The Doctor is Out to Lunch: ALEC's Recommendations Wrong Prescription for State Prosperity

Source: Peter Fisher, Iowa Policy Project, July 24, 2012

…The policy prescriptions laid out in the ALEC report embody the right-wing agenda of ALEC: reduction or abolition of progressive taxes, fewer government services, weaker or non-existent unions. To attain the highest ranking would require a state to have no individual or corporate income tax, no estate or inheritance tax, no state minimum wage, severe tax and expenditure limits and very limited public services. It also would have to be a so-called “right-to-work state” — that is, it would provide no right for employees to negotiate a union contract that requires all employees who benefit from the contract to pay a share of the costs of negotiating it. Laffer and company have been arguing for five years that adoption of such policies is the sure-fire prescription for state growth and prosperity. The better a state ranks on their index of 15 such policies, the better its economic outlook, they say.

So how should we assess the economic performance of states and the validity of the ALEC Economic Outlook Ranking? A good place to start is with the set of performance measures that the ALEC report itself relies on: growth in state GDP (Gross Domestic Product), growth in nonfarm employment, growth in per capita income, and growth in population. ALEC would be disappointed. Simply put, the ALEC Outlook Ranking fails to predict economic performance. … In fact, the less a state followed ALEC’s prescriptions,
the better it did in terms of job growth, and the worse it did on change in poverty rate and median income…

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