The political economy of Kansas fiscal policy (from the comments)

by on June 14, 2015 at 1:51 am in Current Affairs, Economics, Political Science, Uncategorized | Permalink

MR commentator Patrick L. has a go at it:

OK I’ll bite.

In nominal terms, between 2002 and 2012 state receipts grew 50%. Inflation in this period was 28%, and probably significantly lower for Kansas, while population growth has only been about 10% since 2000. Even the “low” 2014 receipts are $1.5 billion more in revenue from when Sebelius first took office and the government started rapidly growing. In the past 15 years expenditures have grown over 50%, exceeding $6 billion today. The shortfall is $300 million, or about 5%. While the growth of the Kansas government in the past 15 years is smaller than other governments in the country, it still explains the shortfall. We can justify this increase by saying that education and health are rising faster than everything else, but that is not a revenue problem. Tax rates have to rise because education and health costs are growing faster than our economies. That says nothing at all about the optimum size of taxation for state governments with regard to growth, jobs, or even revenue. The tax and spending levels Brownback choose would have been adequate ten, maybe even five years ago. With a bit of luck, he could have ignored the shortfall because of variance, which for receipts can be a few hundred million a year.

Republicans should be wise enough to not depend on luck, and they should be wiser predicting how trend lines go. Cutting the size of government was never a serious option.

I haven’t looked at the votes in depth, but it looks like a classic case of urban // rural split that typically troubles the state’s politics. Just under half the state’s population lives around Kansas City or Wichita, which are both five times than the next largest city. These places have as many votes as the rest of Kansas combined, but their needs are radically different.

Rural Kansas has two unique problems. First, there’s the problem of population collapse, which all farm states are seeing. What few children are born move out when they come of age and new people are not moving in. Fixed costs like “We need at least one school building” or “We need at least one teacher per grade” start to add up for small towns of 1000 or less. Those are the obvious problems, not to mention any number of federal or state concerns dealing with food, medical, or disability services that have to be met. As a matter of geography, 98% of the state is rural, and I think I heard 25% of the state is in towns less than 2500 – with over 400 municipal governments servicing less than 1000 people it’s probably the highest per capita in the country (This is FIVE times the national average).

This is a non-trivial growing problem related to scale government services that has been an issue of intense legal debate in the state. Wichita School District’s scale is such it can use its buses to deliver free or low cost lunches to children in the summer. Small cities don’t have buses. Is that fair? How should taxes be structured to compensate? The only political viable solution to this problem has been to spend more money. If all the small towns could magically consolidate into a super smallville, taxes would (back of the envelope) be 10-15% lower.

Government services to low population areas are subsidized by high population areas, and it costs much more to deliver the same services to small towns. The US Postal Service paid for delivery to small towns across the country by charging monopolistic prices on first class letter mail in cities (Which cost almost nothing to deliver). NPR’s national budget mostly goes to setup stations in small towns. The small towns in Kansas are both relatively and in many cases actually getting smaller, older, and poorer. They are costing more and delivering less.

The other problem is that some rural areas are *growing*, but they’re growing because of immigration attracted to the agriculture and food packaging industries. Which is not the same as growing from a resource boom which can be taxed heavily to compensate. Liberal, KS is the largest per capita immigrant community in the United States. While this influx of people is necessary for the health of these places, the new population has more expensive demands on government services and pays less in taxes. Some of these small towns are the same ones that a decade ago were collapsing. Services and infrastructure might have been allowed to lapse or removed, and now rapidly needs to be replaced. That’s expensive! In the long run this problem might replace the first problem, but for now it’s the worst of both worlds.

The economy of the small cities is based largely around food production, which mostly can’t move, and food packaging, which probably can’t for logistical reasons. These places are poorer, getting relatively poorer per capita, and demanding more in services both directly (immigration / aging) and through scale issues. Their populations are either getting very old or very Hispanic, or both.

In contrast, Kansas City is a stable metropolis whose economy depends on manufacturing is built around a national centralized hub for trains. It also has some finance and telecom sprinkled in, though those guys can probably go anywhere. Wichita, is a moderately growing city based around aircraft manufacturing. When state taxes can’t provide enough government services, local taxes for these areas easily rise to compensate. Their economic concerns are how to stop businesses from going across the border to Omaha, Oklahoma City, Tulsa, Springfield, or Kansas City, Mo – places which are functionally identical and just as close. Given their dependence on manufacturing, they also have to consider movement across international borders to China and Mexico. Their demography is much closer to the national averages rather than the extremes. They are large enough that they can take advantage of scaling for government services, without being so large that there is decreasing actual returns. I don’t have figures, but I’d guess income rates in the urban areas to be between 150 and 200% those of the rural areas, which are themselves typically around 2/3rds the national average. This is an industry effect, a farmer in Kansas City and an aeronautical engineer in Greensburg, KS would not make much money. The cities are richer, but they’re richer because they have industries that are becoming increasingly easier to move.

On a political level, normally cities become more liberal, and poorer as you go deeper into the city – a leftover of 19th century industrialization competing against 20th century transportation. Deep urban cores produce these deep blue constituencies that act as checks on conservative suburban rings. In some states this manifests itself as a coalition between the poor rural areas and the poor urban areas against richer suburban areas allowing normal American class politics to balance itself. Cities produce political equilibrium: The richer and denser it becomes, the more liberal, which pushes more money and voters to suburbia, diluting the power. In short, declining rural power (D) and rising urban power (D) offset each other, but rising urban power (D) enhances suburban power (R), and so at a state level you get a balance.

The problem is that the inner core of Kansas City is in Missouri, so Kansas only gets the rich (Republican) suburban ring and a tiny blue part. Typical democratic concerns like maintaining a progressive tax structure can’t really find a foundation. While Wichita also has an urban core that does provide a Democratic representation, the city isn’t constrained geographically by anything (No ocean, mountain, lake, and transportation goes around, not through, the city) means concentration, an ingredient for populist politics, is lessened. The city spreads, and the poor can easily move up the class structure by moving further and further out. Wichita has half the population density of Syracuse and two thirds that of Madison, two close sized metropolitan areas. I haven’t done a county level comparison, but I suspect that Sedgwick has half the density of the ‘average American county with half a million people’ in it. There are other places in America like that, but guess how they vote.

Nor are either cities big university cities, like Madison or Boston. The two big universities in the state are in the small towns of Lawrence and Manhattan, which are quite separate from the rest of the state. Urban centers are places of “Commanding Heights” industries, like health and education that can’t easily move, but Wichita and Kansas City are based around manufacturing.

The political outcomes are not that surprising at all. There is nothing ‘the matter with Kansas’. The power structure easily shifts between slim majorities formed from predominately suburban populations who are wealthier, and whose jobs are most likely to move, and slim majorities formed from the small urban cores and rural parts of the state.

There’s no possible political coalition that you could form that would pass a constitutional amendment allowing a floating balanced budget over a 10 year period. Nor are the populist pressure strong enough to push against regressive taxation. You have ‘fiscal hawks’ in the rural areas who never vote for cuts, and suburban conservatives who never vote for taxes. When the storm gets too bad, they vote a nice moderate democrat in to raise taxes and crack down hard on whatever (Non manufacturing / agricultural) big business they can put pressure on. Obviously something that can’t move easily like Health Insurance.

In summery, this really is an issue of Urban vs Rural politics. Unlike other cities, the kind of industries around Kansas City and Wichita can move. The jobs in the rural areas can’t. The rural areas require more per capita government services, and the urban areas have more money. They both have half the vote. Solve for equilibrium.

== As for the deal:

It’s mostly a .4% sales tax increase, which is less than some of the more fanciful projects done by local governments in the past 15 years, which have included sports arenas, loans to movie theaters, and waterfront improvement. A half cent increase in sales tax does move the state into the top 10 for the country, but the overall tax burden is still quite low. The real problem is that city/county sales taxes are a function of distance from Wichita, and the inverse of population. The smaller your city, and the farther you are from Wichita, the more the county depends on sales taxes. In places like Junction City, this could put the sales tax close to 10%! The real disparity is going to be at the border towns: After the change there will be a .7% difference between KC, KS and KC, MO, though I bet the Missouri side will raise taxes to compensate. After the increase, there’s a 1.5% difference between Pittsburg, KS and Joplin, MO – big enough that I could see some people consider driving for purchases more than $300 (Biweekly grocery shopping for a large family?), especially if retailers on the Missouri side are not dumb. As a general rule, the money and the shopping is on the Kansas side of the border, so stuff isn’t going to transition immediately, but I expect some Laffer curve effects here for local governments, and I would hope they’ll respond by dropping taxes to compensate.

This is probably WHY such a deal was able to pass. Most of the damage goes on the poor and rural parts of Kansas, which is where most of the balance budget hawks are. The rich living near Kansas City will have the easiest time dodging the increase and avoid it more often. A regressive tax, but an efficient one.

As for the other parts of the deal, $90 million in itemized deductions are being removed. I don’t actually think this will amount to much, since there aren’t many itemized state deductions left. What remains are things like adoption, historical preservation, or disabled access. I don’t see much money coming in this way, and the state will almost certainly reverse itself the first chance it gets (As it did the last time it got rid of the adoption credit).

Whew!

1 Steve Sailer June 14, 2015 at 2:39 am

In Raj Chetty’s huge study of 1040s from 1996 to 2011, rural counties in the northern Great Plains did very well in terms of upward mobility of income for the children of families from the bottom half, although Kansas was not as successful as Iowa, Nebraska, or the Dakotas:

“Chetty’s 25 Best Counties for the working class look an awful lot like Sioux County, Iowa. There are five more in Iowa, six in Nebraska, four in North Dakota (with its energy boom), three in South Dakota, two in Utah, one in Kansas, one in Colorado, one in Montana, and one in Wyoming.”

http://takimag.com/article/moneyball_for_real_estate_steve_sailer/print#ixzz3d13JVEXg

2 Barkley Rosser June 14, 2015 at 3:10 am

So, given that Wisconsin is falling into the same toilet and with Walker running hard for prez he is less likely to cave and raise any taxes, will he totally destroy the state higher ed system while making sure the Milwaukee Bucks get their new arena? I mean, we have to keep our priorities straight, especially when dealing with someone who does not have a Bachelors degree.

3 Matt Buckalew June 14, 2015 at 10:48 am

Speaking of upward or in this case downward mobility.

Scott Walker accomplished more than Rosser did with a bunch of degrees and a famous father. That said lonely aging Americans probably really admire the patron saint of Russian mail order brides.

4 Zack June 14, 2015 at 12:27 pm

Anyone else find it amusing that Barkley Rosser is supposedly the professional economist here, and yet he’s always the one who immediately resorts to personal insults and ad hominem attacks. I mean, comparing Scott Walker to Joe McCarthy and ridiculing him for not having a Bachelor’s degree? Seriously? This is pretty lame even by his already low standards.

5 Art Deco June 14, 2015 at 12:49 pm

And an elderly professional economist living in Harrisonburg, Va., a small and unpretentious city which is not populated with people who give positive feedback to the obnoxious.

6 Thomas June 14, 2015 at 4:00 pm

Will he totally destroy higher ed? No, Barkley, U Madison will never be as bad as JMU.

7 Todd Kreider June 14, 2015 at 3:23 am

Walker isn’t destroying the UW system, although I’m sure he’d like to see the end of tenure. But that will come soon enough independent of what he does.

And Walker isn’t reaching out to those decisive Ph.D. voters.

He will milk the fact that he was just shy of a B.A. yet became governor, for all that it’s worth.

8 Barkley Rosser June 14, 2015 at 3:45 am

Todd,

I am very aware of what he is doing, playing a “regular guy populist” card against those “liberal elites.” He is such a fake and a fraud and a hypocrite. He is a true product of the Joseph P. McCarthy wing of the Wisconsin Republican Party, the state where that party began in 1854 in Ripon, WI.

And are you saying that tenure at Wisconsin or elsewhere “will come soon enough independent of what he does”? Actually, it is not independent. If he does end it and ends up getting all kinds of popularity points, expect a bunchy of other guvs trying to become the GOP candidate for prez to also imitate what he has done. This move could in fact move such a thing forward, which I gather you think is a good thing. You want guvs to be able to fire any facutly member who criticizes them, or to point out another level, any university president to fire any faculty member who criticizes him? You really think these overpaid incompetents should be given such power.?

9 Art Deco June 14, 2015 at 12:32 pm

” He is such a fake and a fraud and a hypocrite. He is a true product of the Joseph P. McCarthy wing of the Wisconsin Republican Party, the state where that party began in 1854 in Ripon, WI.

Stringing together random insults whose primary referent is the gorgonzola between your ears is so very winsome.

10 Todd Kreider June 14, 2015 at 3:46 pm

Tenure is of course a complex issue. I’m mostly in favor of ending the current tenure system, and I think I understand the downsides. A university president firing anyone who is critical of him doesn’t seem plausible. Presumably a new system would be set in place that would make this type of firing extremely difficult.

Despite Walker, I don’t see U Wisconsin any more closer to ending tenure than other universities. U Minnesota has toyed with the idea of ending tenure since the 1990s, right?

My view since 1996 with the rise of the internet has been close to what James Miller at Smith College wrote a few years ago. I thought in 1996 that tenure will end by 2016 as online courses become prolific.

Ya’ll have six months notice…

11 Millian June 14, 2015 at 5:11 pm

In the real world, dynamic, go-getting corporations fire internal critics all the time.

I don’t believe it is sufficient to believe or presume in a new system that would keep all the nice things while removing all the nasty things.

12 Todd Kreider June 14, 2015 at 5:58 pm

i don’t think it would be that hard to implement a new system where a President doesn’t get to automatically fire people. As it is, a dean can override an entire department’s unanimous decision for tenure.

At any rate, tenure is in its waning years. The upside is that all profs will actually have to teach. I went to U Wisconsin and U Washington for masters degrees and from my memory almost all profs knew their stuff with many who were outstanding. But there were cases where I could see the students weren’t getting their money’s worth. At those schools, it was very unusual, but I think ending tenure will end that. What about
universities not in the top 20 or top 50?

And of course the tenure system works against most young profs. Nice in the 1970s and 1980s, but time for it to end.

13 Dan Lavatan June 14, 2015 at 8:38 pm

Either such corporations don’t exist or I’m not sure that is true. Basically corporations never fire anyone except when executing a massive layoff that involves thousands of people by product line. It takes forever to hire anyone any good and train them in megacorp bs, and firing someone involves effort or paperwork that reflects poorly on management. Plus everyone knows all the criticisms are valid and critics know all the security vulnerabilities. Critics are just ignored along with everyone else.

14 chuck martel June 14, 2015 at 7:09 am

Walker’s efforts at reform haven’t been limited to reining in the multi-billion dollar U of Wisconsin system. His first foray involved attempting to slightly increase individual public employee contributions to their benefit package. The response to this was near riots at the capitol, work absenteeism and doctors illegally providing false documentation of illness for public employees skipping work in order to protest. There’s been a continuous bogus legal process invoked to hamstring any kind of reform.

The Populist/Leftist/Progressive movement once a feature of Wisconsin politics survives only among its public employees. Walker, and his policies, have been emphatically approved by the electorate more than once. In a direct rejection of democracy public employees have shamefully done all they can to thwart the wishes of the majority.

15 Barkley Rosser June 14, 2015 at 7:49 am

Sure, chuck. Why he was so brave and forward looking that he has made it clear he is able to stand up to ISIS, because, wow, he stood up to all those leftover public union demos. What a man.

I would be bit careful about overstating his popularity. It is true that he did survive both a stupid recall effort and did get reelected in a race most thought was very tight in a massive GOP year, 2014, and the GOP does have control of the legislature, although only by a hair in the Senate.

However, while he is riding high on all this stuff among the crazy GOP base nationally, his poll ratings in Wisconsin have fallen through the floor. If that election were held today, he would get slaughtered. Oh, and do you really think that providing several hundred million dollars for a Bucks stadium is a better use of state funds than the university system, currently rated in the top 20 in the world (depends on source)? This can easily be lost, and ending tenure and totally trashing funding could do it. And once such an edge is lost, it is very hard to recover.

Oh, and in case you have not heard, even more so than in KS, WI has had very poor job growth, despite Walker’s Laffable forecasts. This has been documented by UW’s Menzie Chinn, who blogs at econbrowser and was once oN W. Bush’s CEA staff. He is one of the academics Walker thinks he should have the right to fire, the uppity elitist telling the facts about how Walkier’s forecasts have been totally wrong.

As it is, one of the few parts of the state where job grrowth, and that good high wage high tech job growth, has been going on, has been in evil Madison, home of that old Progressivism of Fighting Bob LaFollette, with my old friend, Paul Sogllin, just having been reelected mayor for the 8th time, with lots of especially medical high tech firms growing fast, led by Epic, now a national heavy, which was founded and has its HQ in Madison. But, I suppose that is all an evil plot by those out of date public union progressives, supported by all that money from the good regular basketball loving folks of Wisconsin. Once Walker cuts all that out, Madison can sink into the low growth stagnation that the rest of the state is enjoying under his brilliant and innovative leadership.

16 TMC June 14, 2015 at 8:37 am

If you can tell anything about a person by who his enemies are, Walker is a fine person.

17 Bill June 14, 2015 at 9:37 am

And, if you can’t say anything good about Walker, you claim that his enemy who is your enemy makes Walker your friend. Hard to find something good to say about Walker, given his promises and current massive state deficit, but, ignore that and attack Barkley.

18 meh June 14, 2015 at 10:06 am

So *that’s* why I like Barkley.

19 Matt Buckalew June 14, 2015 at 10:54 am

If that’s the case then I should really admire Rosser’s persoanality since its been his biggest enemy in life. But I don’t. I admire his dad though. But that’s probably part of the reason I find Rosser fils so lamentable.

20 Art Deco June 14, 2015 at 12:42 pm

You’d think an elderly man could at least contrive an amusing way to be irascible.

21 Zack June 14, 2015 at 3:41 pm

I guess I’ll also point out that Wisconsin currently has a 4.4% unemployment rate along with one of the highest labor force participation rates in the country. Sounds like their labor market is doing ok to me.

22 Bill June 14, 2015 at 5:03 pm

Zack, MN has a 3.7% unemployment rate, and its rate was significantly better than Wis during the entire period.

Here is a link comparing rates: https://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=state:ST5500000000000:ST2700000000000&fdim_y=seasonality:S&hl=en&dl=en

23 Bill June 14, 2015 at 5:17 pm

Zack,

Not only does Wis run a higher unemployment rate, but it is also running a deficit due to a tax cut.

From Bloomberg: (Bloomberg) — Wisconsin Governor Scott Walker, facing a $283 million deficit that needs to be closed by the end of June, will skip more than $100 million in debt payments to balance the books thrown into disarray by his tax cuts.

The move comes as Walker, 47, mounts a 2016 bid for the Republican presidential nomination, and while his state is under stress from a projected shortfall that could exceed $2 billion in the two-year budget beginning in July.

Delaying the $108 million principal payment due in May on short-term debt would free funds. The move doesn’t require legislative approval, the nonpartisan Legislative Fiscal Bureau said in a Feb. 13 memorandum. The terms of the debt sale allow Wisconsin to defer the payment in any given year, a procedure known as a restructuring, without defaulting.”

Here’s the link: http://www.bloomberg.com/politics/articles/2015-02-18/wisconsin-to-skip-debt-payments-to-make-up-for-walker-s-tax-cuts

24 Careless June 14, 2015 at 5:46 pm

I admire Bill, one of whose favorite hobbies is insane accusations of cherry-picking, for bringing up Minnesota there.

25 Zack June 14, 2015 at 6:40 pm

Bill,

What does Minnesota have to do with anything? Even then, according to your graph, when Walker took office the unemployment rate was 8.0% in Wisconsin and 6.8% in Minnesota. Today, it’s 4.4% in Wisconsin and 3.7% in Minnesota (the national rate is currently 5.5%). Is this really the point you were trying to make?

26 Bill June 14, 2015 at 8:52 pm

Hey, Zack and Careless…Its not me who is making the comparison of Wisconsin to Minnesota, it is Walker himself who makes these comparisons, and it is Milwaukee newspapers making the comparison as well:

From the Milwaukee Journal Sentinal:

“Wisconsin and Minnesota have always been friendly rivals: Badgers versus Golden Gophers, Packers versus Vikings, brats versus hotdish. But a battleground has recently opened up in a new field: politics. You see, over the last four years, our sister states have gone in completely different directions. Where Wisconsin elected Scott Walker and gave Republicans control of the legislature, Minnesota has gone to the Democrats. And what has played out has been a competition between conservative and center-left policies to address the most difficult issues facing our two states.

It was after the Great Recession that both states faced some pretty daunting problems: high unemployment, huge deficits, and a sluggish economy. At its most dire, Wisconsin’s unemployment rate was 9.2% and the state was facing a $3.6 billion budget deficit. At the same time, Minnesota was dealing with 8.3% unemployment and a $2.6 billion deficit.

To address the state’s budget problems, Walker and the Republican legislature made huge cuts to public education, shifted healthcare and pension costs to state employees, eliminated tax credits for low-wage workers, and cut healthcare. Walker then went on a tax cutting spree, significantly reducing taxes for the wealthy, arguing that it would stimulate the state economy.

The results have been lackluster at best. Wisconsin job growth has ranked at or near the bottom of the Midwest, personal income growth has been last in the Midwest and 44th nationally, and the budget is in shambles.

Walker likes to say thinat the state has a budget surplus, but to make such a claim requires some really irresponsible accounting. It’s the equivalent of showing off $100 in your wallet, claiming you’re flush with cash, but failing to mention the $2000 credit card bill you know is coming at the end of the month. It’s just not realistic.

The truth is we are falling behind. Our transportation budget has a $750 million hole in it, our healthcare budget is $760 million in the red, and that’s all on top of a $1.8 billion general budget deficit. Add it up and Walker has essentially taken a balanced budget and turned it into a deficit nearly as large as the one created by the worst economic disaster since the Great Depression. That makes for a terrible bumper sticker.

Minnesota took a different approach to address their problems. Since the recession, Minnesota’s budget deficit ballooned from $2.6 billion to over $6 billion under a divided government unable to come to an agreement. After the 2012 election, Democrats took control of the legislature, and they set to work balancing the budget, but they did so by focusing on middle-class Minnesotans. They raised taxes on individuals making more than $250,000, they raised corporate taxes to prevent the wealthy from funneling money to themselves through their businesses, and they increased tobacco taxes.

To spur the economy, Minnesota Democrats cut taxes but focused the cuts so that only middle-class Minnesotans could take advantage of the savings. They also increased tax credits for renters, lowered property taxes, and capped local taxes, which regressively affected lower and middle class families. They also raised the minimum wage to $9.50 per hour and made it so it would automatically increase with inflation.

And rather than cutting services, Minnesota Democrats balanced the budget while increasing investments in the state. They increased spending on public education by $485 million and college education by $250 million. They also increased the state’s economic development fund by $89 million, which allowed for more job training, and grew the transportation budget by $59 million. And by accepting the funds from the Affordable Care Act, the state reduced health care spending by $50 million without losing any health care services.

Let’s talk about health care real quick. While Wisconsin rejected the Medicaid expansion and refused to create a health care marketplace under the Affordable Care Act, Minnesota took the expansion and created a marketplace. The result? Minnesota currently has the lowest health insurance rates in the country, the number of uninsured Minnesotans fell 41% cutting the uninsured rate from 8.2% to 4.9%, and the state’s health care budget is sound. On the other hand, Wisconsin’s uninsured rate is double Minnesota’s, it’s health care budget has a deficit of $760 million, and thousands of lower income Wisconsinites lost their health insurance when Walker pushed them off Badgercare. In fact, by rejecting the Medicaid expansion, Wisconsin is paying $150 million more to cover 85,000 fewer Wisconsinites. Looking at these results, it’s becoming more and more obvious that the Walker administration’s rejection of the Affordable Care Act is more about ideology than common sense.

Now, according to the conservative mantra, with Minnesota raising taxes on the wealthy, increasing spending, boosting the minimum wage, and implementing Obamacare, the state should have turned into a black hole of enormous deficits, huge job losses, and rampant unemployment. But that couldn’t be further from the truth. In fact, during Walker’s tenure, Minnesota has blown Wisconsin out of the water when it comes to job growth. From March 2011 to March 2014, Minnesota has created 20,000 more jobs than Wisconsin. And the gap is widening even faster with Minnesota creating 14,000 more jobs than Wisconsin since only July of this year. Minnesota’s unemployment rate, at 4.5%, is actually lower than it was before the recession and is currently a full point lower than Wisconsin’s.

And it’s not only jobs; the numbers also show that Minnesota outpaces Wisconsin when it comes to wages and personal income growth. Just looking at manufacturing jobs, the most recent numbers show Minnesotans making $600 more per month, with wage growth over the past year more than doubling Wisconsin’s. That’s $7200 more per year. Not exactly chump change.” Here is the link: http://www.jsonline.com/blogs/purple-wisconsin/280089862.html

Here is a NYT article on the same unnatural, in your mind, comparison between both states: http://www.nytimes.com/2013/11/24/opinion/sunday/right-vs-left-in-the-midwest.html?_r=0

And here is brother Scott Walker making the same comparison between Minn and Wisconsin, only with his spin, which the Milwaukee Sentinel claimed was false: http://www.politifact.com/wisconsin/statements/2015/apr/29/scott-walker/democrats-had-total-control-state-politics-many-ye/

I love the internet. You can simply Google “Scott Walker comparison of Minnesota to Wisconsin”

I also like how you guys give me the opportunity to respond to the claim of insane cherry picking, particularly when someone else is picking the cherries, and ignoring the comparison they chose.

27 Zack June 14, 2015 at 10:13 pm

Bill, one of your sources was a poorly written oped from a self-described “progressive” political columnist, one was a two year old article from a professor at the University of Minnesota, and one was a quote from Walker at a stop in…Minnesota. None of this changes the fact that Wisconsin has an unemployment rate well below the national average, and a labor force participation rate well above the average. Even your original source shows that the gap between WI and MN existed before Walker even took office.

28 Bill June 14, 2015 at 10:51 pm

Zack, Please stop giving me these opportunities to pound you into the ground.

I just searched “Federal Reserve comparisons of Wisconsin and Minnesota” and this is the FReserve Chart comparisons.

Read it and weep.
http://blogs.mprnews.org/newscut/2015/01/minnesota-economy-beats-wisconsin-7-charts-1-table/

Here is a comparative piece from Econbrowser. http://econbrowser.com/archives/2014/05/minnesota-vs-wisconsin-and-more

Cmon Zack. Challenge me some more. How about you posting some data and analysis challenging any of the facts, whether or not you like the person saying them.

29 Bill June 14, 2015 at 11:05 pm

Zack, You can add another article to the list, this time by an econ prof, comparing both states.

Here’s the link: http://www.minnpost.com/macro-micro-minnesota/2014/08/gop-candidates-say-minnesota-should-be-more-kansas-and-wisconsin-numbe

All those cherry pickers out there just makes you want to cry.

30 Zack June 14, 2015 at 11:35 pm

What are you not understanding here? I never made any argument about Minnesota. No one else in this post made any arguments about Minnesota. The discussion was about Wisconsin. I brought up basic labor statistics about Wisconsin which you have not even attempted to refute. Instead, for some unknown reason, you keep arguing about Minnesota even though it has absolutely nothing to do with the discussion.

Again (for the third time), the unemployment rate in WI is well below the national average, and the labor force participation rate is well above the national average. Keep flailing and trying to change the subject all you want, but this is getting tiring.

31 Bill June 15, 2015 at 5:58 am

Zack, You made an argument that Wis now is doing well relative to US comparing to US national averages. If you invite comparison, you should expect someone to offer a closer comparison. Sorry you did not like the comparison to Minnesota, but apparently its done all the time.

32 Careless June 16, 2015 at 6:10 pm

Bill, unlike you, I’m not a nutty cherry picker, so let’s look at Wisconsin’s neighbors. You’ve got Iowa, 4% unemployment, Illinois 6%, Michigan 5.6% (and, last I checked, highest, aside from Detroit, in the part of the state that borders Wisconsin).

Yeah, Wisconsin is really going down the shitter compared to its neighbors, you’ve got a great point here.

33 chuck martel June 14, 2015 at 10:39 am

Perhaps shoveling money from taxpayers statewide into Madison will pay off for Paul Sogllin and the high tech people that congregate around university campi but it might be a little more difficult for the people from Ashland, St. Croix Falls, Boscobel and Rhinelander to realize the prosperity that their taxes have financed.

34 Cyrus June 14, 2015 at 12:50 pm

Walker’s success in Wisconsin is in no small part due to the weakness of his Democratic challengers. We held a recall election, but then changed our collective mind after we saw the best the Democratic party could front as an alternative.

Sadly for the state Democratic party, in a competitive election one needs a viable candidate, not just a vote of no confidence in the incumbent.

35 chuck martel June 14, 2015 at 8:23 am

“his poll ratings in Wisconsin have fallen through the floor.”

There’s a periodic poll called an election. It’s the only poll that matters since it’s the one where actual votes are counted. The neo-Leninists of the Badger State refuse to accept that their less intelligent brethren might have a different idea about how their bucolic province should operate.

That being said, Walker is a politician like any other and using public funds to construct huge television studios for professional sports teams is a common method of buying the allegiance of construction labor unions and mindless fans. There are also some gaudy athletic facilities on the U of Wisconsin campus.

36 Art Deco June 14, 2015 at 12:41 pm

The professor is referring to a single datapoint. Politicians ratings bounce up and down as a matter of course and Walker’s haven’t shown any secular trend in that time.

http://www.huffingtonpost.com/2015/04/16/scott-walker-approval-pol_n_7080806.html

Wishful thinking is ever amusing.

37 Barkley Rosser June 15, 2015 at 10:47 pm

AD,

Why is it that you post links that do not at all say what you claim they say (and why do you like to lie so much?)?

So, in October Walker had 49% approval versus 47% disapproval, and he won reelection. Since then the poll is clear, he has gone straight down. The latest is a 41% approval versus 56% disapproval.

Bottom line: I am right and you are wrong, hardly for the first time. If that recall election were held today, Scott Walker would be out on his behind hard where he belongs, the hypocritical scumbag.

38 Careless June 16, 2015 at 6:08 pm

So do you do all your work with single data points, professor Rosser? It must be of sterling quality

39 Pensans June 14, 2015 at 8:29 am

Destroying public universities in Wisconsin is just destroying a liberal ideological machine. They wanted to play politics so let them enjoy it.

40 Citizen of a Silly Country June 14, 2015 at 12:00 pm

Exactly. Academics and the media want to be involved in politics and influence policy (and voter perceptions) but don’t want to get hit back. You want to be liberal democrats and hammer conservatives. Fine. But don’t your panties in a twist when conservatives came after you.

You choose to step onto the field.

Indeed, those Mad-town academics should be glad that don’t live in Europe where the media and academics are finding out just how hard Muslim conservatives will hit back. It’s terrifying and abhorrent, but it reminds one that there’s a whole different level of ideological conflict in much of the world – a level that due to immigration may be coming to town near you.

41 Dude June 14, 2015 at 1:03 pm

Those “Mad-town academics” are one of the primary reasons Madison has seen economic growth consistently above the rest of the state. Although I suspect you are referring more to certain academic fields than you are the engineering and biotech PhDs the Madison economy is dependent upon for growth.

“Academics” is such a broad and lazy brush to utilize.

42 Harun June 14, 2015 at 3:48 pm

“the engineering and biotech PhDs the Madison economy is dependent upon for growth.”

I suspect the same people touting PhD’s as “job creators” laughed when the GOP touted helping other job creators.

Then they say “You didn’t build that!” and ignored their incentives as unimportant.

But suddenly when the job creators are part of a large government institution, things change, eh?

43 Dude June 15, 2015 at 10:27 am

I’ve attempted to parse those sentences to glean a point, but have been unsuccessful.

Which types of businesses are net job creators? Some actions taken by the government have been to help entities which have had a terrible track record of truly being “job creators”.

Me, I’m not big on the whole “job creation” focus. Those programs have historically focused on low pay/skill jobs that don’t really help in the long term. We need more $100k+ jobs in the technical fields which then create service industry jobs for the low pay/skill folks. It was the mistakes of the Thompson and Doyle administrations of continuing to focus on manufacturing jobs which lead to Wisconsin falling behind Minnesota.

Walker is doing almost nothing to enable the actually job creators in this state. It’s all about payback. And that might actually create a permanent red majority as folks that are mobile and left leaning choose to live in MN, CO, & Chicago rather than put up with the dumbing down of Wisconsin.

44 RSaunders June 14, 2015 at 9:03 am

If rural Kansans didnt have rights (eg, were Native Americans, slaves), the US has a pretty good history of gathering up and relocating folks, though certainly with quite miserable outcomes.
I wonder: is there an economically effocient way to shut down ALL of those cities in Kansas less than 1000 population (maybe we need to search for the optimal number, maybe it’s 2500 or 5000 or more).
We pay people on proof of KS residency to relocate here (and moving costs), we build all the schools, post offices, etc. we can space it all out (there’s room, we dont have to make it as dense as Tokyo or even as dense as Manhattan KS) to be better. We level and sell off the scrap of the old places (no squatter villages and associated health crime stuff to deal with). Maybe we combine it with estate tax forgiveness: when grampa/granny dies, you can escape all estate taxes and qualify for x bonus in the new city if you sell out to the state now (you can stay here until new city opens)
Is this feasible? If so, how? Could we eBay this? What if the “charter city” folks fantasists were given a contract to do this, would that make it more/less likely to work? To desirable?

45 ET June 14, 2015 at 9:41 am

This is not feasible. As the post notes, the small towns exist because of non-relocatable agricultural jobs.

Which is the same reason massive forced relocations have never worked in the past. You can create new cities. Creating jobs within them is the hard part. And if there were new jobs in those new cities, you wouldn’t have to force people to move to them as shown by the influx of people to windswept North Dakota.

46 chuck martel June 14, 2015 at 10:03 am

The non-relocatable jobs in Kansas, for instance the meat-packing and feed lots in the Liberal area, didn’t exist at all a few years ago. Stockyards in cities like Chicago, South St. Paul, Kansas City and Denver were surrounded by giant meat-packers employing thousands. Those plants are closed now, the stockyards are gone and those activities have been moved closer to the raw materials. That’s the way it goes. Things change. There’ll be more changes in the future.

47 ET June 14, 2015 at 11:15 am

By non-relocatable jobs, I was refer more to the farms themselves. You can move packing facilities, but farm workers can only live a certain distance from farms before commuting to work is unfeasible given the pay. Even if located in the center of the state, the new city for the relocatees would inevitably be too distant from too many farms. Whatever gains you achieve from condensing your populace would be offset by the loss from unworked farms.

Moreover, the new city couldn’t be fed without the old farms. It’s true rural communities have inefficiencies cities don’t, but without those rural cities, you can’t support cities in the first place.

Certainly though, things will continue to change. Likely at increasingly faster rates.

48 carlolspln June 14, 2015 at 5:53 pm

When the Ogallah aquifer dries up, most of KS will become ‘The Empty Quarter’.

Last call @ the Oasis: http://healthylandethic.com/2013/05/26/death-of-the-ogallala-aquifer/

Its a-comin’

49 collateral June 14, 2015 at 11:20 am

The farms are make-work jobs harvesting direct and indirect government subsidies. Those are easy enough to relocate.

50 Cooper June 14, 2015 at 1:10 pm

I assume collateral is joking..

Kansas wheat feeds half the country. You can’t just move the soil. Somebody has to be there to run the farm.

51 ibaien June 14, 2015 at 2:01 pm

it seems to me that huge, flat wheat fields would be incredibly easy to automate. set them up for irrigation and let the glorified roomba harvesters do the work. fly in service techs as needed. i wouldn’t expect these one horse towns to last more than another generation.

52 Regular guy June 14, 2015 at 3:53 pm

Stopping disability payments would shutdown many rural towns, accomplishing the same thing.

Although the percent of people who are actually disabled would be a very unpleasant casualty, whatever percent that is.

53 Dan Lavatan June 14, 2015 at 8:46 pm

The problem isn’t the population size, it is the inefficient provisioning of services. There is no reason not to move to once a week mail service (particularly in rural areas) and we could probably move to once a month mail service with a few reasonable statutory changes applying existing law to email. Schools are a horrible way to educate young people and should move to a mostly online curriculum and perhaps spend a few weeks a year at a state-level residential facility for access to important capital equipment like chemistry labs.

Most of the things done by the Kansas government shouldn’t be done at all or should not be done by the government. The rest can be made much more efficient with reasonable incentives. The Kansas legislature failed to implement these solutions and make prudent spending cuts but other states will.

54 jerry herbel June 14, 2015 at 9:39 am

This is really a problem of a failed model of agriculture. Rural Kansas can no longer support the small, independent producer who originally settled there in small, vibrant communities with diverse economies. National policy subsidizes agribusiness by keeping commodity prices artificially low, encouraging capital-intensive farming methods that disadvantage small producers. But non-viable small producers are not leaving rural areas fast enough, thus introducing diseconomies of scale for government services. State policy is now essentially subsidizing residential patterns that cannot survive independently, reflecting the romantic myth of America as a nation of abundant, cheap food produced by an army of happy farmers and a watchful government making sure markets don’t get too crazy. What would happen to the Kansas state budget if wheat were $20 per bushel and milk $9 per gallon?

55 chuck martel June 14, 2015 at 10:19 am

The failure of “non-viable small producers” is pretty much the history of American agriculture from the very beginning to the present day. One of the problems of federal ag policy is that all farmers are treated the same, regardless of their talent for the business or the general effort they put forth.

“What would happen to the Kansas state budget if wheat were $20 per bushel and milk $9 per gallon?” Eggs are already over $2 a dozen and beef is unaffordable for normal cash customers. What’s your point?

56 Jerry herbel June 15, 2015 at 7:29 pm

And yet, food costs to consumers are ridiculously low by historical standards. Since 1913 the price of eggs has gone up 418% (BLS) while household income has gone up over 4,000%. Presumably, production efficiency is a major factor, but the point is that policies designed to keep food prices low seem to be unnecessary. “Cash customers” priced out of the market for beef can turn to any number of programs for help. Meanwhile, something closer to market equilibrium might set rural communities on a firmer foundation. And this would be easier than trying to measure “effort” in the next farm bill.

57 RJHJR June 14, 2015 at 9:40 am

Well done, Patrick L.

58 dearieme June 14, 2015 at 2:26 pm

Hear, hear. But “We need at least one teacher per grade” is a recipe for extravagance: history shows you don’t.

59 Harun June 14, 2015 at 3:51 pm

Combo classes are not the end of the world.

60 bjssp June 14, 2015 at 11:12 am

Why is he measuring state receipts in nominal dollars? He’s talking about overspending, so isn’t it better to use state spending as a percentage of state GDP?

61 Yancey Ward June 14, 2015 at 12:26 pm

That Patrick L., what a troll! I bet he doesn’t even have a PhD like Barkley does!

62 Regular guy June 14, 2015 at 3:43 pm

I live in KS and this is a decent summary.
I have also observed that Democrats are really self destructing in this state, making these “reforms” possible. I have been told by numerous people (left leaning) that Brownback’s tax reforms have ruined our local schools and they must be rebuilt…. It’s the same teachers and the same administration, with basically the same pay but without tenure and a savings based retirement now.

This type of derangement syndrome carried over into the election where the democrats ran an opponent to Brownback who wouldn’t actually define what his positions would be, other than paying teachers a lot more. No surprise that Brownback won, even being unpopular.

“More money for government workers ” isn’t a valid party platform and has enabled the conservatives to dominate.

63 Harun June 14, 2015 at 3:55 pm

In California, “More money for government workers” has worked very well, electorally at least, and the Democrats dominate.

So, its not a crazy strategy for electoral success.

64 Al June 14, 2015 at 5:45 pm

In Los Angeles, “More money for unionized government workers” was basically the position that losing candidate Wendy Gruel voiced in the 2013 mayoral campaign (which Eric Garcetti won).

Garcetti voiced a somewhat different message. It was not a hardcore, Scott Walker message, but it was not exactly the position of a labor union lap-dog either. It was something more like “No cost reform idea is totally bad. We need to be open minded about reforming government worker benefits because these benefits have become too expensive…”.

65 Doc at the Radar Station June 14, 2015 at 8:35 pm

Perhaps a solution to this urban/rural political dilemma is to eliminate the states as we currently know them, go back to the concept of the *city-state* as a political unit, and let all the small towns/rural land in the country be part of one large federal district, while still maintaining small town and county governments. Let’s say the city-state’s size would be CSA’s of greater than 100,000 people (give or take). So, in this case, the KC metro area would be one political unit:
https://en.wikipedia.org/wiki/Kansas_City_metropolitan_area#Combined_Statistical_Area
… and Wichita would be one political unit:
https://en.wikipedia.org/wiki/Wichita,_KS_Metropolitan_Statistical_Area#Combined_Statistical_Area
… the rural area around them would be “federalized”, and
….there wouldn’t be any more “Kansas” or “Missouri”
Just some thoughts 🙂

66 Cooper June 15, 2015 at 12:39 am

So rural people lose all local political representation, essentially?

67 Doc at the Radar Station June 15, 2015 at 6:44 am

…while still maintaining small town and county governments –

68 Art Deco June 15, 2015 at 9:05 am

I’ll counter you’re suggestion.

The United States is a large and populous country, so a high level of devolution would be desirable. The difficulty you get is that provincial boundaries are constitutionally fixed and cannot be altered except by a cumbersome process which can be subject to ready veto. Most of the boundaries were artifacts of Congress set around the time the province in question was a frontier zone and take no account of abiding settlement patterns because those patterns were not yet fixed. So, you have the following problems:

1. Demographic behemoths (California, Texas, Florida, New York)

2. States demographically dominated by a single metropolitan center (New York, Illinois, New Jersey, Arizona, Nevada, Hawaii, Rhode Island, Delaware).

3. States where income flows are predominantly to one center (New York, Illinois, New Jersey, Arizona, Nevada, Hawaii, Rhode Island, Delaware, Massachusetts, Georgia, Minnesota, Washington State, Michigan).

4. Metropolitan centers chopped up between several states (New York, Philadelphia, Washington, Cincinnati, Chicago, Kansas City, Portland as well as some smaller centers like Providence, Louisville, Augusta (Ga), Rock Island / Moline / Davenport, Omaha, Duluth, Huntington (W Va), Texarkana).

5. States without any second-tier cities. Population and affluence are associated with sophistication of function. Most countries, there is only one financial center, for example. The most sophisticated sort of service that’s generally devolved and requires labor on site is the University hospital complex, something you reliably see only in concentrations exceeding about 600,000. About 15 states have no cities in that size range.

What you might benefit from is setting up a selection of metropolitan centers as free-standing provincial authorities with adjustable boundaries. New York, Philadelphia, Washington, Miami, Dallas, Houston, Chicago, Phoenix, San Francisco / San Jose / Oakland, and Los Angeles would be candidates. Then you might set up a set of interstate compacts with a joint administration responsible for selection of things. New England, the mountain and desert west, and the Deep South would be candidates for that, along with some isolates like West Virginia and Alaska.

69 federalized June 15, 2015 at 11:17 am

Doc, you describe the status quo in the western states. All the land, all the decisions, all the controversy, all the money is/are federal. County government is the right layer for local responsiveness, but can’t function with a census of under 5000 people. And at that, the county money is federal, injected through the state or a couple dozen agencies. More than half the jobs are government, mostly the schools.

Art Deco describes the economy and politics of Arizona. It’s more or less the same in Nevada, Utah, Colorado, New Mexico. The state boundaries matter to the highway department, but the edges don’t matter; the money gets spent at the core.

70 Doc at the Radar Station June 15, 2015 at 8:08 pm

Art Deco and federalized, I don’t dispute your insights in any way. I was just thinking if I lived in let’s say Sedan, KS: http://www.city-data.com/city/Sedan-Kansas.html
and something like my idea was implemented, then the political structure would look something like this: Federal > Chautauqua County > City of Sedan instead of
Federal > State of Kansas > Chautauqua County > City of Sedan
The removed layer “devolves” power to some degree already. Perhaps there isn’t a senate any longer, just a larger House of Reps. Perhaps to balance power between rural / city-state we can elect at least one representative for Chautauqua County even though the county population is tiny. Perhaps there is a revenue sharing agreement at the federal level with the rural areas that is balanced and fair that the city states all pay into in aggregate. The system we have now is getting a little ancient and dysfunctional IMO.

71 Zach June 19, 2015 at 1:25 am

This analysis is a bit harsh on Kansas. I’m from Kansas City and live in Berkeley, and KC is visibly more prosperous than the Bay Area. Cash incomes are high in the Bay Area, but if you put San Francisco next to Kansas City, nobody would go there.

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