Saturday, November 08, 2008

Obamanomics is Coming

Faced with challenging economic times, Obama's remedies all discourage work, investment, and job growth when we need more of all three. Another stimulus check? This is nothing more than redistribution of wealth and the recipients are likely to just stick the money in their bank account. Longer unemployment benefits may or may not be necessary, but any benefit should be weighed against the cost: the unemployed will wait longer before finding a new job. Taking away workers' right to a secret ballot on the decision to form a union will hurt job growth and is fundamentally unjust. Raising capital gains taxes and corporate taxes dissuades investors from creating jobs in this country and will send capital overseas. I'm sure China and India won't mind.

Obama named Michigan Gov. Jennifer Granholm to his economic advisory team. Maybe she can share her policy secrets for Michigan's booming economy with the rest of the nation. As Phil Gramm and Mike Solon note in the Wall Street Journal, states still have some freedom in their own economic policies. The effectiveness of state policies will be evident in movement of people into the state, increased per-capita income and employment growth.

A study that ranked states according to these three factors found that from 1996-2006, Texas, Florida and Arizona were the three most successful states. The three worst were Illinois, Ohio and Michigan. A third of all new jobs created during this ten year period came from Texas (1.7 million), Florida (1.4 millions) and Arizona (.6 million). Illinois gained only 122k, Ohio lost 63k and Michigan lost 318k jobs and the citizens of these states saw their real income increase by just 58% of the national average.

Economic policies matter. The successful states have lower taxes, lower government spending and they are right-to-work states (employees are not forced to join or contribute to unions). The least successful states promote all powerful unions and have a higher minimum wage, yet their workers make far less.

Obama promises to bring the economic policies of Illinois, Ohio and Michigan to the nation.

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