Monday, July 28, 2014

The Brownback miracle (?!?) in Kansas

Paul Krugman in Left Coast Rising New York Times 07/24/2014 and How's California Doing? 07/23/2014 describes the success of Jerry Brown's Keynesian economics on the state level in California with some reference to the contrasting failure of Tea Party economics in Kansas under Republican ideologue Gov. Sam Brownback.

The Young Turks also recently took a look at Kansas Gov Sam Brownback Fulfills Promise To Destroy Kansas 07/08/2014:

Dave Helling and Brad Cooper did an analysis of Brownback's record A look at Kansas Gov. Sam Brownback's economic claims Kansas City Star 07/04/2014. One example of their findings:

Claim: The Kansas poverty level has been "flat" during the current administration. — March 2014

This claim depends on the definition of "flat" and the definition of poverty.

Census Bureau figures show poverty in Kansas grew during the first two years of the Brownback administration.

In 2010, the year before Brownback took office, 13.6 percent of Kansans were living below the poverty level. In 2012, 14 percent of Kansans lived below the poverty level, the highest percentage since at least 2008.

Figures for 2013 are not yet available. In an email, Brownback’s office said the poverty claim is related to poverty for children, not the overall rate.

Brownback’s office points to data showing the percentage of children living in poverty was essentially flat in 2011 and 2012, although the actual number of those children grew by about 1,000.

In a March speech when he was asked about the state’s poverty level, Brownback conceded that he had not made a lot of progress on the problem of child poverty.

"We really haven't had enough time to get at that issue," he said. "We've really got to do a lot more work in that area."
Josh Barro also notes a lesson from the Brownback experience, Yes, if You Cut Taxes, You Get Less Tax Revenue New York Times 06/27/2014. Here he raises and important caution about a common assumption that politicians make, at least in their public statements (bold in original):

It’s not clear that there’s anything special about small businesses for the purpose of job creation.

A 2013 study by economists from the Census Bureau and the University of Maryland found that while young firms add jobs more quickly than older ones, the size of a firm does not appear to drive job growth.

And indeed, while Governor Brownback wrote last month that the tax cuts were allowing businesses to "hire more people and invest in needed equipment," job growth in Kansas has been modest since he signed the bill, trailing the national average and the rate in three of its four neighboring states.
Krugman does remind us "that the recession and recovery have had differential effects across states" (Moore of the Same 07/26/2014), so we always need to exercise some realistic caution in comparing state economic performance. In California's case, the state economy is large enough that state-level stimulus probably has a disproportionate effect there compared to other states.

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