Rich States, Poor States…Initiative States?

Fri, Jun 4 2010 by Paul Jacob

In ALEC’s latest “Rich States, Poor States” report there is a ranking of states by “economic outlook,” a compilation of 15 policy variables, and by past economic performance (from 1998 to 2008).

While we hear so much about California’s troubles and the unsubstantiated idea that the state’s initiative process has “ruined” the state economically, it is worth noting that the top 7 states in economic outlook are ALL initiative states. Further, 12 of the top 15 states are initiative states. Of the bottom 5 states only California has a functional initiative process. Illinois is one of the bottom 5 states and it does technically have an initiative process, but only technically, as it is so limited that only one initiative has ever appeared on the ballot in over 30 years, and in fact, initiatives affecting taxes and spending are forbidden.

As for looking at the last 10 years of economic performance, again 12 of the top 15 states are initiatives states, though 3 of the top 7 are non-initiative. At the bottom, however, three of the five states have the initiative, though one is Illinois where, again, the initiative has no ability to address taxes or spending or much of anything as discussed above. The other two initiative states, at 49 and 50, are Ohio and Michigan. Both are industrial states, where the automotive industry’s decline (and de-industrialization generally) has had an enormous impact.

To compare cumulatively, on economic outlook I-states have an average rank of 20.9 and non-I-states have an average rank of 29.7. Switch Illinois – where the state’s initiative process forbids any citizen-based measure affecting taxes, spending and budgets – from I-state to non-I-state and the average rankings change to 19.8 for I-states and 30.4 for non-I-states. The cumulative rankings on economic performance for 1998-2008 are 21.7 for I-states and 29 for non-I-states. Switch Illinois and the rankings are 20.6 for I-states and 29.7 for non-I-states.

So, what conclusions can we draw? Well, the initiative process is no panacea. It certainly does not equate to automatic economic success. But clearly if we are to compare initiative states against those without any initiative rights, the initiative states enjoy clear statistical advantages economically.

Still, don’t hold your breath for the mainstream media or big-spending politicians to own-up to this fact. But we’ll remind them nonetheless.