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December 14, 2015


An internet professor notes that states act as “laboratories” for the federal government and that two side-by-side states are moving in different directions. Thus Minnesota is booming and their neighbor across the Mississippi River, Wisconsin, is in economic malaise. She asked those of us in her audience to explain such a disparity. She suggested that the inhabitants of the two states were ancestrally alike and wondered why they were not otherwise alike. The short answer, of course, is that Wisconsin has a right wing governor and legislature dedicated to austerity while Minnesota has a progressive governor and legislature, a current account surplus of 1.6 billion dollars, and follows Keynesian economic principles. Keynesianism works; austerity doesn’t. End of story – almost. My lightly edited response was as follows.

I think common ancestral roots have little to do with fiscal outcomes of the various states. For instance, if we compared today’s Wisconsin with Herr Brownback’s Territory of Kansas, Wisconsin would look much like Jerry Brown’s State of California, perhaps one of our most progressive enclaves and one that with good management, appropriate taxing, investing and spending has California in the black.

There is no big mystery in how to have a prosperous state or nation. Governor Dayton in his Minnesota “laboratory” has shown us how to do it (as FDR and Truman did long ago). You tax the people who can best afford to pay, invest (not spend) in education, infrastructure, and in your people rather than spend on tax breaks for corporations and banks and others who least need public spending, all with a Keynesian economic mindset (no austerity plans need apply). Accord: Joseph E. Stiglitz, Nobel Prize-winning economist. Money invested in education and in public “furniture” pays handsome public dividends both immediately and down the road; money spent on tax cuts for the rich and corporate class goes into a black hole (perhaps in Zurich) and yields little if any public benefit. There is no trickle down with tax cuts to the rich; only trickle up.

Instead of making the economic pie smaller for the rich and devious to divide via political control (austerity), you adopt policies which make the pie bigger with Keynesian principles and then proceed to divide the new income and wealth derived from the economy’s enhanced performance more equitably with all of your people and the state’s needs (education, public safety, roads, streets, bridges, public buildings etc.). With such new activities, you reap what Dayton has reaped in Minnesota, i.e., good wages and high employment numbers, resulting, among other things, in increases in local aggregate demand. Who in any state (other than those of the rich and corporate class) can complain of that outcome whether blue or white collar?

When you play the Brownback/Walker game of giving away tax money to people who don’t need it while simultaneously poor mouthing the needs of the state and its people with reductions of budgets for education and repair of crumbling infrastructure , and then insist on cutting taxes on the same people who didn’t need the tax cut you gave them in the first place, you are dealing in fantasy. There is no invisible hand beyond the theoretical nor manna from heaven outside the biblical. It’s the “peoples’ capital” you are giving away, Governor(s)! That’s our money, not yours!

No budget can long withstand such austerity (and largesse to campaign contributors at the same time) whose adherents are always telling us that “we can’t afford it” but do nothing to put us in a position to “afford it,” though I note they seem to find funding for tax cuts for their friends whatever the state of their respective treasuries. These people need to leave their ideologies at home and go sit at the knee of Governor Dayton for an enlightening tutorial after reading some of Lord Keynes’s books and tracts, go back to their offices, become pragmatists, and adopt policies that serve the wants and needs of those who elected them (as well as those who voted for their opponents, since all are entitled to good management of their “capital” irrespective of their voting records).

So when does trickle down, austerity and other such fantasies end? They end when the people elect pragmatists and not ideologues to manage the policies and finances of the various states and our nation, so let’s ignore the propaganda of the status quo and get on with that project, since, in a reversal of events, we are the ones who “cannot afford” continuation of the current system of giveaways to friends and austerity for the rest of us. So vote your interests.    GERALD     E


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