Monday, March 17, 2014

What does the Mercatus State Fiscal Solvency Report tell us about governance in the US?

Mercatus* came out with an unusually thorough and transparent evaluation of state fiscal solvency.  You can see the results here.  It would be easy to point out that with the exception of Appalachian Kentucky and West Virginia all of the states in the most desperate fiscal straights are deep blue, mostly one party states.  And it is super easy to observe that with the possible exception of purple Ohio, all of the top 10 fiscally solvent states are Red and that none of the top twenty are 'blue' states.  Indeed it is child's play to note the first blue state is #23 Washington state and it doesn't have a state income tax so from a fiscal standpoint it really isn't that 'blue'.



But it would be a bit unfair to compare tiny whitebread Tball states with large complex urban ones.  I think we need to break the league table into two divisions:  big and/or very urban vs. small and/or less urban with the dividing line being having or being part of a city >2 million.  Here's how it stacks up:

The ten sickest big city states are all blue.

What's interesting is the worst performers are a who's who of states with huge advantages:  NY has the richest mega city in the world, NJ and CT have millions of NYC's affluent suburbanites, MA is the best educated state in the nation and these four states have huge, rich institutions (Harvard, MIT, Yale, Princeton, Columbia) coming out their ears.  Not to mention California which in terms of natural and entreprenurial endowment is without a doubt the richest place on the planet.  Illinois has Chicago, the greatest concentration of wealth and commerce between the coasts.  And yet even Minnesota (!) is fiscally outclassed by inbred, cousin marryin' knuckle draggin' states like AL and OK.

So just why are blue states so bad at managing their financial affairs?  It's not like they're all poor, exactly - even after adjusting for inflation IL and MA are among the richest, although RI, CA, NY are at the bottom of the barrel. They don't all have traditions of criminal political machines - certainly MN and CA don't, and their economies aren't collapsed ruins. Yet in consumer terms most of them would have a hard time getting a credit card.  What gives? Why are states with the blue ideological predisposition which they point out is more 'sophisticated',  'modern', 'compassionate', and of course 'progressive' such bad financial actors?

There are two generic narratives about what the left side of the political divide stands for.  The first which I'll call the 'Classical' or 'Optimate' critique argues that leftist politics is simply an updating of the Roman appeal to the mob pioneered by the Gracchus brothers and used to good effect by Julius Caesar:  promise the rubes goodies, get in power and then use the public fisc to pay your debts to favored constituencies and to cultivate more support.  Fiscal accountability, keeping your promises, protecting the next generation are irrelevant. What matters is power and your will to grasp it, you'll use that power to balance the books somewhere down the line, preferably on the backs of your enemies.

The other, which I'll call for want of a better name the "Deweyite-Sinclair Rejoinder" argues that the left has a principled preference for state action when the private market or society fails to address serious problems like the environment, poverty, plutocracy, and so on.  In this view the left is not obsessed by power but by the public good and policies that increase it.  Sometimes that means that the left will take greater fiscal risks for a time but by investing in people, those risks will pay off.

But if you argue that the second is more true (there are of course many shades of gray) wouldn't the government's credibility, its honesty, its probity be absolutely crucial to the "good government left's" leaders? Because if you are an advocate for principled government intervention then you need to make sure that the government is seen as being clean and trustworthy to undertake these great tasks.

The paradox is that the situation has changed almost 100% from a century ago.  In 1914 the states that were fiscally responsible were overwhelmingly northern industrial or west coast and the profligate, populist states tended to be...southern or agrarian.  Of course back then the the south was solid for...Democrats and the northern industrial states....  Oops, never mind.

So what does the relative rankings of all heavily blue, often one party states have to say about which type of 'progressive' dominates our Democratic party's leadership ranks?  People like Bill Clinton who retired to roar around the world amassing a hundred million dollar fortune and no doubt a stable of adoring and accommodating playmates? or Harry Truman who when he was done in DC retired with his wife to the family's wood frame home in Independence (sort of like GWB did to Crawford but I would never, ever compare GWB to a 'righteous' Democrat)?  And what do you think BHO's Presidential payoff is going to be?  Or more to the point:  how many years to his first hundred mil? After all he's a 'world historical' figure with his very own Nobel Peace Prize Prize. (God forgive me but I laugh every time I read that)

The history of the Roman Republic was bookended by the republican heroes of Rome like Cincinnatus who took power for a time, served the state and then returned to his plow and the Caesars - Julius and his adopted son Octavian, the plutocratic imperialists who killed it.  Likewise our republic had its Cincinnatus in Washington and as late as Coolidge or Truman (or GWB - I know, I know, eeeviiil) who took back up their plows as well.  Yet today what kind of leaders are we cultivating?  Small 'r' republican magistrates or the world's most popular stationary bandits?  You be the judge.

*Admittedly Mercatus is a free market thing tank but as I said earlier, this is a very transparent and non-controversial ranking. Everyone knows who's at the bottom and the top even before the rankings. So click on the link and judge for yourself.

No comments:

Post a Comment