Curmudgeon's Corner

cur-mud-geon: anyone who hates hypocrisy and pretense and has the temerity to say so; anyone with the habit of pointing out unpleasant facts in an engaging and humorous manner

Wisconsin's Biggest Growth Segment?

Economy, Political, Quality of Life, Taxes, Wisconsin

Wisconsin's gross domestic product (GDP) increased by about 1% in 2007, half the rate of growth of the nation as a whole.  But one sector continues its dominant position as the leading growth segment in our state: government seems to be our biggest growth segment.

State government and related institutions continue to grow at significantly greater rates than the GDP.  Might our GDP have risen more than 1% if the state's business climate were better than it is?  I believe the answer to that rhetorical question is a resounding YES!

Seriously, there needs to be some level of sanity restored to our state government and to those institutions funded with tax money and other fees.  This simply is an unsustainable situation and that seems to have, as yet, escaped too many of our elected officials.  We cannot continue to increase the tax and fee loads at greater rates than the economy can sustain.  We cannot continue to extract more and more money from our citizenry even as they all pay far more for energy and foodstuff and virtually everything else that is consumed.

Our state educational institutions' budgets grow at rates of several times the rate of growth of our GDP.  Our government continues to give money away to the 'favored few' in the forms of ethanol subsidies, and 'ear marks' that send dollars here and there again to the 'favored few'.  Social engineering continues to be practiced as an 'art form' at the state level.

Seemingly every time we open our eyes, we're looking at someone's proposal for spending more money.  Or, we're looking at someone's proposal to curtail this or that segment of our economy.  Or, we're confronted with the latest effort to protect us from ourselves.  Or, we see the latest state labor settlement that raises the compensation of this group or that group.

The U.S. average for all states was GDP growth of 2.0%, so we came in on the bottom side of that mark.  In fact, we ranked 39th of the 50 states in terms of our GDP growth.  Coincidentally, that is also our ranking in terms of tax collections.  Do you suppose there might be a tie-in there if we probed a bit?

There is a point beyond which our GDP growth will simply become a negative number; a point at which the economic engine will simply not sustain the government demands placed upon it.  Michigan had a GDP growth rate of -1.2% in 2007.  There is a reason for that.  The reason for Michigan's problem is the auto industry decline and the rate of spending by the state government.  Wisconsin faces its own declining industry base and it certainly is spending too much.  What does that suggest?

We lose two people for every one person that moves into the state.  We watch as more and more businesses either leave the state entirely or relocate their headquarters or become acquired by an out-of-state entity.  We become defensive about negative news rather than stepping up to the proverbial plate with aggressive alternative approaches to solve our declining growth.

We do not seem to understand that states cannot use tax increases to get out of these situations.  States that use tax decreases find their economies booming in contrast to those states that use the reverse approach.

The old bromide, "will the last one out, turn out the lights?", has been employed regularly with regard to Michigan.  When will we begin to hear it used in conjunction with our own state?  What must we do to get the attention of our leaders?

Maybe the answer is: we have to fire them to get their attention...and the attention of those who follow that group!

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