Massachusetts as the model

Terrific Slate article entitled Don’t Mess with Massachusetts: It may be everyone’s punching bag, but it’s time to face facts: The Bay State is best. You read that right!  Massachusetts as the state we should want to be like.

How can that be? As Mark Vanhoenacker – the article’s author – writes: Massachusetts, in today’s political culture, is more epithet than state. The People’s Republic, Taxachusetts, “Sweden”—this is America’s arugula-munching, maple syrup-swigging, receding-ponytail hippy uncle, exiled to its cold, lonely corner of American geography by Sunbelt population growth and a rightward-leaning national discourse. In many ways public exhibit #1 for what not to do to be a successful.

Massachusetts ranks 24th overall and 34th in corporate taxes (a metric trumpeted by Snyder Administration because Michigan now ranks 7th ) in the Tax Foundation’s 2012 State Business Tax Climate Index. And yet when it comes to what matters to citizens – not ideologues – Massachusetts is at the top of the rankings. So much for taxes predicting outcomes.

Slate uses three metrics to make the case that Massachusetts is the best state: education, social well-being, and economic strength. Metrics that measure how well off a state’s residents are, rather than how well a state conforms to someones political beliefs. Vanhoenacker writes about a set of important metrics on education and social well-being that rank Massachusetts at or near the top.  And then writes:

Finally, let’s take a purely dollars-and-cents look at Massachusetts. No matter where you start on the political spectrum, this is the most important question, because many Americans believe we must choose between social investments and a competitive economy. So what economic sacrifices is Massachusetts making to achieve such extraordinary educational and social outcomes? None, apparently. Massachusetts has the second-highest per capita personal income among the states. Unemployment in March was 6.5 percent, well below the national 8.2 percent. Its state per-capita GDP ranks sixth-highest. Its median household income (a measure of widely-distributed income) is fifth. Massachusetts is looking particularly sharp when it comes to the globalized, tech-driven economy on which America’s superpower standing hinges. According to a 2011 report, Massachusetts has the highest per-capita venture capital, patents, and technology licensing of 10 leading high-tech states. Worker productivity in Massachusetts (GDP per employed person) is the third-highest in the world. And research and development spending as a share of GDP in Massachusetts is higher than any country anywhere.

My guess is almost all Michiganders would prefer to be 2nd in per capita income and 34th in corporate taxes like Massachusetts, rather than 36th in per capita income and 7th in corporate taxes. Obviously its income, not tax rankings, that pay the bills.

So if it isn’t low businesses taxes, what is the key to Massachusetts success and Michigan’s decline? In a word: education! As Michigan State University economist Charles Ballard noted in a recent presentation Michigan and Massachusetts used to have similar outcomes. No more! Ballard said: “while Michigan and Massachusetts were virtually neck and neck economically from the 1950s to the 1970s, Michigan has fallen from 21st to 36th place since the 70s. … He said the key difference between Michigan and Massachusetts, which has fared better during the recession, has been education. He noted that not only do a higher percentage of Massachusetts’ residents hold bachelor degrees, the state’s K-12 population posts higher test scores than the national average.”

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