Minnesota Wins!

If you want a good barometer on how what sort of government policies work the best, compare the states of Minnesota and Wisconsin. That's what this recent piece in the New York Times did and the results speak for themselves. In 2010, voters in each state chose a specific path to improve their economic conditions. Minnesotans chose Democrats to run their state and Wisconsin chose Republicans. Minnesota's unemployment rate was at 6.7 percent and Wisconsin's was at 7.1 percent.

As the article notes, a month after Mr. Walker’s inauguration in January 2011, he catapulted himself to the front ranks of national conservative leaders with attacks on the collective bargaining rights of Civil Service unions and sharp reductions in taxes and spending. Once Mr. Dayton teamed up with a Democratic Legislature in 2012, Minnesota adopted some of the most progressive policies in the country.Minnesota raised taxes by $2.1 billion, the largest increase in recent state history. Democrats introduced the fourth highest income tax bracket in the country and targeted the top 1 percent of earners to pay 62 percent of the new taxes, according to the Department of Revenue.

The result?

Today, Minnesota is essentially at full employment at 4.8 percent while Wisconsin's unemployment rate stands at 6.5 percent. Wisconsin lags behind Minnesota in job creation and economic growth. Wisconsin ranks 34th for job growth. 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.

So, why is it working in Minnesota?

Higher taxes and economic growth in Minnesota have attracted a surprisingly broad coalition. Businesses complain about taxes, but many cheered Mr. Dayton’s investments in the Mayo Clinic, the new Vikings stadium, the Mall of America and 3M headquarters. The lion’s share of Minnesota’s new tax revenue was sunk into human capital. While the state’s Constitution required that half of the new revenue balance the budget in 2013, Mr. Dayton invested 71 percent of the remaining funds in K-12 schools and higher education as well as a pair of firsts: all-day kindergarten and wider access to early childhood education. Minnesota was one of the few states that raised education spending under the cloud of the Great Recession.

Why is not working in Wisconsin?

Mr. Walker’s strategy limited Wisconsin’s ability to invest in infrastructure that would have catalyzed private-sector expansion, and he cut state funding of K-12 schools by more than 15 percent. Per student, this was the seventh sharpest decline in the country.

I'm pretty optimistic about the state in which I grew up, however. The numbers speak for themselves and, if the Democrats put up a good candidate, Walker will be gone and left to pursue his dreams of 2016.