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SEIFFE:  Turnabout Is Fair Play

Tuesday, May 10, 2006

By Ralf Seiffe

Last week, USA Today published an analysis of the 50 states’ recent economic progress.  Based on data produced by the Bureau of Labor Statistics, the article showed Illinois performing in the bottom 10% of all states.  

Illinois' per capita income shrank 1% since 2000, turning in the worst economic performance since the Bureau started keeping state statistics in 1929.  In a turnabout for Democrats who love to remember the Great Depression, this means Illinois, under the Democrats' complete control, is suffering the worst economy since Herbert Hoover.  

This fact provides Judy Baar Topinka with credible and quotable evidence that the current regime isn’t competent and should be replaced.  But, to turn out the Reagan Republicans she’ll need to win in November, Topinka needs to demonstrate an economic epiphany that proves she’s not the just an extension of the Thompson-Edgar-Ryan-Blago model of governance.  

By way of background, the last five years have been difficult for the American economy.  Tribulations included the economic hangover from the dot bomb, the 9/11 attacks and the costs of the war, off-shore outsourcing and now high energy prices. 

Despite these problems, the nation managed to grow some 2.2% after adjusting for inflation. Some states did better than others; Wyoming showed what was possible with a stunning 13.9 % increase in per capita income.  The top five states averaged an 11.4% five-year growth rate. 

The bottom five states managed to shrink per capita income by 2.2%.  Joining Illinois at the shameful end of the list were Michigan, Washington and Georgia which had respective per capita income shrinkage of 1.2%, 1.8% and 2.0%.  Poor Louisiana, already the state with the lowest per capita income, turned in the worst performance of all; Katrina, along with the problems all states suffered faded the bayou state’s income by 5.2%.  

The Ryan-Blagojevich economy hasn’t always been the case.  The state has been an economic powerhouse and even with this dismal performance, Illinois comes in at 14th in terms of per capita income.  But, our top-third ranking will evaporate if the local economy continues to contract.  In fact, if Illinois’ economic failure isn’t remedied, our falling standard of living will become more noticeable and raise the level of pain. Signs of this will include lower employment levels and for those working, lower wages. Tax receipts will decline or at least not keep up with our politicians’ voracious appetite for spending. 

Our states’ de facto debtor-in-possession bankruptcy will, by necessity, become a liquidation or repudiation of the state’s debts.  

The successful candidate will recognize that improving Illinois’ economic condition is the most important job for the people of Illinois.  Indeed, it may be the only question for the November election. 

How to accomplish this is the real quandary.

One way to start our rehabilitation is to set goals.  (This would be called a “vision” for politicians that may be reading.)  Office seekers don’t seem to be offering many such visions so what follows are a few suggestions to get the process started.  But before that, here are a few ground rules for constructing a “vision”:  

• All goals should be easily understood and objectively measurable.  

• Given the delay and questionable accuracy of information coming from state government, the measures should be available from sources outside Springfield.  

• The state should make its financial and economic data available no more than 90 days after the close of the period measured. 

• The state should statutorily impose the same standards that the federal government imposes on large, publicly traded corporations.  An Illinois “Sarbanes-Oxley” law might have the delightful, if unintended consequence, of creating a way for local law enforcement to go after local politicians who don’t tell the truth. 

Given these ground rules, here are some visions that will get my vote regardless of which party that adopts them: 

1. We should envision a future as the growth leader of the nine states The Bureau of Labor Statistics lumps us with.   If, over the last five years, Illinois had achieved the average growth of the top half of our peer states, our per capita income would have risen by nearly $3,000 to $39,174.  Instead, the Ryan-Blago economy let our state’s income fall by about $300. 

2. We should envision a future in which Illinois is a “top ten percent” state in terms of per capita income.  If we had met that goal during the last half-decade, Illinois’ per capita income would stand at $40,508.  Had we been “number one” in our BLS state peer group (by beating North Dakota ), Illinois would have been sixth in state per capita income.  

3. The “Top Five”-- Connecticut, Massachusetts, New Jersey, Maryland and New York --are high tax states.  We should also envision a future in which our state government is as productive as it can be so that our after-tax income is actually better. The proper metric may be obscure but let’s start with this one: Cost of government per capita.  This should be broadly measured to include all taxes, state and local. 

There are many metrics that could serve to measure public progress; each of these meets the ground rules. Regardless of the measures one might choose, they will improve only when we break with the government-centric social model Illinois suffers and replace it with a citizen-centric model.  Neither of the major party candidates understands this imperative apparently believing that Illinois’ economy is the servant of Springfield. 

On the other hand, there is always the chance the muse that changed Ronald Reagan from an FDR Democrat might also whisper in Judy Baar Topinka’s ear.  To overcome the faults conservatives find in her, Topinka could position herself as a sinner reformed, mount a bold challenge to the Illinois political-economic model and win a big proportion of the conservative voters she needs. 

Topinka’s  service as treasurer gives her authority to introduce numerical objectives for improving Illinois’ standard of living that the innumerate Governor would be hard-pressed to answer.  By highlighting how far we have sunk and appealing to our optimism, she could bring the Reagan Revolution finally to Illinois. 

©2006 Ralf Seiffe

Ralf Seiffe advises business start-ups and product launches from Chicago, Illinois and is a political analyst and columnist for the Illinois Leader and Illinois Review.