John Margolis is VTDigger’s political analyst.
It’s October of an election year, and the hills are alive with the sounds of clashing statistics.
Pay them no mind.
“Vermonters enjoy one of the lowest unemployment rates in the country,” Gov. Peter Shumlin intones at almost every campaign stop.
But, says Republican opponent Scott Milne, the latest Census Bureau data indicate that Vermont’s median household income is down while the poverty rate is up, “another clear indication that … things are not getting better in Vermont, they are getting worse.”
Maybe worse, maybe better, maybe neither. But for what it’s worth, say this for the candidates: their numbers are accurate.
Alas, they are not worth much.
Oh, it’s good to have the third lowest unemployment rate in the country. (Or is it the fifth? Four states had rates lower than Vermont’s 4.1 percent last month, but three of them – Nebraska, South Dakota, and Utah – were tied at 3.6 percent. North Dakota’s 2.8 percent was lowest.)
Still, fifth place is pretty good. But as the whole country has been learning for the last few years, a falling unemployment rate does not equal a prosperous economy. The recovery that began in 2009 has been slow and stingy. The unemployment rate has inched down. So have wages.
And while those Census Bureau figures that Milne cited are true enough, they ignore the reality that Vermont’s median household income remains higher and its poverty rate substantially lower than most other states.
Besides, these tiny year-to-year fluctuations mean almost nothing. Vermont’s 12.3 percent poverty rate rose half a percent, about as much as the increase in 12 other states, including – would you believe? – low-unemployment North Dakota (up 0.7 percent).
Do you suppose North Dakota’s state government – as Republican as Vermont’s is Democratic – is doing something wrong?
No, and neither is Vermont’s, or at least nothing that makes enough difference to notice, or to verify.
Here’s the little secret that state office-holders and office-seekers would rather nobody know, lest they seem only as important as they really are, which is less important than they would like to seem.
That dollar bill you have in your wallet, the one that buys you 100 cents’ worth of goods or services in Burlington, Bennington or Brattleboro, buys you the same 100 cents’ worth in Buffalo, Birmingham and Boise. The economy is national.
The secret is that unless they go to extremes (which a few do; see below) whatever governors, state legislators and their minions do – raising or lowering taxes, imposing or getting rid of regulations, wining and dining business leaders – has little or no impact on a state’s economy.
That’s because – here comes another secret—there ain’t no state economy.
That dollar bill you have in your wallet, the one that buys you 100 cents’ worth of goods or services in Burlington, Bennington or Brattleboro, buys you the same 100 cents’ worth in Buffalo, Birmingham and Boise. The economy is national. When it comes to the economy, what the president does matters. What the Congress does (or doesn’t do) matters. What the Federal Reserve Board does perhaps matters even more.
Governors do a whole lot of really important stuff. They appoint judges. They help determine how a state educates its kids, cleans up (or doesn’t) its lakes and rivers, maintains (or doesn’t) its roads and bridges, enforces its laws, and more.
But when it comes to what the folks in academia call the macroeconomic impact of state policy … well, there just isn’t much.
Vermont has its economic problems, for which there are two explanations. The first is that Vermont is part of the United States of America, where, even in the fifth year of a recovery, the economy grows slowly, the number of jobs grows more slowly, the number of good jobs slower yet, the number of good jobs for what used to be called working-class people (no college degree) has not grown at all, and their incomes have actually shrunk.
The second reason is that Vermont is more rural than most states. The economies of rural areas are stagnating – or worse – all over the country, with the Bureau of Labor Statistics recently reporting that job growth in rural counties was roughly half the growth in metropolitan counties over the past year.
These are the great winds buffeting America’s economy. Whatever happens in Montpelier (or Albany, Sacramento, Austin, etc.) is like a tiny straw lost in those winds.
Besides, even if there is some economic impact to state policy, it is not only too tiny to notice – or at the very least to confirm – but there is no way to know which policies help and which hurt.
Cut taxes and loosen regulations to “unleash” business, say some politicians.
Sounds plausible. And it works.
Except when it doesn’t, which is at least as often as it does. The nation’s economy grew at a healthier clip after taxes rose in the 1990s than after they were cut in the 1980s. Wisconsin cut its taxes a few years ago. Neighboring Minnesota did not. Minnesota’s economy has been growing faster.
Then there is Kansas, where the governor and the Legislature went to extremes. In 2012, Gov. Sam Brownback pushed through huge tax cuts, claiming that a booming economy would follow. “Our place, Kansas, will show the path, the difficult path, for America to go in these troubled times,” he said.
That path has been just short of disastrous. Kansas’ job growth is well below the national average. State finances have been so depleted that schools have had to slash spending. Republican Brownback could be beaten in one of the most reliably Republican states in the country. As Kansas has shown – again – a state which cuts taxes can be certain of only one result: less money in its treasury.
It’s tempting for politicians and polemicists to cherry-pick data to prove a point. Thus, Vermont Republicans point to statistics showing that Vermont’s labor force (the employed plus those actively looking for work) has fallen since Shumlin took office.
It has. So has almost every other state’s. Vermont’s percentage of working-age population in the labor force is higher than the national average, not lower.
As to job numbers, in 29 states, fewer people are working now than were working during the depths of the recession in 2008 and 2009. Vermont is not one of those states.
By and large, Vermont’s economy under Peter Shumlin has done … OK. A little better than most states by most measurements, not as well as others. And there is no way to credit state government for the upside of that assessment, nor to blame it for the downside.
Could a tweak in state policy here and there have made things better?
Sure. Or made things worse. And it’s impossible to say with any certainty which tweak would have done what.
The wise voter will examine the Shumlin and Milne policy statements of health care and education, energy and the environment, transportation and law enforcement. That voter will not expect either of them – unless he goes to extremes – to make Vermont richer or poorer. Governors can’t do that.
