u00adhi\u00adla\u00adtion, and there is not much the cur\u00adrent admin\u00adis\u00adtra\u00adtion can do about it, even if it has any coher\u00adent eco\u00adnom\u00adic doc\u00adtrines to work with (which it doesn\u2019t).&nbsp;Most of America\u2019s man\u00adu\u00adfac\u00adtur\u00ading capac\u00adi\u00adty has been destroyed.&nbsp;Dur\u00ading the 1950\u2019s and 1960\u2019s, man\u00adu\u00adfac\u00adtur\u00ading account\u00aded for rough\u00adly fifty per\u00adcent of cor\u00adpo\u00adrate prof\u00adits, and rough\u00adly a quar\u00adter to a third of gross domes\u00adtic prod\u00aduct.&nbsp;Finan\u00adcial ser\u00advices account\u00aded for less than ten per\u00adcent of cor\u00adpo\u00adrate prof\u00adits and lit\u00adtle more than ten per\u00adcent of gross domes\u00adtic prod\u00aduct.&nbsp;By the end of Bush, Jr.\u2019s regime, after 28 years of poli\u00adcies dri\u00adven by Con\u00adser\u00adv\u00ada\u00adtive ide\u00adol\u00ado\u00adgy, the pro\u00adpor\u00adtions were reversed.&nbsp;Man\u00adu\u00adfac\u00adtur\u00ading now accounts for less than five per\u00adcent of Amer\u00adi\u00adcan cor\u00adpo\u00adrate prof\u00adits, and Amer\u00adi\u00adcan prod\u00aducts are noto\u00adri\u00adous\u00adly shod\u00addy and hard to find out\u00adside of the U.S.<\/span><\/p>\n<p><\/p>\n<p><\/p>\n<p><span style=\"color: #000000;\">The pub\u00adlic debt that start\u00aded to soar with the Con\u00adser\u00adv\u00ada\u00adtive Rev\u00ado\u00adlu\u00adtion has now reached lev\u00adels that only a mirac\u00adu\u00adlous revival of indus\u00adtri\u00adal pro\u00adduc\u00adtion could pos\u00adsi\u00adbly start to pay down, and nobody is inter\u00adest\u00aded or will\u00ading to increase pro\u00adduc\u00adtion.&nbsp;The coun\u00adtry is still enrap\u00adtured by the infan\u00adtile notion that there is a viable \u201cpost-indus\u00adtri\u00adal\u201d econ\u00ado\u00admy in which peo\u00adple mirac\u00adu\u00adlous\u00adly sup\u00adport them\u00adselves by exchang\u00ading e\u2011mails and buy\u00ading things that oth\u00ader peo\u00adple make.&nbsp;This may be as ludi\u00adcrous\u00adly absurd as any dri\u00adv\u00adel thought up by Karl Marx, but it is the dom\u00adi\u00adnant world-view among the nation\u2019s pol\u00adi\u00adcy makers[*3].&nbsp;Along with the mirac\u00adu\u00adlous pow\u00aders of \u201cdereg\u00adu\u00adla\u00adtion\u201d (i.e. refus\u00ading to pro\u00adtect the pub\u00adlic from rack\u00ade\u00adteer\u00ading, fraud and ponzi schemes), and the premise that the rich must nev\u00ader pay for any\u00adthing or suf\u00adfer any con\u00adse\u00adquences for fail\u00adure, this fan\u00adta\u00adsy remains a cen\u00adtral tenet of Con\u00adser\u00adv\u00ada\u00adtive ide\u00adol\u00ado\u00adgy.&nbsp;The U.S. now pro\u00adduces noth\u00ading and con\u00adsumes with the blithe irre\u00adspon\u00adsi\u00adbil\u00adi\u00adty of a twelve-year old acci\u00adden\u00adtal\u00adly giv\u00aden a plat\u00adinum cred\u00adit card.&nbsp;Since the Rea\u00adgan Rev\u00ado\u00adlu\u00adtion, mon\u00adey has rock\u00adet\u00aded out of the pock\u00adets of Amer\u00adi\u00adcans into the pock\u00adets of sleazy dic\u00adta\u00adtors, glob\u00adal car\u00adtels, kings, princes, aya\u00adtol\u00adlahs and oth\u00ader crim\u00adi\u00adnals. The stan\u00addard of liv\u00ading of ordi\u00adnary Amer\u00adi\u00adcans has been steadi\u00adly declin\u00ading.&nbsp;Per\u00adhaps more dam\u00adag\u00ading, fam\u00adi\u00adly finan\u00adcial insta\u00adbil\u00adi\u00adty has dra\u00admat\u00adi\u00adcal\u00adly increased.&nbsp;The chances that any giv\u00aden Amer\u00adi\u00adcan fam\u00adi\u00adly will sud\u00adden\u00adly and unex\u00adpect\u00aded\u00adly see its income halved are now one in five, a his\u00adtoric high[*4].&nbsp;The notion that the Com\u00admu\u00adnist Par\u00adty is a legit\u00adi\u00admate com\u00adpo\u00adnent of the \u201cfree mar\u00adket,\u201d anoth\u00ader Alice-in-Won\u00adder\u00adland Con\u00adser\u00adv\u00ada\u00adtive con\u00adcept, has ensured that America\u2019s assets are now in the hands of the world\u2019s most ruth\u00adless and bru\u00adtal geno\u00adci\u00addal monsters.<\/span><\/p>\n<p><\/p>\n<p><\/p>\n<p><span style=\"color: #000000;\">But the pub\u00adlic debt is only a shad\u00adow cast by the gen\u00ader\u00adal lev\u00adel of indebt\u00aded\u00adness.&nbsp;From the end of World War <span class=\"caps\">II<\/span> to the Rea\u00adgan Rev\u00ado\u00adlu\u00adtion, the U.S.\u2019s total mar\u00adket debt as a share of gross domes\u00adtic prod\u00aduct remained rel\u00ada\u00adtive\u00adly sta\u00adt\u00adic at %145, what would be expect\u00aded in a func\u00adtion\u00ading, indus\u00adtri\u00adal\u00adly pro\u00adduc\u00adtive econ\u00ado\u00admy.&nbsp;With Con\u00adser\u00adv\u00ada\u00adtive ascen\u00adden\u00adcy, it began a steep upward climb, reach\u00ading an almost incon\u00adceiv\u00adable lev\u00adel of %335 under Bush,&nbsp;Jr.<\/span><\/p>\n<p><\/p>\n<p><\/p>\n<p><span style=\"color: #000000;\">The dam\u00adage done by crack\u00adpot Con\u00adser\u00adv\u00ada\u00adtive eco\u00adnom\u00adics is as pro\u00adfound as the dam\u00adage done by Marx\u00adism was for the coun\u00adtries that embraced <em>that <\/em>bull\u00adshit.&nbsp;For the last twen\u00adty-five years, I\u2019ve been try\u00ading to explain to peo\u00adple that Con\u00adser\u00adv\u00ada\u00adtive ide\u00adol\u00ado\u00adgy and Com\u00admu\u00adnist ide\u00adol\u00ado\u00adgy are close\u00adly relat\u00aded, dri\u00adven by the same motives and employ\u00ading the same tech\u00adniques.&nbsp;They dif\u00adfer only on the lev\u00adel of slo\u00adgans.&nbsp;But that has been a hope\u00adless, thank\u00adless&nbsp;task.<\/span><\/p>\n<p><\/p>\n<p><\/p>\n<p><span style=\"color: #000000;\">Now, Cana\u00adda is stuck with an admin\u00adis\u00adtra\u00adtion for whom the dis\u00adas\u00adtrous Communist\/Conservative ide\u00adol\u00ado\u00adgy is unques\u00adtion\u00adable gospel.&nbsp;Because the pre\u00advi\u00adous Lib\u00ader\u00adal admin\u00adis\u00adtra\u00adtion had bal\u00adanced the books, cre\u00adat\u00aded a healthy sur\u00adplus, and encour\u00adaged respon\u00adsi\u00adble polic\u00ading of the bank\u00ading sys\u00adtem, Cana\u00adda did not suf\u00adfer much from the glob\u00adal Con\u00adser\u00adv\u00ada\u00adtive-cre\u00adat\u00aded reces\u00adsion.&nbsp;The cur\u00adrent gov\u00adern\u00adment sleazi\u00adly claims cred\u00adit for the safe\u00adty mar\u00adgin cre\u00adat\u00aded by the pre\u00advi\u00adous gov\u00adern\u00adment, by poli\u00adcies which it hat\u00aded and opposed.&nbsp;But Com\u00adrade Harp\u00ader has already, with\u00adin a few short years, tak\u00aden us from a pos\u00adi\u00adtive bal\u00adance sheet to the great\u00adest lev\u00adel of fed\u00ader\u00adal debt we have ever expe\u00adri\u00adenced, worse even than the night\u00admar\u00adish fis\u00adcal irre\u00adspon\u00adsi\u00adbil\u00adi\u00adty of the old Mul\u00adroney Con\u00adser\u00adv\u00ada\u00adtives.&nbsp;The ordi\u00adnary cit\u00adi\u00adzen does not feel the pinch of this yet, but will when the bills come due.&nbsp;That\u2019s the dam\u00adage he man\u00adaged to do with a minor\u00adi\u00adty in par\u00adlia\u00adment.&nbsp;Now he has a major\u00adi\u00adty.&nbsp;Hang on to you hats.&nbsp;You ain\u2019t seen noth\u00adin\u2019&nbsp;yet.<\/span><\/p>\n<p><span style=\"color: #000000;\">\u2014<br>\n<\/span><\/p>\n<p>*1. \u2014 James Alm <span class=\"amp\">&amp;<\/span> Janet Rogers. <em>Do State Fis\u00adcal Poli\u00adcies&nbsp;A<br> ffect State Eco\u00adnom\u00adic Growth?. <\/em>Tulane Eco\u00adnom\u00adics Work\u00ading Paper #1107, April 2011. jalm@tulane.edu; jrogers@budget.state.nv.us<\/p>\n<p>*2. \u2014 Cristo\u00adbal Young and Charles Varn\u00ader. <em>Mil\u00adlion\u00adaire Migra\u00adtion and State Tax\u00ada\u00adtion of Top Incomes: Evi\u00addence from a Nat\u00adur\u00adal Exper\u00adi\u00adment<\/em>. Nation\u00adal Tax Jour\u00adnal, June 2011, 64 (2, Part 1), 255\u2013284.<\/p>\n<p>*3.- It would be dif\u00adfi\u00adcult for me to exag\u00adger\u00adate the depth of this atti\u00adtude in Amer\u00adi\u00adcan pow\u00ader cir\u00adcles.&nbsp;Wit\u00adness an arti\u00adcle in <em>For\u00adeign Pol\u00adi\u00adcy <\/em>(\u201cSecu\u00adri\u00adties: The New World Wealth Machine\u201d, Autumn 1996) that was wide\u00adly influ\u00aden\u00adtial in both Repub\u00adli\u00adcan Par\u00adty and Wall Street cir\u00adcles.&nbsp;Enrap\u00adtured by the lack of reg\u00adu\u00adla\u00adto\u00adry con\u00adstraints on issu\u00ading repacked \u201chigh qual\u00adi\u00adty\u201d bonds against clus\u00adters and pools of exist\u00ading loans and assets (mak\u00ading vast and instan\u00adta\u00adneous prof\u00adits in the finan\u00adcial mar\u00adket, based on no actu\u00adal pro\u00adduc\u00adtive activ\u00adi\u00adty), it argued that \u201c<em>an eco\u00adnom\u00adic pol\u00adi\u00adcy that aims to achieve growth by wealth cre\u00adation there\u00adfore does not attempt to increase the pro\u00adduc\u00adtion of goods and ser\u00advices, except as a sec\u00adondary objec\u00adtive.<\/em>\u201d&nbsp;It is wise to keep in mind, when hear\u00ading Con\u00adser\u00adv\u00ada\u00adtive ide\u00ado\u00adlogues use the words \u201cwealth cre\u00adation,\u201d that their pri\u00advate def\u00adi\u00adn\u00adi\u00adtion of the term is as fan\u00adtas\u00adti\u00adcal and dis\u00adhon\u00adest as when Com\u00admu\u00adnists use the word \u201cdemoc\u00adra\u00adcy.\u201d<\/p>\n<p>*4.- Jacob S. Hack\u00ader. <em>The Great Risk Shift<\/em>. Oxford Uni\u00adver\u00adsi\u00adty Press, 2006. p.31<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last month some high\u00adly illu\u00admi\u00adnat\u00ading research was pub\u00adlished among the Tulane Uni\u00adver\u00adsi\u00adty Eco\u00adnom\u00adics Work\u00ading Papers[*1].&nbsp;The authors, James Alm and Janet Rogers, are respect\u00aded experts in the neglect\u00aded (by the pub\u00adlic and leg\u00adis\u00adla\u00adtors) field of tax pol\u00adi\u00adcy out\u00adcomes.&nbsp;They under\u00adtook to systematically&nbsp;\u2026<\/p>\n<p class=\"read-more\"><a href=\"http:\/\/www.philpaine.com\/?p=3533\">Read more \u00bb<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"wp_typography_post_enhancements_disabled":false,"footnotes":""},"categories":[1,927],"tags":[],"class_list":["post-3533","post","type-post","status-publish","format-standard","hentry","category-a-blog","category-ap-blog-2011"],"_links":{"self":[{"href":"http:\/\/www.philpaine.com\/index.php?rest_route=\/wp\/v2\/posts\/3533","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.philpaine.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.philpaine.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.philpaine.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.philpaine.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3533"}],"version-history":[{"count":31,"href":"http:\/\/www.philpaine.com\/index.php?rest_route=\/wp\/v2\/posts\/3533\/revisions"}],"predecessor-version":[{"id":12108,"href":"http:\/\/www.philpaine.com\/index.php?rest_route=\/wp\/v2\/posts\/3533\/revisions\/12108"}],"wp:attachment":[{"href":"http:\/\/www.philpaine.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.philpaine.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3533"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.philpaine.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}