States should beware ALEC-brand snake oil

ALEC’s rankings are based on arguments and evidence that range from deeply flawed to nonexistent, consistently ignoring decades of peer-reviewed academic research.

Peter Fisher

Legislative sessions will be starting across the country after the first of the year, and with them, some very bad ideas for public policy.

The purveyor of many poor prescriptions is a very influential right-wing organization, the American Legislative Exchange Council, known as ALEC. The organization promotes policies to cut taxes and regulations in the disguise of promoting economic growth, but what they really do is reduce services, opportunity and accountability.

In short, the ALEC medicine show is a prescription for poor results, and states should beware.

Our new report, “Selling Snake Oil to the States,” examines ALEC’s proposals and the misinformed, primitive methodology behind the study that supports them. The new report, a joint project of the Iowa Policy Project in Iowa City and Good Jobs First in Washington, D.C., illustrates how ALEC’s prescriptions really offer stagnation and wage suppression.

In fact, we find that since ALEC first published its annual “Rich States, Poor States” study with its Economic Outlook Ranking in 2007, states that were rated better have actually done worse economically.

Find “Selling Snake Oil to the States” at http://www.goodjobsfirst.org/snakeoiltothestates.

We tested ALEC’s claims against actual economic results. We conclude that eliminating progressive taxes, suppressing wages, and cutting public services are actually a recipe for economic inequality, declining incomes, and undermining public infrastructure and education that really matter for long-term economic growth.

ALEC’s rankings are based on arguments and evidence that range from deeply flawed to nonexistent, consistently ignoring decades of peer-reviewed academic research.

What we know from research is that the composition of a state’s economy — whether it has disproportionate shares of high-growth or low-growth industries — is a far better predictor of a state’s relative success over the past five years. Public policy makers need to stick to the basics and recognize that public services that benefit all employers.

Posted by Peter Fisher, Research Director

Over-regulated?

As we have seen, it is hard to regulate in America or in Iowa.

David Osterberg
David Osterberg

How much regulation is right for the United States? One might expect demand to rise after the speculative fury that ruined financial markets and then nearly destroyed the economy, or after the massive Gulf of Mexico oil spill. However, some guys still take every chance they can to get on TV claiming g’mnt is the problem, crying that the economy is overregulated and they want less of it.

Actually, too little regulation leads to great potential mischief. We have a great example of it right here in Iowa. In 2008 we had massive floods all over eastern Iowa. Short-term responses dealt with the aftermath of the disaster, but we faced long-term questions as well.

Sensible regulatory policy would try to avoid the worst effects of another flood. We could limit development in the 500-year flood plain or plan for dikes to be breached, to let water flow onto farmland rather than on to city streets. (Compensating farmers and landowners is a better option than rebuilding cities, businesses and homes.)

A committee of Iowa experts looked into how to avoid the worst disasters from flooding. They recommended limits on development and establishing ways to spread out the flood wave before it hit cities and built-up areas.

The result? Legislation to do both was introduced into the most recent legislative session but powerful farm groups and developers were too strong and nearly nothing was done.

The Gulf oil spill, bankers speculating on our country’s future, and unwise development in the flood plain are all good reasons to rein in markets. However, as we have seen, it is hard to regulate in America or in Iowa.

Posted by David Osterberg, Executive Director