Recently, the US Chamber of Commerce (Chamber) ranked Tennessee No. 1 among our 50 states for its low taxes and limited regulatory environment, and recommended Tennessee as a role model for the nation.
The Chamber, Tea Party, GOP, Grover Norquist, Mitt Romney and Newt Gingrich tell us that low taxes and limited regulation will solve America's economic problems, including giving us a balanced budget. Indeed, the Republicans are making a major push to eliminate or reduce state income taxes across the US. Norquist (and others) claim that government programs are a waste, no job is ever created by government, and so on. Tennessee, under their theory, should be a low tax/limited government utopia.
Instead, Tennessee's results imply -- 'you only get what you pay for.' Let's benchmark Tennessee's performance against the rest of the US.
Proponents of the 'low tax/limited regulation strategy' tell us it's not just about money, but also about quality of life. So let's see how Tennessee does on some basic metrics for Health, Personal Safety, and Education:
At an overall level among American states, Tennessee was ranked 44th -- where 50th is worst-performing -- by the American Human Development Index (Index). The Index was developed:
'as an alternative to simple money metrics. It is an easy-to-understand numerical measure made up of what most people believe are the very basic ingredients of human well-being: health, education, and income.' Source: The American Human Development Project, 2012.
Correlation is not causality. But it appears that Tennessee residents receive fewer and lower quality services from their government and private sector -- because they spend less money on their government and have a limited regulatory environment.
Oliver Wendell Holmes, Jr remarked, 'Taxes are the price we pay for a civilized society,' and the word 'price' is worth emphasizing. We are a free society and can choose how much government we want to buy, and how much regulation we're willing to accept.
My point isn't that the people of Tennessee have made bad choices, or that other states have made better choices. But when a politician tells you s/he can cut your taxes and reduce regulations -- without increasing the budget deficit, and/or reducing the quantity (or quality) of services -- that politician is likely a liar.
I welcome your comments!
About the Author: Steven Strauss was founding Managing Director of the Center for Economic Transformation at the New York City Economic Development Corporation (NYCEDC). He is an Advanced Leadership Fellow at Harvard University for 2011-2012. He has a Ph.D. in Management from Yale University and over 20 years private sector work experience. You can follow him on twitter at: @Steven_Strauss.
Appendix with Sources
Follow Steven Strauss on Twitter: www.twitter.com/steven_strauss