The hollowing-out of Wisconsin
The untold story of Walker's plan is that it will accelerate the state's race to the bottom as a low-wage, low-skill economy.
Meir Russ guardian.co.uk, Tuesday 1 March 2011
The current events in Wisconsin can be framed in four different story lines, each presenting a pair of conflicting interests: budget gaps and cuts (private v public sector); state government and business against labour unions (business v labour); can we the people afford the educational and health services we have (the haves v the have-nots); and corporations against entrepreneurs (big business v small business).
The media focuses on and loves the first two stories. They fit in well with the "big picture" national politics and discussion. They are simple to tell. They capture headlines and agitate people.
The other two are more complex and difficult to sell to the media and to the public. The first is the quality and the affordability of educational and health services. Governor Scott Walker's plan will lower, if not destroy, the quality of one of the best in the world's public educational systems. His assault on education is broad (K-12 and universities), sophisticated (salaries and benefits cuts to academic and administrators service providers, changing the structure of state support and the state university system) and deep (state employees in Wisconsin are currently underpaid by comparison with equivalent staff by 10-30%). The net result? Wisconsin in 2009 was already 3% below the national average in the percentage of adults 25 years and over with a bachelor's or higher degree (pdf), compared to 2% behind in 2000. Walker's assault on health services will also cost tens of thousands of people in the state to lose their Medicaid coverage.
But the least covered story is the last one. The governor's plan is supposed to create 250,000 jobs in Wisconsin. The tax cuts he proposed and the policies he is promoting suggest that if his plan succeeds, these will be low-paying jobs that the state cannot afford. This will continue the downward spiral of Wisconsin's economy. Large companies rarely are net job creators, and can and will move out of state when the financial incentives recede. Investing less in human capital and promoting cheap labour is not a recipe to bring in knowledge-based, high-paying jobs. Lowering the quality and increasing the cost of educational and health services will encourage the outward migration of the young, the bright, the entrepreneurial and the able.
In short, Wisconsin will be losing the most viable asset the state has: its human capital. This will accelerate existing long-term trends. Already, in 2003, Wisconsin was a net exporter of residents with bachelor's degrees (pdf), and the median population age in 2009 was more than 4% higher than the national median; in 1990, it had been equal (pdf). If you wonder why, then it's worth knowing that the median household income in Wisconsin went down from more than 4% above the national median in 1999 (pdf) to only 0.4% above in 2009.
Not surprisingly, Walker is playing to the unholy coalition of big money, government administration and judiciary that already gave us the highest level of economic inequality since the depression. The US is closer than it has ever been to becoming a plutocratic state and country. Such policies are accelerating the decline and preventing the appropriate investment in future, new knowledge-based economy stars.
So, in the "best case" scenario, Wisconsin will attract more low-paying jobs. In the worst case, the state will not get even that, since it will be competing with Ohio and New Jersey in a race to the bottom. Shouldn't the state and chambers of commerce develop policies to support small businesses, instead of subsidising large corporations (as it may do, for example, if it were to allow Koch Industries and other companies to purchase state-owned power plants in non-bid contracts), so that those higher-paying jobs that will keep graduates in Wisconsin are created?
Over the last 30 years, the economic inequality, rate of poverty and unemployment have all risen slowly but steadily, while the enrichment of the few has continued unabated – amplified by the quiet collaboration of both political parties and the three branches of the government.