IBD: The most liberal states in the country are the worst run and have the widest gaps between rich and poor. Could it be that spread-the-wealth policies make things worse?
The list of worst-run states — compiled by the news site 24/7 Wall St. using things like pension funding, credit ratings, unemployment, poverty, crime and high school graduation rates — shows that three of the bottom five are liberal. Illinois ranks dead last, followed by New Mexico, with Rhode Island coming in at No. 5.
At the other end of the spectrum, only one of the top 5 best-run states — Minnesota — is liberal. North Dakota comes in first, followed by Wyoming, Nebraska and Iowa.
Liberal states also show up, amazingly enough, as having the greatest levels of income inequality. That’s according to another 24/7 Wall St. list, which based its ranking on state-level income inequality data from the Census Bureau.
The state with the widest gap between rich and poor is New York. Also among the top 10 are Connecticut, California, Massachusetts, Illinois and New Jersey. These six states also just happen to be ones that have pushed hardest on redistributionist policies — imposing among the highest taxes rates in the nation and spending the most on transfer programs.
New York, New Jersey, Connecticut and California have the heaviest state tax burdens, according to a separate 24/7 report, and these states are in the top 10 when it comes to per-capita spending on pensions, Medicaid and education. Another ranking, this one by George Mason University’s Mercatus Center — which orders states by measures of economic and personal freedom — finds that these same six states have among the most intrusive governments.
Mercatus’ latest “Freedom in the 50 States” report finds that New York, California, New Jersey, Illinois, along with Louisiana, have the highest regulatory burdens of all 50 states. Look at any other ranking of business friendliness, and you’ll see all the same states pooling at the bottom.
It is true, as the 24/7 article notes, that the states with the biggest income gaps tend to have a higher share of people working in financial, professional or scientific fields — which helps explain why four nonliberal states show up on the inequality list.
More unequal states also have unemployment rates higher than the national average, currently 5.8%. In New York, the unemployment rate is 6%; Connecticut, 6.4%; California, 7.3%; Massachusetts, 6%; Illinois, 6.6%; and New Jersey, 6.6%.
The 24/7 Wall St. article quotes an analyst with the liberal Economic Policy Institute as saying that “the root of income inequality really is the stagnation in pay and wages for the vast majority of Americans.”
That’s also true. But it misses the point. The liberal policies meant to redistribute income tend to cause that stagnation by choking off private-sector growth, over regulating businesses, and encouraging people to flee the state. That, in turn keeps wages down, hurting middle- and lower-class families far more than the rich.
That’s happening at the national level, which, under President Obama’s policies, has seen stagnant wages and rising inequality. Now if only our president would learn this valuable lesson, we could see greater prosperity up and down the income ladder.
DCG
