The Minnesotan left-wing economic miracle continues, while neighboring Republican states slowly collapse

Last fall, I wrote about the strange case of Minnesota governor Mark Dayton, a left-wing billionaire heir to the Target fortune who came to power and reversed his Republican predecessors' Reagonomic idiocy, instead raising taxes on rich people, increasing public spending, and creating shared prosperity for the people of Minnesota.

The results of the experiment continue to surprise and delight: unemployment is down to 3.7%, private sector earnings are up 1.5% to $891/week, 47,000 new jobs were added to the economy in the past year, and the state just declared a $1.8B budget surplus, even as Forbes ranked it 9th in its table of best states for business.

But this is all the more remarkable when compared the fate of the Republican-run, austerity-fuelled neighboring states, where a succession of GOP governors and state houses have slashed taxes on business and the wealthy, eliminated social spending, and attacked trade unionism. They are running deficits, the people there are earning less than their Minnesotan cousins, they're adding fewer (and worse) jobs, and posting less growth.

Economics is bedeviled by confounding factors: comparing the outcome of the same intervention in two states will always be complicated by the other differences in between them. But as controlled experiments go, you could hardly ask for a better one than the outcomes in Kansas and Winsconsin -- the homes of the "American carnage" that Trump weaponized in 2016 -- and the ones in Minnesota over the same period. If that's not enough, we can just compare Minnesota under Dayton to the former Republican governor Tim Pawlenty, who slashed services, cut taxes, and drove the Minnesota economy off a cliff, from whose depths Dayton has now comprehensively rescued it.

Average weekly private-sector earnings: Kansas, $784 (+2.3 percent over the past year); Wisconsin, $795 (+0.1 percent); Minnesota, $891 (+1.5 percent); Illinois, $893 (+1.6 percent); national average growth, 2.3 percent. Annual GDP growth: Kansas, 1.9 percent; Wisconsin, 1.7 percent; Minnesota, 2.8 percent; Illinois, 0.9 percent; national average, 1.8 percent. In the past year, Minnesota has added 47,000 private-sector jobs, leading Kansas, Wisconsin and Illinois in per capita growth in that metric. Further, in the most recent Forbes ranking of the best states for business Minnesota was ninth, Kanas 25th, Wisconsin 32nd and Illinois 40th. And Dayton, 68, whose party lost its majority in the state House even as he was cruising to re-election in 2014, is claiming a surplus of $1.8 billion for the next two-year budget. Campaigns amid the ashes of unrest Campaigns amid the ashes of unrest In contrast, PolitiFact reports that Wisconsin is facing a $2.2 billion shortfall in its upcoming two-year budget. The Kansas City Star reports that Kansas appears to be $800 million short for fiscal year 2016. And, of course, Illinois lawmakers are trying to close a projected budget gap of some $6 billion for the year beginning July 1.

'Most liberal governor' rights ship in Minnesota [Eric Zorn/Chicago Tribune]

(via Naked Capitalism)

Notable Replies

  1. But how am I supposed to enjoy prosperity under the grim probability that other people, including ones I don't approve of, might also be enjoying prosperity?

  2. Exactly! Any economic success under Republican leadership is the result of careful planning, even if that success happened under their predecessor. Any bad news under Republican leadership is actually good news, and it never happened, and it's Obama's fault.

    However, transferring wealth from the rich to the poor has always resulted in economic stimulus, for rather obvious reasons. No state or nation has ever cut their way to prosperity.

  3. So you are saying that the neighbouring Republican states made so many errors that reflation was negated? I can believe that.

  4. BULLSHIT

    And: "socialism"?! I'd laugh if the message that you're dogwhistling weren't so insidious.

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