February 07, 2013
A Comparison of Selected Economic Indicators for Minnesota vs. Wisconsin
And assessing Walker's "open for business" program thus far
Governor Walker recently implied Wisconsin's economic performance exceeded that of Minnesota. Louis Johnston provides some statistics to evaluate this belief. From the Minnesota Public Radio report [link fixed 1:20pm - mdc]:
...who might want to take advantage of Walker’s “open for business” offer?
These data imply that companies that want to avail themselves of a deeper pool of unemployed workers whom they can pay lower wages would do well in Wisconsin. Perhaps setting up a subsidiary in Wisconsin (to take advantage of lower labor costs) and keeping the high-skill, high-income headquarters in Minnesota is the way to go for those businesses.
See also this post.
Posted by Menzie Chinn at February 7, 2013 08:10 AMdigg this | reddit
The economic vision of the Republicans rooted in the visions of Milton Friedman and Ayn Rand is giving the US the economic dynamics of a third world country.
"I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible." - Milton Friedman
"If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand." - Milton Friedman...
"Contradictions do not exist. Whenever you think that you are facing a contradiction, check your premises. You will find that one of them is wrong." —Ayn Rand
Posted by: Edward Lambert at February 7, 2013 11:27 AM
"Louis Johnston provides some statistics to evaluate this belief." Not that I can see - I followed the link and found the following:
"Dayton insisted that there is no correlation between tax levels and job growth or per capita income. He cited statistics from the Minnesota Taxpayer's Association saying Minnesota has higher job growth than Wisconsin."
Then I went to the MTA website and could find nothing. The reports that I could find seemed to be at least 2 years old. So where are those statistics?
Posted by: Rich Berger at February 7, 2013 12:40 PM
Rich Berger: I had the wrong link in the post; the corrected link is there now.
Posted by: Menzie Chinn at February 7, 2013 01:19 PM
The most interesting thing in Johnston's linked piece is the graph of personal income showing WI falling behind MN in the late 1960's. The 2 were close for a while but diverged in the late 70's when WI income trended down while MN income continued to grow. That is the essence of the GOP takeover of WI: a response, rational or not, to the poor performance of the state for about 30 years.
My take is that WI was affected more by events beyond control: the decline of traditional industry, the rise of other industry & services. It was also affected by the blunt relative failure of Milwaukee compared to Minneapolis-St. Paul. Some of that, I would think, would be due to Milwaukee being too close to Chicago while failing to provide a reason to locate there. That assumes Milwaukee could overcome the relative disadvantage of being north of Chicao. I don't know what infrastructure has been built to make Milwaukee more attractive.
In other words, I can see how given 30 years of failure the state has responded by taking an ideological approach. But it's also clear taxes aren't the issue: look at the regional competition and its relatively better performance. It's also not labor because again look at the regional competition. But I understand the urge to try something else. It isn't clear what will work.
As for me, I think I'd have put much more emphasis on developing the Madison-Milwaukee area, much in the way MI has worked to develop from Ann Arbor to Rochester. They've worked to developd a high-tech corridor focusing on manufacturing, trying to build on what existed in the understanding that change was happening anyway.
Posted by: Jonathan at February 7, 2013 02:13 PM
Let's see in Minnesota from 2003-2011 they had Republican Governor Tim Pawlenty and had reasonable economic success. Now they have Democrat Mark Dayton living off of Pawlenty's success. In Wisconsin from 2003-2011 they had Democrat Governor Jim Doyle with little success to say the least. Now they have Republican Scott Walker repairing the damage done by Doyle.
When Scott Walker says Wisconsin is open for business compared to Minnesota he is not saying the state is economically stronger now. He is saying weight the future and consider that the trend has changed.
For example in 2010 Minnesota spent $10,685 per student compared to Wisconsin's $11,364, but Minnesota spending on instruction was $7,082 while Wisconsin spent only $6,931. Recent changes won by Gov. Walker should change this inequity so that children in Wisconsin receive more attention than political education industry appointees.
Menzie, it appears your state in moving in the right direction so I hope you will open your doors.
Posted by: Ricardo at February 8, 2013 10:40 AM
Ricky- You don't live up here, do you? I understand basement dwellers like you tend to be reality- challenged, but you couldn't be further from the truth here,
People with talent choose places where that talent is appreciated, and tolerance and openness to new companies and lifestyles is allowed. The Twin Cities promotes its openness and grows, Madison promotes thought and openness and is still booming, while Milwaukee (run by Walker before he became governor) sticks to the same oligarchs and is filled with racist suburbanites- and they're stagnating.
And that gap will only grow over the next two years. Of course, it'll get worse if Wisconsin passes the 13%sales tax that Walker's DOA floated this week
Posted by: Make formerly of the LP at February 10, 2013 06:17 AM
I couldn't resist even though no one but Menzie will see this:
Posted by: Rich Berger at February 18, 2013 06:09 PM
A few points...
Anyone who thinks Wisconsin is moving in the right direction is hopelessly addled, and I would direct their attention to such sources as Moody's that show nothing but a downward trend. Historic industrial firms in central Wisconsin are closing, the northern counties are rapidly aging, the smaller Lakeshore port cities are generally moribund, with a substantial portion of growth located in counties closest to the thriving Twin Cities and ChicagoLand. Otherwise what limited growth that there is manifests itself in Madison (liberals create jobs and with the best credit scores in the nation--go figure), the Fox River Valley, and Milwaukee's suburbs. Job growth is limited to the still-incomplete rebound in manufacturing from the recession, and low-wage service jobs.
To maintain that the state is now poised from growth is ludicrous--AL, MS, SC have, under this definition, been "poised for growth" for most of the last century.
The new hits to Medicaid, EITC reductions, and the further threats to education in voucher expansion combined with national level economic problems will only further constrain spending especially in the rural north, central, and southwest parts of the state.
To highlight a 150 job transfer from MN to WI is like celebrating the removal of a bucket of water from the cargo hold of the Titanic.
The discussion of eliminating the state income tax is interesting for two reasons--first how will Walker maintain his conservative creds with a $100 tax cut when Jindal, et. al. will be at the next CPAC trumpeting their total elimination of their states' income taxes? and second the 13% rate is interesting not that the rate would be that high, but that the rate was calculated AT ALL. The elimination was apparently seriously considered (the calculations are not easy) by Walker, and it was only being faced with the necessity of eliminating aid to municipalities (remember Scott McCallum tried it?) that would be necessary to balance the budget (and the resultant revolt of the cities and villages) that turned them away.
Posted by: dr. morbius at February 21, 2013 06:49 AM