*Maine Versus New Hampshire: *The American states provide a number of
natural policy experiments that let us judge --- if we are open-minded
--- what works and what doesn't work.
One such natural experiment can be found in two neighboring New England
states that pursued different paths after World War II. Amity Shlaes,
relying on a study by J. Scott Moody, describes the result
<http://www.bloomberg.com/news/2010-08-24/obama-misreads-message-of-live-free-or-die-commentary-by-amity-shlaes.html>.
At the end of World War II, Maine boasted a bigger economy and a
bigger population than New Hampshire. In some other respects the
two states were similar. They were both in New England, and both
were struggling with the death of old industries such as textiles.
In 1946, per capita income was $9,610 and $9,768 for Maine and New
Hampshire, respectively.
. . .
Overall today, Maine residents shoulder a heavier tax burden than do
those of New Hampshire. State and local taxes take 12.6 percent of
personal income in Maine, the sixth-highest share among states. In
New Hampshire state and local taxes take 8.7 percent, putting New
Hampshire at 49th for tax burden.
The result? Decade in, decade out, New Hampshire's economy grew
faster than Maine's, so that the Granite State surpassed the Pine
Tree State in 1984 and today boasts an output that is 20 percent
bigger. Maine's recessions and double dips were worse than New
Hampshire's. Eventually New Hampshire also won the population
contest, passing Maine, in part thanks to migration. Last month,
joblessness was 8.1 percent in Maine, better than Ohio but still
bad, and 5.8 percent in New Hampshire.
What about that family pocketbook that the White House highlights?
Bureau of Economic Analysis data show average per capita income
for Maine in 2009 was $36,745, a bit more than Ohio. In New
Hampshire that number was $42,831, eighth highest in the nation.
If you want lower unemployment and higher incomes in your state, you
should imitate New Hampshire --- and learn from Maine's mistakes.
(In the late 1970s, I read a comparison of New Hampshire with
neighboring Vermont. The Green Mountain State had had higher taxes than
New Hampshire for many decades. But they didn't seem to have gotten
better services in return. SAT scores were a little higher in New
Hampshire, the state's roads were about as good, welfare payments were a
little higher (though a little harder to get), and so on, and so on.
Vermont taxpayers were paying more (and still are, last I looked) but
weren't getting more in return.)
- 9:40 AM, 24 August 2010 [link]
<http://www.seanet.com/%7Ejimxc/Politics/August2010_3.html#jrm9076>
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