I for one am very happy to live in Connecticut. Although I believe some changes are needed and things could be better (for another article perhaps), I don’t accept the recent attack on our state by the conservative Cato Institute’s Jim Powell, who penned this essay for Forbes Magazine.
All this article does is take cheap shots to burnish an ideological viewpoint not held by most of Connecticut’s residents. Yet, many state politicians are pointing to this article as evidence that their low-tax, more business-friendly approach has been right all along.
So we can’t simply dismiss Powell’s arguments. We need to go through them, identify the assumptions he makes and the context that he provides, in order to understand his goal and that of his in-state boosters.
Powell’s argument starts with a classic trope about Connecticut: Connecticut is a rich state. Look at how much money there is in Fairfield County. If people are leaving such a rich state, something must be dreadfully wrong.
Fairfield County is obviously a valuable asset for Connecticut, and it helps to balance the state’s books. Yet Powell is making a ludicrous illogical leap when he suggests that because Westport is so nice, it doesn’t make sense that people are choosing not to live in Waterbury or Manchester.
Connecticut’s “attractions,” i.e. those in Fairfield County and other tourist areas , won’t lead people to stay in other parts of the state. Nor does having a lot of financial services people with a New York focus help to solve the state’s structural jobs problem. Those financial sector jobs won’t be coming to Norwich anytime soon.
So Powell’s question — why doesn’t Connecticut look like Greenwich? — has an obvious answer. The rest of the state isn’t Greenwich.
Powell then declares that Connecticut’s competition for business is Texas and Florida . . . Those states are winning. They have low taxes. Ergo, we should have low taxes.
Yet Powell already stacked the deck in selecting his competitor states. I would argue that in competing for what he describes as “self-appointed investors and entrepreneurs — the key people who make prosperity happen,” we are vying with high-tax places, such as Boston, New York, and California’s Silicon Valley, as much as we are with low-tax states like Texas and Florida.
We will come back to Texas and its low tax strategy a bit later. For now, remember that nearly 30 percent of Texas’ citizens are without health insurance, nearly three times the rate in Connecticut. Connecticut is fifth in the nation in life expectancy, while Texas is 30th.
Powell then goes on to list, in particularly shifty ways, all the things wrong with Connecticut. He lists so many he must be hoping no one will catch each individual trick. I can’t possibly comment on every claim so I’ll stick to just a few.
In listing all of government’s wrongs, Powell conveniently overlooks the fact that the state had 16 straight years of Republican governors. He downplays Rowland’s corruption, while mentioning local players in local scandals that had far less money at stake. He drudges up everything negative written about Waterbury, going back almost 20 years (except the inconvenient Republican governor connection), and uses these attacks to dismiss its population growth, which undercuts his argument.
He attacks the New Deal as having been expensive and pointless, even though it was and is pretty popular in Connecticut, particularly a little government program called Social Security.
Powell says we overreacted to Newtown, enacting a gun bill that made us less friendly to gun manufacturers.
Not surprisingly, he’s most annoying on the subject of taxes. He says 2011’s tax increase resulted in out-of-control spending, neglecting to mention that the cost of the state budget remained the same. In going after the 2011 tax increase, he uses the well-worn and ridiculous tactic of listing all the taxed items as if varied taxation was in-and-of-itself bad.
If one tax had been raised, there is no doubt Powell would have jumped on the massive percentage increase. The little things can be most bothersome — such as his discussion of the Amazon tax.
Those with an understanding of the sales tax know that in Connecticut the person receiving the goods already was responsible for a use tax to make up for the lack of payment of sales tax. The fact that people frequently don’t pay this tax doesn’t mean getting the shipper to collect it is actually a tax increase. It is merely a way to insure that an obviously needed tax is paid; it’s about enforcement of existing taxes, not adding new ones.
Without a use tax, any state’s sales tax would quickly crumble as everyone would ship purchases from out of state to avoid paying the tax. Powell must know this.
On the big things, he moves from annoying to odious. His overall theme is, of course, that government is terrible and that only the private sector (the investors and entrepreneurs) will provide the jobs the state needs. As a state, we have to put up with any of their demands, whatever the cost.
If you had to read just one paragraph in the article it would be this:
“Of course, politicians can be counted on to say that they must spend ever-larger amounts of money because of all the poor people who need help. But more than anything else, poor people need a real private sector job — a means of sustaining their financial independence and helping to produce goods or services other people are willing to pay for. The more costly it is to do business, the fewer jobs there will be, and the more people will stay poor.”
Here is where we should return to the mention Texas, where government has been pursuing a low-tax, business-friendly strategy and yet the state has almost double the poverty rate of Connecticut.
Since 1980, the national policy also has been to lower taxes and presumably create jobs. The jobs simply haven’t appeared, partially because of technological changes. Even during the so-called “bad-for-business” Obama presidency, the Dow Industrial average has almost doubled and yet jobs have not come close to keeping pace. It is hard to say what the right strategy is to help the middle class, but the wrong path is the one taken in Texas.
Republicans in Connecticut had better be prepared with more than Texas redux if they wish to lead. And they should not join a spiteful, flimsy attack on our state in hopes that people will read the headline — Connecticut economy floundering — and ignore the context and assumptions behind it. We need to think seriously about our economy. In truth, the Forbes article contains nuggets we should consider. But mostly, Powell and Forbes Magazine had an answer and then filled in the question. We can’t afford that.
Jason Paul of West Hartford is a partner in a campaign consulting company called What’s Next. He is also a student at the University of Connecticut Law School.