What Happens When GOP Economic Fairy Tales are Applied to the Real World

A piece in the New York Times this weekend compared the economic fates of Wisconsin and Minnesota, two states that were in roughly similar economic condition in 2012. Minnesota elected a Democratic government, while Wisconsin chose Republicans. And it was with this choice that the two neighboring states' fortunes began to diverge.


Three years into Mr. Walker’s term, Wisconsin lags behind Minnesota in job creation and economic growth. As a candidate, Mr. Walker promised to produce 250,000 private-sector jobs in his first term, but a year before the next election that number is less than 90,000. Wisconsin ranks 34th for job growth. Mr. Walker’s defenders blame the higher spending and taxes of his Democratic predecessor for these disappointments, but according to Forbes’s annual list of best states for business, Wisconsin continues to rank in the bottom half.

Along with California, Minnesota is the fifth fastest growing state economy, with private-sector job growth exceeding pre-recession levels. Forbes rates Minnesota as the eighth best state for business. Republicans deserve some of the credit, particularly for their commitment to education reform. They also argue that Minnesota’s new growth stems from the low taxes and reduced spending under Mr. Dayton’s Republican predecessor, Tim Pawlenty. But Minnesota’s job growth was subpar during Mr. Pawlenty’s eight-year tenure and recovered only under Mr. Dayton.


Trust me, it sucks when your state is used as an example of economic failure. While Walker complains that previous higher taxes and spending are dragging the state down (a tough argument to make -- the mechanics are so bad he doesn't even bother to explain them), Minnesota has raised taxes and spending to great success. And that spending has been distinctly Keynesian. NYT reports that the "lion’s share of Minnesota’s new tax revenue was sunk into human capital." Wisconsin, of course, has been anti-Keynesian, reaching into workers' pockets to take pay and benefits away.

And that's where conservative economic policies fail. One way of looking at Republican economic theories is to say that any government involvement in the economy is bad. Why? Well, I actually haven't heard a good explanation of that. It just is. It seems to be less of a logical argument and more of a moral one -- i.e., progressive taxation is unfair, as is providing some sort of even minimal safety net. Where they used to argue that taxation was metaphorical theft, they now argue that it's literal theft. Taxation and social programs have been lifted out of the "good or bad for society" argument, because conservative can't win that argument. History proves again and again that progressive taxation and social spending are to the common good. They "promote general the welfare," to use a phrase from the preamble -- i.e., the mission statement --  of the Constitution.

If it's "unfair" to tax the wealthy and corporations at a higher rate, in order to at least try to guarantee a bearable level of existence for those in need, then cry me a freakin' river, moneybags. If the right were really as objective as they claim to be, they'd argue that fair and unfair are irrelevant. What matters is "works" or "doesn't work."

Of course, if they really were that objective, conservative economics would've died the first time Reagan raised taxes.

But Reaganomics lumbers, zombie-like, on -- both dead and brainless. And it's because the argument isn't so much a recipe for a healthy economy -- or even for basic fairness -- but a rationalization for allowing a small number of very fortunate people to transfer wealth from the bottom to the top. In Wisconsin, that means cutting benefits for workers and the poor to pay for new goodies for the wealthy. What's that gotten us? An economy in a downward spiral, as workers no longer have any money to spend and demand drops. And of course, cutting spending while you've made certain consumer demand will plummet is like drilling holes in an already sinking boat; you've already poked a hole in the hull by taking money away from workers and now you're further reducing demand by cutting government spending.

In short, what Walker has done is a recipe for destroying an economy and -- lo and behold -- it's working. We need to be more like those crazy lefties across the Mississippi, who care less about what whiny one-percenters think is "unfair" and more about what works for everybody

-Wisco.

[photo by Nick Ares]