It might be a stretch to say that good research never gets old — at some point you might need an update — but one thing is certain: Bad research never gets good.
IPP’s Peter Fisher is one of the nation’s experts on rankings of state business climates. In two reports published in the last two years by our colleagues at Good Jobs First, Fisher lays out irretrievable problems with the Rich States, Poor States analysis periodically offered by the American Legislative Exchange Council, or ALEC.
Fisher tested ALEC’s claims against the actual economic performance of states, finding that states following ALEC-favored policy did more poorly than other states.* He also found serious flaws of methodology, including comparisons of arbitrary states instead of all 50.
As Good Jobs First’s executive director, Greg LeRoy, wrote in the preface to the 2013 Grading Places report:
Indeed, the underlying frame of these studies — that there is such a thing as a state “business climate” that can be measured and rated — is nonsensical. The needs of different businesses and facilities vary far too widely. … Given these realities, “business climate” studies must be viewed for what they are: attempts by corporate sponsors to justify their demands for lower taxes and to gain public-sector help suppressing wages. …
To borrow Oscar Wilde’s witticism about cynics, these “business climate” studies know the cost of everything and the value of nothing.
In the case of ALEC, others are noticing. Michael Hiltzik of the Los Angeles Times has written twice in recent days about the ALEC problem, citing the work of both Fisher and Professor Menzie Chinn of the University of Wisconsin.
See these pieces by Hiltzik:
- Surprise! ‘Pro-business’ policies hurt state economic growth
- ALEC fires back, but proves its ‘pro-business’ state index is bogus
In the latter, Hiltzik notes a recent “response to the critics” by ALEC:
It’s a curious document that ends up proving the critics’ point. Take the point made by Chinn and by Peter S. Fisher of the Iowa Policy Project that the correlation between ALEC’s policies and economic growth is largely negative.
When the ALEC “analysis” is dissected, it becomes clear that its conclusions are faulty, and its policy prescriptions are no more valid. And it is good for Iowa to have Peter Fisher on the case.
*View Peter Fisher’s reports for Good Jobs First on business climate rankings including the ALEC claims:
- Grading Places: What Do the Business Climate Rankings Really Tell us?, Second edition, May 2013
- Selling Snake Oil to the States, November 2012