About Those Rankings…

A reader recently sent me a link to a ranking of U.S. states on the basis of how “business-friendly” they are. The more welcoming to business, the more likely to create jobs and experience economic growth–or so the organization doing the ranking asserted.

The organization doing this particular ranking was ALEC, the American Legislative Exchange Council. ALEC is dominated by corporate and libertarian interests, so it isn’t surprising that its definition of “business friendly” is heavily weighted toward low tax rates and corporate subsidies.

If you agree with ALEC’s priorities, I suppose having one’s state receive high marks is cause for celebration. If you don’t–and I don’t–their conclusions are pretty worthless, except, perhaps, as a cautionary tale.

City and state rankings are issued by a variety of organizations and publications; they’re the sorts of “report cards” that Mayors and Governors often brag about–conveniently overlooking the fact that virtually all of them paint a picture of how well their jurisdictions meet the sponsors’ priorities rather than providing accurate assessments of the comparative merits of the “rankees.”

I would call my critique of city and state rankings their “dirty little secret,” except it isn’t very secret: all of the various rankings–the ones I like and the ones I don’t– are inescapably a function of the values of the entity doing the ranking. (Take a look at those “best places to retire” lists. Their top choices tend to be places I’d hate, because the elements that make a community livable to me are clearly not among the criteria they’ve employed.)

ALEC  finds Indiana moderately “business friendly” because our taxes are low, and it prioritizes low taxes over elements of state environments that many businesses find more important: an educated workforce, and such quality of life measures as good schools, convenient public transportation, affordable housing and well-maintained infrastructure. The presence of those elements, of course, depends upon the adequacy of the public dollars available to support them–and we raise those public dollars through taxation.

You see the problem.

It isn’t a mystery why states like Indiana lack the first-rate public schools needed to produce that coveted educated workforce, not to mention the well-maintained public amenities that factor into a high quality of life. Like ALEC, we’ve prioritized low taxes over the maintenance of our social and physical environment.

There is a fairly substantial body of business research that finds the availability of an educated workforce and those “quality of life” measures that attract and keep talented workers much more important to businesses seeking to relocate than the level of taxation. Not that taxes aren’t an important part of the mix, but they are rarely dispositive.

If you want confirmation of that research, you need only take a look at the qualities that Amazon has listed as important as it searches for a city in which to locate its second headquarters. Or talk to the people in your city or state who are charged with economic development.

A genuinely business-friendly environment is one in which people want to live and work. Unfortunately, that isn’t something that can be produced on the cheap.

 

 

 

21 thoughts on “About Those Rankings…

  1. Hope you push this a bit further. There must be data out there which show how well the states highly rated by ALEC stack up against those that don’t on dimensions such as job creation, employment rates, salary levels, etc. I presume that Kansas probably got a pretty high rating from ALEC? We all know how well they have been doing

  2. I think we need to reset our vocabulary. When people use the term “business friendly,” they generally mean “management friendly.” To be truly business friendly would require being worker friendly as well.

  3. What’s not a coincidence is those states ranked high by ALEC, and other pro-capitalism entities are also ranked for pollution. Indiana is always in the Top Five Dirtiest States.

    CEO’s love Indiana because of low wages and virtually no labor laws.

    Why do you think rural Indiana is now a mecca for CAFOs? Where do you think they spray all the manure and urine laden with antibiotics?

    I’ve written countless articles about the connections between Indiana’s focus on “maximizing shareholder wealth” while ignoring “social responsibility.” One of the heads of Ball State’s Business Department salivates over talking about the subversive ways Disney built its empire and how it does business.

    What’s also interesting is this professor lives in a small mansion in Hancock County while many of his ilk commute from Hamilton County. Both of those counties consistently rank the highest in quality of life.

    Starting to get the picture of where this is heading…

    Those who espouse the reality of the 99% don’t live among the 99%. You could almost call the donut ring around Indy – “CEOville”.

    Both Seuss and Orwell would have lots and lots of fun today.

  4. “ALEC finds Indiana moderately “business friendly” because our taxes are low,…”

    Is ALEC aware of those many pesky little Indiana taxes added to paychecks, utilities, cable, restaurant tax (to be temporary downtown during the Pan Am Games over 25 years ago), gas (the not long ago increase slated for road repair only), vehicle registration (the new Transportation Infrastructure Improvement Act), et al, which add up to an overall reason Indiana has been known for so many decades as “The Land of Taxes”. Corporations moving to this city with that low tax incentive should have this information to pass along to their CEOs and employees moving here for the benefit of jobs. The much aligned property tax cap brought about the result I expected of higher assessment on the value of property which of course increased the AMOUNT of property taxes due (which was their goal), overriding the decried benefit of that tax cap. (Mitch Daniels’ work along with that of the unnecessary and as yet unending construction of I-69.) My property assessment was just increased for the 2nd time (unannounced), resulting in an almost 50% increase in my property taxes.

    Aha! The light dawns! ALEC was only interested in and reporting on tax abatements and low taxes on businesses…my bad. Please ignore my comments above.

  5. IMHO the most reliable source of information on how Indiana is doing has, for many years, been Morton Marcus. It’s just too bad that his reports on the state of your state have been consistently ignored by the governors and legislators of both parties. If we want good government, we should insist on fact based government.

  6. Peggy, the problem with governors and legislators ignoring the facts is that facts don’t donate to their political careers, while business interests are capable of making large donations.

  7. Nothing coming from ALEC should be considered valid for labor at any level. That includes the legislation they write for corrupt lawmakers who are so eager to take Koch money to fund their elections.

    Capitalism is based on paying no taxes, and, where they can, no labor costs. Slavery is the ultimate labor environment for capitalism. Without regulations and laws that thwart the runaway greed machine, society ends up as Lords v. Serfs and democracy is down the drain.

  8. Here in South Carolina we know little about being business friendly and worker hostile. Our politicians and Chamber of Commerce go around the world marketing the idea that if you relocate to our state you need never fear a union, will enjoy some of the lowest pay rates in the country, and will receive generous tax benefits and other incentives (Boeing’s total incentive package = $900 million+; Volvo got $70 million toward cost of building a new factory; Michelin got more than $73 million in taxpayer-backed incentives; BMW was awarded more than $80 million by generous lawmakers).

    For a state that ranks near the bottom in virtually every category that makes a place livable, just getting those companies to agree to come here is no small achievement. But after they build their factories, the state shows them who is boss. Michelin and other companies threatened to depart the Palmetto State because the roads were in such disrepair. Then Governor Haley told them, in effect, to get lost and few significant road improvements have been made. Having invested hundreds of millions in their factories, those companies are still here and have stopped complaining, at least publicly.

    For a Bible-thumping, fried-food-loving, mired-in-poverty, gun-toting small state with a perennially corrupt legislature but good football, time marches on. Except that it stands still for kids needing a good education (or even a textbook if your school is located in the Corridor of Shame), spouses hoping for a little less abuse, drivers tired of navigating potholes and laborers who wish they didn’t have to work two or three jobs to keep food on the table. Yes, we are deeply ashamed of ourselves and our fiscal choices, but our good old boys are living better than ever. And in our state, that’s all that matters to those with their hands on the levers of power.

    If you are relocating a plant and need rock-bottom wages and a union-free workplace, be sure to give us a call. We have got such a deal for you!

  9. Terry,

    Who keeps electing those “good ol’ boys” in South Carolina? Does the “Corridor of Shame” vote at all? Are there any Get Out the Vote organizations? Who are the alternative candidates for office at all levels?

    Ask some of those questions somehow without getting shot, and see what happens. I am sorry that South Carolina is in such dire straits, but it is far from being alone. Texas touts the same economic memes to corporations, and they lead the nation in percent of population living in poverty, are near the bottom in education achievement and continue to elect Republicans anyway.

    Oh. Wait. Maybe THAT is the problem.

  10. documentries
    hiest, who stole the American dream,
    mike moores, capitalism,a love affair.
    all about alec,and who and where it started

  11. How the system works:

    Mick Mulvaney, the interim director of the Consumer Financial Protection Bureau, told banking industry executives on Tuesday that they should press lawmakers hard to pursue their agenda, and revealed that, as a congressman, he would meet only with lobbyists if they had contributed to his campaign. ‘Open and Flagrant Corruption’: Mulvaney Admits to Bankers He Only Met With Lobbyists Who Gave Him Cash.

    “We had a hierarchy in my office in Congress,” Mr. Mulvaney, a former Republican lawmaker from South Carolina, told 1,300 bankers and lending industry officials at an American Bankers Association conference in Washington. “If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”

    Mulvaney’s comment came as he was advising bankers on how to most effectively pursue their deregulatory agenda with Congress.

    Influencing legislators, Mulvaney explained to the audience of ultra-wealthy financiers, is one of the “fundamental underpinnings of our representative democracy. And you have to continue to do it.”

    Robert Reich, former Secretary of Labor and professor at University of California, Berkeley, offered a simple translation of Mulvaney’s advice on how to sway lawmakers: “Bribe them with even more money.” https://www.commondreams.org/news/2018/04/25/open-and-flagrant-corruption-mulvaney-admits-bankers-he-only-met-lobbyists-who-gave
    ========================================================================
    We know simply using logic that campaign contributions equal influence, or as we say in Chicago – Clout. Most politicians try to deny this linkage, but if it walks like duck and quacks like a duck, it must be a duck.

    Mulvaney has simply exposed to the bright light the quid pro quo – a favor or advantage granted or expected in return for something.

    An open revelation like this should startling. The McMega-Media should be all over it 24/7. However, the McMega-Media is far more interested in Stormy Daniels and Russians. Any Russian influence pales in comparison to the way our political system works.

  12. ALEC’s view of low taxes on business as an asset ignores the costs of regressive taxes paid by the proles to keep a modicum of civilization in the state’s communities, and on top of such as sales taxes (a flat tax) and increasing fees and other such costs Hoosiers are also called upon to pay taxes to bring business into such communities so that robots (and not proles) are put to work. (See Carrier.) Brilliant investment!

    So long as we have wage inequality (my chief beef) it doesn’t really make a lot of difference as to the number of jobs brought to town; many of those in such “jobs” still require public outlays such as food stamps by taxpayers etc., and such increases in human and automated labor at substandard wages in net terms do not materially add to aggregate demand (the sole arbiter of economic growth) and serve mainly to (in plain sight) perpetuate serfdom. So full employment is the answer? Hardly. We had full employment in the antebellum South prior to 1865, I note, and someone tell me how that “peculiar institution” (aka slavery) worked out. We seem to know how to create wealth but have big problems in coming up with its fair and equitable distribution after its creation – and there’s the rub – the creation of a niche ALEC has skillfully exploited.

    Median wages have hardly moved since Reagan while the Dow has ballooned to astronomical heights, which is all we need to know in assessing the chronic and ongoing cancer of wage inequality to our economic system as currently practiced. So what happens to economic growth when aggregate demand is stagnant irrespective of the Dow? Nothing. Instead of expanding the economic pie (as we did following WW II up to Reagan marked by wages which rose in tandem with the Dow to bring us a bustling middle class), Republicans decided to hand over the lion’s share of the economy’s income and wealth to Wall Street, hence such perversions as buybacks, carried interest, hedge funds et al.

    What to do? Do as others have; legislate a living wage (which will stimulate demand) while shifting use of tax money to education, infrastructure and other such areas designed for the common good. Can’t be done? Look around. Germany and Sweden have a bustling middle class in this automated age along with trade surpluses while we suffer by far the biggest trade deficits and the biggest poverty rate in the Western World. The difference is in policy and policy as of late is up to the highest bidder. We the People need to defang such as ALEC and their libertarian financiers and put an end to such “policies” this fall lest we all go down with the ship, so let’s do it in November!

  13. The plutocrats and oligarchs here in the USA learned a lesson back in 1930’s. A real coup was being planned to overthrow FDR. They selected a man who had served the American Imperialist cause in a number of overseas expeditions to lead the coup in the streets. That man was a retired Marine Corp General and two time Medal of Honor winner Smeldley Butler.

    General Butler at some point realized – “I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism.

    “Like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical with everyone in the military service.”
    =======================================================================
    General Butler blew the whistle on them in public. With the planned coup exposed, the McMega Media of it’s day circled the wagons around the plutocrats and attacked Butler.

    The plutocrats and oligarchs no longer have to plan and execute an actual coup, it can be done through campaign contributions from front organizations who write the legislation.

  14. Monotonous,

    “General Butler blew the whistle on them in public. With the planned coup exposed, the McMega Media of it’s day circled the wagons around the plutocrats and attacked Butler.”

    Let’s don’t forgot he STOPPED the Fascist coup. That was his mission and he succeeded. We haven’t been so fortunate this time around. Do we even have someone available like General Smedley Butler who was both a two time recipient of the Congressional Medal of honor as well as being a QUAKER [Society of Friends]?

  15. It’s tempting to think everyone not a liberal is either crooked or dumb, and some certainly are, but so are some liberals. The difference between liberals and others tends to be priorities. For most of us the goal once we are married with children is a good job. If we’re lucky enough to get one that pays enough, is reliable, and seems well suited to who we are that slips off the priority list and gets replaced by other things like good health and education for all of the family and good friends. But there are always those for whom the job thing never leaves top priority. To them there might not be anything more compelling from government than attracting more job suppliers and low taxes. Perhaps some of them also would fall for very general measures or special interest measures of how well their state is is doing addressing their number one priority.

    So for those people government looks different than it does to liberals who can afford to consider broader, lengthier goals.

    To move up Maslow’s Hierarchy requires many things and some come from what each of us are born into and with and some of which respond to hard work and responsible living and some of which are just good fortune. But the trip up or not to self actualization happens to a relative few and all others remain distributed among the base of the pyramid. The government must accept responsibility for all of them.

    So for some Indiana might be a well run state, others of us wouldn’t pick there if we had any other choice. Lots of thers think California is a well run state and an ideal place to live. Same with Chicago or Florida or Tupulo Mississipi. I just spent a vacation meeting many from NOLA, (New Orleans) who can’t believe people choose to live elsewhere.

    Back in the day when things worked better one of the reasons was because in the age of immigrants diversity was merely reality. We largely accepted other flavors like we do in ice cream dispensaries, not my first choice but maybe yours. So what?

    Now we’ve been trained (by entertainment?) (by Capitalism?) to compete at everything. Everyone’s either a loser or a winner makes everyone losers.

  16. Lt. Governor Crouch posted the ranking from the ALEC pollsters on FB. I was skeptical so went to research who was providing the data. The ALEC affiliation was readily apparent.
    The reason I was skeptical was because the poll findings were contrary to what I could see for myself in Indianapolis.

  17. take notice
    common dreams .org,, Jake Johnson,staff writer…
    mulvaney open and flagrant corruption,admits at bankers assoc,conf
    4/25/18 story..
    and ya wonder just how blantant he and congress is…..

  18. As to Terry’s comment: last year my family and I went to Myrtle Beach. What a change from the last time we were there! All along the beachfront are blue beach chairs with matching blue umbrellas. You can’t get close to the water because they hog all the dry sand space above the high tide line, so you have to pitch your umbrella or beach towel behind them. They block your view of the ocean. Privateers charge $35 per day to sit on the chairs, enforced by little harpies driving dune buggies. If you accidentally sit on one of them because there’s no sign indicating you have to pay for the privilege, they’ll be right there to shoo you away or demand $35. It costs you if you want to go to the bathroom on one of the piers, because now they charge just to go on the pier. It used to be free, so your bladder must be able to hold you until you can get back to your room. There are multiple privateers who rent golf carts and scooters. All evening it was a cacophony of honking horns, both on the street and on the walk along the beach. No rules preventing or restricting this. Anything to help big business make money. Anything to fleece people who can’t fight back. Well, we’ve had enough and we’re never going back. The charm is officially gone.

  19. It’s evident in Indpls. that it is very business friendly by construction companies taking over half a major street downtown for their equipment. I’ve often had to plans on hold due to delivery trucks stopping in middle of streets & blocking traffic. Why businesses get the sense that their enterprise takes precedent over others activities is infuriating! We need city officials that won’t give away citizens rights while their trying to attract more business!

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