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November 30, 2012 / needhamgrassroots

Rich States, Poor States, Snake-Oil

Snake-oil

None of ALEC’s predictors of economic growth—elimination or reduction of progressive taxation, reduced commitments to public services, tightening of social safety net programs, or reduced union influence—showed any relationship to economic prosperity.

In fact, if anything the ALEC formula for prosperity had an inverse relationship.

From Demos — For most of its history ALEC has operated in the background, but its influence recently drew the spotlight when its promotion of “Stand Your Ground” laws came to light in the wake of the killing of Trayvon Martin in Florida.  Faced with the potential of consumer boycotts,corporate sponsors such as McDonald’s and Pepsi withdrew their support.  Henceforth, the organization announced, it would concentrate on state economic policy.

State legislators who might look to the organization for leadership on economic policies should be wary of following ALEC’s lead in this arena.  A startlingly candid report, “Selling Snake Oil to the States,” just released by the Iowa Policy Project and the Washington-based Good Jobs First, shows that ALEC’s recommendations for producing economic growth in the states are essentially worthless.

This is a strong claim, but the researchers support their conclusion neatly by putting under the microscope the implicit predictions in the 2007 edition of Rich States, Poor States, the volume written by economist Arthur Laffer and the source of the ALEC-Laffer State Economic Competitiveness Index.

In brief, the authors take ALEC’s 2007 ranking of states based upon the states’ adherence to its recommendations, and seeing whether indeed the states that were predicted to prosper were doing so five years later.

None of ALEC’s predictors of economic growth—elimination or reduction of progressive taxation, reduced commitments to public services, tightening of social safety net programs, or reduced union influence—showed any relationship to economic prosperity.

In fact, if anything the ALEC formula for prosperity had an inverse relationship.  As the authors put it:

…states that were rated higher on ALEC’s Economic Outlook Ranking in 2007…have actually been doing worse economically in the years since, while the less a state conformed with ALEC’s policies the better off it was.

From: ALEC’s (and Arthur Laffer’s) Worthless Recommendations for Prosperity in the States – The Demos Blog – http://bit.ly/TrXayk

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