Compare
the actual numbers between Red and Blue states
By
Robert Reich
To watch this video on YouTube: https://www.youtube.com/watch?v=1KKCXJ6WesU
For
years, conservatives have been telling us that a healthy business-friendly economy
depends on low taxes, few regulations, and low wages. Are they right?
We’ve
had an experiment going on here in the United States that provides an answer.
At
the one end of the scale are Kansas and Texas, with among the nation’s lowest
taxes, least regulations, and lowest wages.
At
the other end is California, featuring among the nation’s highest taxes,
especially on the wealthy; lots of regulations, particularly when it comes to
the environment; and high wages.
So
according to conservative doctrine, Kansas and Texas ought to be booming, and
California ought to be in the pits.
Actually, it’s just the opposite.
For years now, Kansas’s rate of economic growth has been the worst in the nation. Last year its economy actually shrank.
Texas hasn’t been doing all that much better. Its rate of job growth has been below the national average. Retail sales are way down. The value of Texas exports has been dropping.
But
what about so-called over-taxed, over-regulated, high-wage California?
California leads the nation in the rate of economic growth — more than twice
the national average. In other words, conservatives have it exactly backwards.
So
why are Kansas and Texas doing so badly? And California so well?
Because
taxes enable states to invest in their people – their education and
skill-training, great research universities that spawn new industries and
attract talented innovators and inventors worldwide, and modern infrastructure.
That’s
why California is the world center of high-tech, entertainment, and venture
capital.
Kansas
and Texas haven’t been investing nearly to the same extent.
California
also provides services to a diverse population including many who are attracted
to California because of its opportunities.
And
California’s regulations protect the public health and the state’s natural
beauty, which also draws people to the state – including talented people who
could settle anywhere.
Wages
are high in California because the economy is growing so fast employers have to
pay more for workers. And that’s not a bad thing. After all, the goal isn’t
just growth. It’s a high standard of living.
Now
in fairness, Texas’s problems are also linked to the oil bust. But that’s
really no excuse because Texas has failed to diversify its economy. And here
again, it hasn’t made adequate investments.
California
is far from perfect. A housing shortage has been driving rents and home prices
into the stratosphere. And roads are clogged. Much more needs to be done.
But
overall, the contrast is clear. Economic success depends on tax revenues that
go into public investments, and regulations that protect the environment and
public health. And true economic success results in high wages.
So
the next time you hear a conservative say “low taxes, few regulations, and low wages
are the keys to economic business-friendly success, just remember Kansas,
Texas, and California.
The
conservative formula is wrong.
ROBERT
B. REICH is Chancellor's Professor of Public Policy at the University of
California at Berkeley and Senior Fellow at the Blum Center for Developing
Economies. He served as Secretary of Labor in the Clinton administration, for
which Time Magazine named him one of the ten most effective cabinet secretaries
of the twentieth century. He has written fourteen books, including the best
sellers "Aftershock", "The Work of Nations," and "Beyond
Outrage," and, his most recent, "Saving Capitalism." He is also
a founding editor of the American Prospect magazine, chairman of Common Cause,
a member of the American Academy of Arts and Sciences, and co-creator of the
award-winning documentary, INEQUALITY FOR ALL.
