Today, The Two Mikes discussed the economies of the states located in America’s Mid-West Heartland — focusing on Kansas and Indiana — with renowned economist and urban-studies specialist Aaron Renn.
“It struck me for a while that you always hear red states talk about how business-friendly they are, but you never hear them talk about how citizen-friendly they are, when ultimately, it’s the people that we care about,” he said. “We do care about business. I’m pro-business, pro-market because we want economic growth, we want jobs.”
Watch the episode on Locals or listen to it on Apple Podcasts.
In his most recent articles, Mr. Renn focused on whether the Mid-West’s Red-State governments were more “business-friendly” than “citizen-friendly”. While these states largely have been successful in enticing some companies to relocate via tax breaks and other economic favors, they have not always yielded as much employment or state economic growth as had been expected, while producing more traffic and other infrastructure challenges that were not anticipated.
“A lot of the conventional wisdom Republican-thinking at the state level is, what you need to do is have low taxes, very few regulations, and if you essentially create the best ‘sandbox’ for business, they’ll flow into where you’re at,” he said. But it’s simply not that simple as there’s no “one-size-fits-all” strategy to driving economic growth.
In his latest column at Governing Magazine, Renn expanded on this concept:
The traditional Republican formula for success at the state level has been low taxes and light regulation. The theory is that this will attract businesses and residents. The formula has worked in Texas, Florida and Tennessee. Having no income tax appears to be a major draw.
But get outside the Sunbelt, and the same approach doesn’t have such a great track record. Kansas enacted deep income tax cuts in 2012 under Republican Gov. Sam Brownback, along with cuts in spending on education, foster care and other social services. But the tax cuts were rolled back after falling revenues created a fiscal crisis and no economic boom at all. Kansas has also run what the Kansas City Star labeled “one of the most secretive state governments in America,” so much so that they fired the state DOT spokesman for truthfully stating that the state didn’t have enough funds to rebuild a dangerous stretch of road. The Star found that 90 percent of state legislation was written by anonymous authors. Job growth in Kansas badly trailed the nation over the past decade and 86 percent of Kansas counties are losing population.
Or look at Indiana. It has had Republican governors since 2005 and full Republican control of the state for over a decade. Its leadership loves to boast that its growth rate in population and jobs beats surrounding states, but that’s a low hurdle to jump. In reality, most of Indiana is stagnating or declining. Over half of the state’s counties are losing population, and the forecast for the prime working age population is grim: Virtually the entire state is projected to have a declining workforce in coming years. Indiana’s per capita income is only 86.2 percent of the national average, and that’s lower than it was when the GOP took over the governorship and the Legislature. Under Republican management, the state started out poor and got even poorer.
Renn noted that the correlation between incoming companies and an improved state economy and social lifestyle do not always match, and at times trend lines show little growth in either category. Renn concluded that it may be time for red State governors to simultaneously seek to build a “business friendly” AND a “citizen friendly” state.
A lot of it comes down to geography, according to Renn. Basic considerations like weather and heavy population centers make it easier for red states like Texas to outperform red states like North Dakota. He discussed this further on his Substack:
Whatever the underlying causes of southern red state success, the attempted imitations in the north have not worked.
Professor Tanner Greer wrote an article that got a lot of attention on the problems of the “new right” (defined basically as post-liberal or Trumpist conservatives). This article has a number of problems, including overly focusing on the Catholic integralist movement that is minuscule in size. But it makes an interesting point about the Jacksonian (think small-l libertarian) orientation of much of the Republican voting base.
Indiana, with a heavy influence from the upland South, has a strong Jacksonian streak in its population. Presumably Kansas does as well. That Jacksonian orientation is one reason these public policies persist. Arguing for a more citizen oriented approach by the government, as I do, goes against the cultural grain. Whereas cronyism of the type of Indiana and Kansas engage in is easy to frame in the libertarian language of “pro-business,” “limited government,” etc. Thus the people who live in these places have to take their fair share of the responsibility for what has happened to them.
Republicanism means many things to many people, but decentralization of policy and establishing what works for each individual state and city is definitely one of them. It’s time for local Republican leaders to start finding solutions that work for them.
Watch the episode on Locals or listen to it on Apple Podcasts.
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