40 Years of Left Wing Policy Failure

The Public Assets Institute (PAI) recently released a report, “The State of Working Vermont 2020.” It provides a good overall picture of the economic stagnation Vermont has experienced over the past several decades.

For 40 years, Vermont created an average of 4,700 new jobs a year. The best year, 1978, saw an increase of more than 12,000 new jobs. But after the turn of the century, job growth flattened. Vermont employers averaged fewer than 1,000 new jobs a year between 2000 and 2019. The high point was 2012, when 3,800 jobs were added.

Given that timeline, it's worth noting 1994 was the last time VT Republicans held a majority in the state senate and 2000-2004 was the last time the VTGOP had a majority in the House. While two Republican governors served for twelve years over this period, Douglas and Scott, governors can’t sign any laws not passed by both chambers of the legislature. In other words, conservatives have never been in a position to put forward and pass any policy initiative.

PAI points out:

During the recovery after the Great Recession, Vermont’s economy grew half as much as the nation’s: 11.2 percent vs 22.2 percent, after adjusting for inflation. With the exception of Massachusetts, New England as a region also underperformed the U.S.

What do all of these NE states have in common? They are all, with the sometimes exception of New Hampshire, run for the most part by progressive liberals.

Moreover,

In 2019, the top 20 percent of Vermont households received almost half (48.4 percent) of the income earned in the state. The top 5 percent of households got 20.7 percent. Average income for the top 20 percent of households had increased more than 8 percent since 2007, after adjusting for inflation. For the bottom 20 percent, average income was down more than 7 percent.

Now, Vermont has, and has had, one of the most progressive tax structures for income and property taxes in the nation. We have, and have had, one of the highest minimum wages. Logical conclusion: policies like this do not solve income inequality and may, in fact, exacerbate it.

And,

The nation’s longest recovery left Vermont with fewer workers. In 2019, 342,226 Vermonters were working or actively looking for work—11,500 fewer than in 2007.… The share of people of prime working age—35 to 54—shrank. And workforce participation dropped. These factors helped make Vermont one of 11 states, including three in New England, whose labor forces shrank between 2007 and 2019.

Since 2006 we steadily expanded government universal pre-school programs, have engaged in public funded healthcare access programs such as, going back to the early 1990’s “guaranteed issue” and “community rating” and more recently Catamount Health and now OneCare. We have one of the most generous welfare programs in the nation. And, we recently started paying people up to $10,000 to move here. Vermont has also branded itself as a “green” Mecca, putting considerable resources into renewable energy and related environmental programs. Conclusion, these kinds of programs do not seem to attract young, working age people to our state, as politicians promised they would.

And, finally,

At the end of the recovery, Vermont didn’t have much to show for its efforts to reduce poverty. The poverty rate came back down after it shot up in the Great Recession. But by 2019, there were just as many Vermonters in poverty as in 2007: more than 60,000.

We’ll just let that one speak for itself.

If you care about these issues specifically – reducing income inequality, alleviating poverty, and solving Vermont’s demographic and workforce problems -- and for broad economic prosperity generally, we must stop doing the same things while expecting different results. As PAI demonstrates, this experiment in high taxes, government micro-management through excessive regulation, and lots of spending on fine-sounding programs important to politicians but, in practice, not the people has been a failure. PAI doesn’t reach that conclusion themselves, but it’s the obvious one.  

- Rob Roper is president of the Ethan Allen Institute

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  • Christian Matthews
    commented 2021-01-15 15:17:12 -0500
    1. It is always important to look at percentages when analyzing numbers. From 1959 to 1988 Vermont averaged an increase in jobs of 3.07% every year. From 1959 to 1989 this rate decreased to 3.04% per year and has continued to decrease ever since. The 1959 to 2019 rate was 1.84% per year. Sounds like investigating what started happening in 1989 in Vermont and nationally might be helpful.

    Source = https://fred.stlouisfed.org/series/SMU50000000000000001A

    2. While the PAI report didn’t look outside of New England, if we are going to compare GDP growth rates in New England states to the US average, we might as well look at some of those other states. The following Gross Domestic Product (GDP) values are in Millions of current dollars, are from Q1 2007 to Q4 2019 (matching the PAI report), and the rank is based on the percent growth rate:

    Vermont’s GDP grew 141.0% (ranks 35th) from $24,346.0 to $34,320.2.
    Rhode Island’s GDP grew 128.7% (ranks 46th) from $48,434.1 to $62,335.4.
    Louisiana’s GDP grew 127.4% (ranks 47th) from $203,391.6 to $259,079.3.
    Connecticut’s GDP grew 123.1% (ranks 48th) from $236,117.70 to $290,703.0.
    Wyoming’s GDP grew 117.9% (ranks 49th) from $34,582.3 to $40,764.3.
    Alaska’s GDP grew 117.7% (ranks 50th) from $46,468.8 to 54,674.7.

    What do these numbers show us? GDP growth is clearly impacted by more than just the “progressive liberals” or conservatives that are in power.

    Source = https://apps.bea.gov/itable/iTable.cfm?ReqID=70&step=1&acrdn=1 (SQGDP1 Gross Domestic Product (GDP) summary, quarterly by state Current-dollar Gross Domestic Product (GDP))

    3. Before coming to a conclusion on income data, the comparison should be made against other states to see if Vermont’s progressive tax structure reduced the increase in income inequality seen nationally or exacerbated it. It’s also important to note that this data was only focused on income, not wealth.

    4. I think your conclusion on population growth is correct. Clearly people are moving to certain states and away from others for reasons more than just what a state government can offer.

    5. In regards to poverty, like I said initially, we always need to look at percentages. In 2007 Vermont’s poverty rate was 10.1% and in 2019 the poverty rate was 10.2%. A comparison needs to be made to put this increase into context compared to national averages and other states. For what it is worth, in 2019 Vermont had the 15th lowest poverty rate in the country.

    Source = https://www.census.gov/library/visualizations/interactive/2019-poverty-rate.html
  • Rob Roper
    published this page in EAI Blog 2021-01-15 10:47:32 -0500