









^^^ if this supposed relationship were verified by 'per capita' spending reductions rather than gross dollar spending reductions I might consider some possible validity. As it is, a greater probability of the actual relationship is that the collapse of 'bubble' based state economies resulted in the loss of state businesses and productive taxpaying residents ... thus reduced state tax revenues and eventually reduced gov't spending. Or put another way, your author has cause and effect interchanged i.e. his cart is before his horse i.e. states that have lost the most jobs have been forced to cut spending the most. However, this observation does not identify any factual explanation as to why those jobs were lost in the first place. Nor does it offer any factual proof of an ideologically popular supposed Keynesian relationship actually existing between state gov't spending levels and state employment levels.





The figures are based on percentage, not dollar amounts, so population shouldn't make any difference.





If a state has cut spending by 3%, but has lost 4% of it's former income tax paying workers ... it certainly makes a difference. And particularly so when the same state has gained 5% of low skill non-income tax paying residents to replace the former higher skill higher paid workers who have emigrated to a different state ! And again the author offers no proof whatsoever that state spending reductions aren't the result of an after the fact 'forced hand' after jobs and tax revenues have first been lost !
Which state has added the most new jobs since the election of Obama ? Texas.
Which state has lost the most jobs over the last decade ? Michigan has lost 800,000 jobs over the last decade.
Which state has lost the most taxpayers since 2000 ? New York has lost 1.5 million.
Going back to Eagle's link, where is ANY correlation between state spending and PRIVATE sector job growth or loss ? The author's chart is a joke as the bloggers who READ it pointed out. It proves NOTHING !
Last edited by Eric Stoner; 06-29-2011 at 12:21 PM.





Of course in Eric's mind, the chart proves nothing because it contradicts his ideology. For him, ideology always takes precedence over facts and evidence. When the facts show that states that increased spending created jobs, and states that decreased spending lost jobs, then the facts are wrong. Of course Eric raves about the conservative utopia, Texas. Thanks to Texans' conservative policies, their state ranks all the way up at 24th in unemployment, just behind New York.
http://www.bls.gov/web/laus/laumstrk.htm
While coming in 24th in unemployment, Texas does rank first in one area. Texas has the highest percentage of minimum wage jobs in the country.
http://thinkprogress.org/economy/201...mum-wage-jobs/
Also, from the above link:
Between 2008 and 2010, jobs actually grew at a faster pace in Massachusetts than they did in Texas, and “Texas has done worse than the rest of the country since the peak of national unemployment in October 2009.”
Eric,
Why aren't you willing to consider that the economies of states that have increased spending may have done better than states that reduced spending?
Last edited by eagle2; 06-29-2011 at 09:37 PM.





No, the chart proves nothing because it does not prove causation, nor does the author of the article even make a serious attempt to explain HOW government spending cuts purportedly lead to private sector job losses.
In fact, one would expect those two stats to move "hand in hand" because when a state's economy is very bad both private sector jobs AND government spending are inevitably shed. However, one does not cause the other, but rather they are boths symptoms of the same underlying problem.
Do morning news broadcasts cause people to take showers? Obviously not - for many people they both occur at the same time because it is morning, yet one could draw the same graph and make the same inferences. In fact, one could play that game all day with any two events that have the same underlying cause.
Eagle, I am all for a serious analysis of the correlations between the two stats, but that article was not it.





It's just basic economics that government spending creates jobs, and cutting government spending destroys jobs.
There are only three reasons why anyone would claim otherwise: ignorance, stupidity, or dishonesty.





No, it is a basic theory held by simple folks who are too stupid, unread, or both, to understand that government spending: (1) is not a primary contributor to private sector employment; and (2) does not have the same impact on labor markets as positive economic activity.
Let's take two of the worst examples on that nearly meaningless scatter plot graph: MI and FL. MI is suffering from an overall decline in its industrial production base that has been long in the making and FL is suffering from, among other things, an utter collapse in its housing market. Nobody in their right minds would conclude that the primary reasons for the decreases in private sector employment in those states are cuts in state spending, yet that is the inference that the crackpot who wrote that article is trying to draw.
In fact, cuts in government spending often come long after - and grudgingly at that -significant private sector job losses and corresponding declines in tax revenues, not before those job losses.
But no doubt that the type of half baked analysis used in that article sounded very convincing to some folks.![]()
Last edited by rickdugan; 06-30-2011 at 12:04 PM.
Leaving ideology aside - Yes, government spending can increase employment In the PUBLIC SECTOR ! And those employees have to be PAID FOR. their salaries and benefits ( which invariably are better than those of private sector workers ) have to be paid for.
Ask vendors in Illinois how all that government spending worked out for them ? Many are still waiting to get paid for goods and services provided to the state.
Ask all the folks in California who got IOU's instead of checks.
Spending on infrastructure can also increase employment BUT it has to be paid for.
Tax money has to be directed to various projects or if bonds are used, they have to be paid off. BUT those jobs are always TEMPORARY ! Once the bridge is rebuilt or the highway is repaved, then what ?
Then how do you explain why states that have controlled their spending ( like Texas ) have created the most PRIVATE SECTOR jobs ?
Where do you think the money for those PUBLIC SECTOR jobs comes from ? You are knowledgeable, bright and honest enough to know that states can't print their own money, aren't you ?
We can also add Nevada which saw a housing collapse as bad as the one in Florida. And California which has been hit with the double whammy of a housing collapse and idiotic , spendthrift state government.
States that have returned to fiscal sanity and managed to maintain same have healthier budgets and better employment pictures than states that have not.
Btw, here is pop quiz : According to that "conservative rag" the New York Times, which state has created the fewest new jobs over the past 20 years ?



Hmmmm maybe this is due to ny taxpayers getting tired of the sky high taxes for all the welfare abusers? Didn't people (including some on this site) say ny is a "welfare state"? What a waste of money. No wonder taxpayers dont feel appreciated there. If I lived there I'd want to leave too! And speaking of, didn't melonie used to live in ny, complained about the high taxes, and has since moved to the tropics?...thus demonstrating my theory.





Keynesians and Karl Marx would agree with your position. Austerians would point out that the exact opposite is true over any extended period of time.It's just basic economics that government spending creates jobs, and cutting government spending destroys jobs.
Canadians and Australians would partially agree with your position because a significant percentage of THEIR gov't spending can be paid for via mineral rights royalty income ( from coal mining, natgas & oil wells, base metals and precious metals mining ) accruing to the gov't ... as opposed to US gov't spending which must come from taxation of the private sector or borrowing / printing new money.
A totally different situation exists when the gov't money being spent must be 'taxed away' from a private sector company / worker and/or printed out of thin air and/or borrowed from the Chinese ... as opposed to the creation of actual gov't wealth ( coal / oil / gas / minerals etc. ). The former arguably amounts to a net neutral transfer scheme involving a fixed amount of actual wealth, whereas the latter constitutes a net positive increase in wealth.
While the Keynesians will never admit it, actual wealth generation and increased debt are not equivalent.
Yup it's amazing how much further investment income goes when it is untaxed !!!And speaking of, didn't melonie used to live in ny, complained about the high taxes, and has since moved to the tropics?...thus demonstrating my theory.
Last edited by Melonie; 06-30-2011 at 03:29 PM.





The facts agree with this position. What Austerians say is not true. It's been proven over and over again. During World War II, a great numbers of jobs were created as a result of massive government spending. After World War II, the unemployment rate never even came close to what it was before the military buildup began. The Chinese government has been spending massive amounts of money on infrastructure for decades and the number of jobs available has been increasing greatly over the same period of time.
so, when someone borrows money to buy a car or house, no wealth is generated?
and it's amazing how much less actual income there is in those countries where it isn't taxed. I would bet that Melonie would never have moved to her adopted country if she had to live under the same conditions and work for the same wages that their nationals do. When Melonie actually had to make a living, she chose to live in a "high tax" country where workers are paid high-wages.
Last edited by eagle2; 06-30-2011 at 09:27 PM.





well here's the latest example of the Keynesian versus Austerian theories being tested ... from
(snip)"Gov. Jerry Brown has signed into law California's tax on Internet sales through affiliate advertising which will immediately cut small-business website revenue 20% to 30%, experts say.
The bill, AB 28X, takes effect immediately. The state Board of Equalization says the tax will raise $200 million a year, but critics claim it will raise nothing because online retailers will end their affiliate programs rather than collect the tax.
Amazon has already emailed its termination of its affiliate advertising program with 25,000 websites [ with physical addresses in the state of California - sic ]. The letter says, in part:
(The bill) specifically imposes the collection of taxes from consumers on sales by online retailers - including but not limited to those referred by California-based marketing affiliates like you - even if those retailers have no physical presence in the state.
"I think that Amazon.com's decision to throw their affiliates, (including myself) under the bus is a national disgrace," Richards said. "Jeff Bezos should be ashamed of his conduct. His bully boy practice and tactics of extinguishing small business in California should be (condemned). Small business has no power...and no hope to confront Internet giants like Amazon.com."
Board of Equalization Member George Runner blasted Brown for signing the law. "Even as Governor Jerry Brown lifted his pen to sign this legislation, thousands of affiliates across California were losing their jobs. The so-called 'Amazon tax' is truly a lose-lose proposition for California. Not only won’t we see the promised revenues, we’ll actually lose income tax revenue as affiliates move to other states."(snip)
Thus it remains to be seen whether California's 'spending' of this 200 million in additional tax revenues is able to 'create' state jobs that don't exist today ( the Keynesian theory ), versus California 'destroying' thousands of existing California jobs by attempting to collect the additional 200 million in tax ( the Austerian theory ) to fund state spending !!! Of course it also remains to be seen whether California is actually able to collect this additional 200 million in tax revenues at all ( the even older 'Broken Window' theory ).
Actually, if I knew 'then' what I know 'now', there was an absolute ton of money to be made from the very rich 'frequent visitors' down here south of the border. Many are here on ostensible vacations from their 'high tax' country jobs and businesses ... ostensible vacations which includes paying some annual attention to their 'offshore' assets and investments !!! And the higher the tax rates rise in the US / Western Europe etc. the more money they bring south of the border with them !!! In fact, at this very moment we're awash with 'rich' Greeks bearing Euros !When Melonie actually had to make a living, she chose to live in a "high tax" country where workers are paid high-wages
~
Last edited by Melonie; 07-01-2011 at 01:57 AM.





We are talking correlation here. The author says that states with the biggest spending cuts are correlated with the biggest job losses. When the data shows that A and B have a strong correlation, then it can mean one of four things:
1. A causes B;
2. B causes A;
3. A and B are caused by something else or
4. A and B are completely random events.
In the case of North Carolina the chart shows a relatively small cut in employment and a large cut in state spending. The truth is, NC's constitution requires a balanced budget and it requires voter approval of bond issues. Further, NC's tax system has not changed much, other than rates, since the 1930s. It was designed to extract a money from manufacturers and large land owners as most of the 1930s economy revolved around manufacturing and large farms. Today, NC has much less manufacturing and large farms are all but extinct. Thus, the state income tax and property tax fall heaviest on wage earners and suburban land owners with high property values. As employment fell in NC, so too did income tax revenues. As the foreclosure crisis lowered land values property tax revenues fell. As those two events shaped up, the legislature (Democrats last year and Republicans this year) had no choice but to reduce state expenditures to keep a balanced budget.
In North Carolina's case, the decline in employment and the cuts in the state budget are caused by something external, that is the worsening economy. (Number 3 above.) I suspect the same is true for many states with balanced budget requirements. Some states may look to deficit financing. At least in theory, North Carolina could borrow money to cover a deficit. But, that would require going to the voters and they have not approved a state wide bond for even needed highway improvements in several years. Both parties do not like the chances of getting a deficit bond approved, or at least they don't like the idea of defending a deficit bond to the same voters who are deciding to re-elect them.
HTH
Z
Nobody wants to take a whack at answering which state created the fewest new jobs over the last 20 years ? It is Connecticutt !





^^^ actually, on a per capita basis, New York created fewer jobs relative to population size. Similarly, California created a shitload of jobs in the 90's but has lost a shitload of jobs in the 00's ( which skews your 20 year comparison time frame ). However, a common thread prevails ... i.e. that states with high tax rates and generous gov't spending policies have added the fewest number of private sector jobs. The states with high tax rates and generous gov't spending policies indeed added the greatest number of PUBLIC sector jobs ... at the expense of those states going massively in debt in order to pay those public sector workers' salaries. And now that a new fiscal year is upon the states, combined with the end of Obama's federal stimulus money subsidy payments, those states are ( finally ) shedding the public sector jobs as well ...
from
(snip)"(Reuters) - U.S. state and local governments cut thousands of jobs in June, pushing their payrolls down to the lowest in five years, according to Labor Department data released on Friday, and analysts do not expect the losses to end any time soon.
Local governments shed 18,000 jobs and state governments cut 7,000 in June. The level of local government employment -- 14.143 million employees -- is the lowest since June 2006. State government employment is the lowest since August 2006.
"Today's employment report reflects continued belt-tightening at the state and local level and the trend we have previously noted, a trickle-down in budget cuts from the state to the local level," wrote Natalie Cohen, senior analyst at Wells Fargo Securities, in a research note.(snip)
(snip)Cuts have been particularly deep in education. In June alone, local governments shed 12,600 education positions. Since last August, when concerns about mass layoffs at public schools spurred Congress to send states millions of dollars, local education has lost 124,300 jobs.(snip)
(snip)The housing bust, financial crisis and recession devastated state and local tax revenues. For more than three years, states have cut spending, hiked taxes, borrowed and turned to the federal government for help in keeping their budgets balanced. Now, with few places left to find savings, they are rolling back funds for cities, counties and school districts.
The resulting layoffs could become a drag on the national economy(snip)





Where did you get this from? It's my guess that your statement is based on your ideology rather than facts. According to the article in the OP, states that increased spending had an increase in private sector jobs and states that decreased spending had a decrease in private sector jobs.





here's an update from California ... which is unarguably a high tax rate state with generous gov't spending policies ...
(snip)"NEW YORK (CNNMoney) -- Buffeted by high taxes, strict regulations and uncertain state budgets, a growing number of California companies are seeking friendlier business environments outside of the Golden State.
And governors around the country, smelling blood in the water, have stepped up their courtship of California companies. Officials in states like Florida, Texas, Arizona and Utah are telling California firms how business-friendly they are in comparison.
Companies are "disinvesting" in California at a rate five times greater than just two years ago, said Joseph Vranich, a business relocation expert based in Irvine. This includes leaving altogether, establishing divisions elsewhere or opting not to set up shop in California.
"There is a feeling that the state is not stable," Vranich said. "Sacramento can't get its act together...and that includes the governor, legislators and regulatory agencies that are running wild."
The state has been ranked by Chief Executive magazine as the worst place to do business for seven years.
"California, once a business friendly state, continues to conduct a war on its own economy," the magazine wrote.(snip)
(snip)While not all companies investing elsewhere are doing so for economic reasons, some are shopping around for lower costs, lighter regulations, stable leadership and government assistance and incentives.
The most popular places to go? Texas, Arizona, Colorado, Nevada, Utah, Virginia and North Carolina, said Vranich. All rank in the Top 13 places to do business, according to Chief Executive.(snip)
(snip)After 15 years in Monterey Country, Calif., Feel Golf relocated its headquarters to Florida earlier this year after it acquired Pro Line Sports, which was based in the Sunshine State.
"The whole state is a bureaucratic Santa Claus," said Lee Miller, chief executive of the golf equipment company, of his former home. "There's a very high cost of doing business."
In Florida, he found a better work pool, lower operating costs and no personal income taxes.
"Overall, it's just a better environment," he said.
PayPal opened a new customer services and operations center in Chandler, Ariz., in February, bringing 2,000 jobs to the area. The San Jose, Calif.-based tech firm, along with its parent eBay, also added 1,000 jobs in Austin, Texas, and expanded operations in Utah.
"They have business-friendly environments," said Kathy Chui, a spokeswoman for eBay.(snip)
from










^^^ not the kind of strip clubs that you'd be willing to work in LOL !!!
As alluded to in many other contexts, the economy down here is basically comprised of 80% of the local population being 'poor'. You then have another 15% of the population that is 'middle class' by local standards i.e. local business owners, gov't employees, skilled workers etc. But local standards means that 'middle class' equates to perhaps an income level of $40k per year or less ... enough to provide for a plain house and an older car, but NOT enough for spending a lot of money on 'luxuries'. And then you have the remaining 5% which is comprised of gov't higher-ups, major business owners, professionals, rich 'repeat tourists', ex-pats, those involved in *cough cough* 'cash' businesses etc. It is this last 5% group that keeps the Mercedes Benz dealers busy ( while it's nearly impossible to find a Hyundai dealer ). But unfortunately there is no local equivalent of a high end Manhattan strip club where the last 5% group can easily be found !!!
Back on topic, the unemployment rate down here is actually fairly low ... albeit the 'poor' workers are accustomed to working for $2-$3 an hour performing unskilled jobs. Even so, with the local cost of living and the cost of locally produced food and other goods also being very low, and with local taxes being practically non-existant, nobody is 'burning cars' or 'hurling rocks'. While the local gov't does 'subsidize' health care costs and some other costs like 'entertainment', there are no local equivalents of welfare or food stamps. By 'pure coincidence', there also isn't any 'structural unemployment' to be found.
~
Last edited by Melonie; 07-13-2011 at 01:42 AM.





I dunno....if I could handle Babydoll's in Dallas I might be able to handle anything!! (joke!)
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