The American Legislative Exchange Council (ALEC), working with Arthur Laffer and Stephen Moore, has updated its “state economic competitiveness index.” The authors claim that the index analyzes how well state lawmakers are using fifteen “policy levers … that can make their state a desirable location” for individuals and businesses.
The study contains numerous absurdities and arbitrary features that could be picked apart in a longer article (for example: levying an estate tax, regardless of its size, is for some reason assumed to be exactly three times more damaging than failing to require a supermajority vote in the legislature in order to raise taxes).
But the more important problem is that the ALEC study makes almost no effort to evaluate the quality of public services provided within a state’s borders. Virtually everyone agrees that good schools, adequate police protection, and an efficient transportation network are central to what makes a place a “desirable location” to live and work. But none of these factors can boost a state’s “competiveness” score under the ALEC index.
In fact, it’s even worse than that. Since more than half of the “levers” relate to keeping taxes low, adequately funding public services can actually hurt a state’s “competitiveness.” And since states also lose points for every public employee living within their borders, most new laws designed to reduce class sizes, increase police patrols, or hire additional road construction workers will also hurt a state’s desirability and competitiveness, according to ALEC.
Unfortunately, the problems with this report aren’t just confined to its data and methodology. As with previous editions of this study, a significant portion of its text was simply copied-and-pasted from the Wall Street Journal’s editorial page (one of the authors is on the Journal’s editorial board). Most notable is the section on Oregon’s “missing” millionaires – a virtual carbon copy of a December 2010 editorial that ITEP and others thoroughly debunked on more than one occasion.
Ultimately, the authors have done little more than count the number of conservative priorities achieved in each state, and tack on some boilerplate anti-tax rhetoric that we’ve all seen before. "Rich States Poor States" is about as serious as the TV miniseries that inspired its name.