ALEC-Laffer Ranks Are About Ideology, Not Economic Policy
The American Legislative Exchange Council (ALEC) released its 2013 Rich State, Poor State rankings in May. The report ranks states by “economic outlook,” but by the report’s standards a positive economic outlook is narrowly defined by the extremity of regional anti-worker laws and regulations. ALEC’s metrics are more concerned with ideology than economic growth, prioritizing twisted value judgments over facts.
ALEC’s selective reasoning is blatantly obvious in its ranking of Mississippi as the state with tenth strongest economic outlook, largely because of low taxes, low minimum wage, and weak unions. ALEC’s rosy outlook on Mississippi is in stark contrast with this description of Mississippi from The Economist:
Mississippi spends less per student on education than all but four other states. It has a law that directs extra funds to schools in poor counties, but has not complied with it, [David Jordan, a state senator from Greenwood] complains, shortchanging the neediest spots by a billion dollars over the past four years. In all the states of the region and at the federal level, [Christopher Masingill, joint head of the development agency Delta Regional Authority] concedes, budgets for education and development have been getting skimpier.
The Mississippi Delta is in a particularly bad position, The Economist further reports: “The entire county has ten private businesses (other than farms), employing just 99 people. Like the region as a whole, it suffers from low rates of education and high rates of obesity and diabetes.”
ALEC’s ranking bears little resemblance to reality. A recent report by Peter Fisher finds that ALEC, “fails to predict job creation, GDP growth, state and local revenue growth, or rising personal incomes.”
Another example of the report’s failure is the fact that this year’s BEA numbers show the economies of Washington, Oregon, California and Utah growing at about the same rate. Why does ALEC rank Utah as number one, while Washington is 36, Oregon is 44, and California is 47? The only reason for these rankings is a bias against progressive economic policy. Utah is bolstered by its anti-unionism, low workers compensation payments, low minimum wage, and regressive tax system. The other states, although growing just as quickly, are held back in the ALEC report by their liberal policies.
The purpose of these rankings is to push the ugly legislative agenda of ALEC, which gives a state like Wisconsin, with disturbingly low growth rates but shown a penchant of anti-unionism, a gold star while more union-friendly states get hit with low marks. ALEC assumes hat taxes drive wealthy people out of state, decreasing tax revenues. That’s false. Lower taxes will bring in more revenues? That’s false. Estate taxes reduce growth? That’s false.
The worst thing about the rankings isn’t the blatant partisanship masquerading as rigorous analysis. State governments take these rankings seriously, and change policy accordingly. When Peter Fisher analyzed how states that followed ALEC’s prescriptions performed, he found the states were more likely to see a decline in median family income and an increase in poverty. The purpose of ALEC’s rankings is not to promote growth, but to give conservative legislators’ intellectual credibility. Look, they have white papers too!
ALEC’s lobbying goes practically unopposed in some states because the American labor movement is a shell of its former self. The Organization for Economic Cooperation and Development (OECD) data for 2008 (the most recent year for which all countries are available) shows that the unionization rate for America is far below average. This means that in America we have two parties beholden to corporate interests and no counterbalance. Is it any wonder that Larry Bartels found in 2005 that politicians respond almost exclusively to the preferences of wealthy voters and ignore the needs of poor voters? There should be no surprise that lower unionization rates correlate with higher levels of inequality. But if the union movement in America remains suppressed by powerful corporations, it’s hard to imagine anything other than ALEC-style legislation winning the day.
Originally Published on Alternet.org
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