Chief Executive Magazine, a publication read by national and
international Chief Executive Officers (CEOs) of major and minor firms, has
just released its list of best and worst places to do business in the United
States.
Connecticut ranks four spots from last on the list. Three
comments from CEOs were far from reassuring:
“A difficult tax structure like the ones in New York or
Connecticut makes incentive-giving easy, but penalizes existing businesses,”
said one. “The climate for coming is better than the climate for staying.”
“Connecticut,” said another “is a horrible state for
business. The governor is anti-business and the economic environment he creates
is confrontational. The roads and highways are in poor condition, and the state
is fundamentally broke. The cost of living continues to rise and the governor
raises taxes and spending and does not work to lower expenses.”
And a third sourpuss said, “Have manufactured in Connecticut
for 106 years. If I could leave, I would.”
Susan Bates, the
policy director for the Yankee Institute for Public Policy, weighed in with a column in CTNewsJunkie. Apparently, according to Mrs. Bates, the
usually unruffled, mild-mannered folk at Connecticut Business And Industry
Association (CBIA) are straining at the tether:
“CBIA, the state’s largest business association, called an
emergency meeting yesterday with stakeholders from across the state to discuss
ways to push back. Joe Brennan, the association’s president, has come out
strongly in opposition to the legislature’s budget.
“’The stuff I’m hearing is scary,’ he said. ‘I hear every
day about investment going out of Connecticut.’”
These fluttering
red flags follow by almost two years a shattering piece written by Jim Powell
for Forbes Magazine inauspiciously titled “How Did Rich Connecticut Morph Into One Of America's Worst Performing Economies?” Mr. Powell’s opinion piece gathers in one
place the relevant statistics supporting his view that Connecticut is indeed
one of America’s worst performing economies. Dotting Mr. Powell’s "i”s and crossing his “t”s, it should be noted –
as CEOs across the nation certainly have noticed – that Connecticut STILL has
not recovered from a malingering recession that nearly every other state in the
nation has shucked off years ago.
Mr. Powell years
ago told us why:
- Connecticut ranks #50 – the worst — in annual economic growth. According to the Department of Commerce’s Bureau of Economic Analysis, Connecticut’s economy contracted for the second year in a row. “Connecticut is the laggard,” reported Connecticut Department of Labor economist Daniel Kennedy.
- Between
1996 and 2006 – before the financial meltdown and recession —
the number of Connecticut small businesses declined by 2.2 percent, while
the average experience of all 50 states was a 10 percent increase.
Only Ohio and West Virginia did worse than Connecticut. Its small
businesses account for about half of the state’s private sector jobs.
- Government
spending is out of control. Two years ago, Connecticut Governor Dannel
P. Malloy signed a $1.8 billion tax hike, the biggest in the state’s
history, that supposedly would generate enough. But it wasn’t enough
for the next budget, enacted this year. It was balanced mainly with
gimmicks like shifting some $6 billion of Medicaid spending off-budget.
- State
Budget Solutions, a think tank monitoring state finances, reported
that among the 50 states Connecticut has run up the fourth largest pile of
debts per capita — $27,540. This includes unfunded liabilities for
government employee pension funds. The total is almost double the
per capita debts of financially-strapped California. Higher debts
imply higher taxes in the future.
- Barron’s considered
Connecticut to be in the worst financial shape – with debt and pension
liabilities a higher percentage of GDP (17.1) than any other state.
The financially strongest state: South Dakota where debt and pension
liabilities are only 1 percent of GDP.
- Connecticut
has one of the worst business climates in the country. Factors
affecting a state’s business climate include the individual income tax,
corporate income tax, sales tax, property tax, unemployment insurance tax
and security of private property. For example, as the Tax
Foundation reported, “Connecticut imposed a temporary 20 percent
surtax on top of its flat 7.5 percent corporate income tax, in effect
raising its rate to 9 percent. This 20 percent surcharge is an increase on
a supposedly temporary 10 percent surcharge that has been in place since
2009.”
- The
American Legislative Council, in its annual Rich States, Poor States study,
ranks states two ways – economic performance and economic outlook.
The economic performance ranking is based on a state’s GDP trend,
migration trend (in or out) and non-farm payroll enrollment
trend. The economic outlook ranking is based on 15 factors
including the top marginal personal income tax rate, the top marginal
corporate income tax rate, property tax burden, estate tax burden, public
employees per 100,000 population, state liability system survey and
whether a state has a right-to-work law. Connecticut is ranked #46
for economic performance and #43 for economic outlook.
- The
Connecticut Business & Industry Association reported that “70 percent
of executives believe the value they receive for their tax dollars is
extremely low considering the amount they pay in taxes.”
- The
Cato Institute gives Connecticut Governor Dannel P. Malloy an F
grade for his economic policies that throttle investors and
entrepreneurs. Malloy “creates a more hostile climate for business,
but then tries to compensate for the damage with tax incentives.”
- Connecticut’s probate court system seems to have gained a reputation for loading unnecessary costs on estates and sometimes arbitrarily nullifying wills, a practice that’s hard to distinguish from looting. Yale Law School professor John H. Langbein declared that “Connecticut probate is a national scandal.”
A recession is a
slowdown in business activity. Connecticut’s malingering recession fairly
shouts at any thoughtful person, among whom we may number the many folk who
write editorials for Connecticut’s newspapers, that the prescriptions for
recovery followed by Governor Dannel Malloy and the Democratic dominated General
Assembly – namely, more taxes, more crippling regulations, more straws heaped
on the camel’s sagging back, an adamantine refusal to adopt policies that cut
spending in the long term, a benefice for the state’s unions – have not cured the patient.
In the midst of the
state’s death throes, the Democratic dominated, progressive-minded budget
writing committee in Connecticut’s General Assembly has just produced a “straw that
breaks the camel’s back” budget – more taxes, more regulations, more of the same
economically criminal measures that will consign the state to penury for many
more years to come. It is as if the progressives in the state Democratic Party will
not be satisfied until Connecticut drops to last place in the Chief Executive
Magazine rankings. Why settle for 44th place?
If only the sailors
of the ship of state were drunk, the course plotted by Mr. Malloy and the
union-captive Democrats in the General Assembly would be understandable, if not
forgivable. Insobriety may be offered as a mitigating factor. But these are
folks who are stone sober. Their intent – like the intent of Einstein’s madmen,
who repeat over and over again actions that produce predictable results, all
the while hoping against hope for a different outcome -- is commendable. But the end they hope to
secure, which is prosperity, cannot be achieved by the means they propose. Prosperity
wants a field unencumbered by high taxes, excessive regulations and solicitous,
chest-thumping, tax consuming politicians.
Still, the
progressives in Connecticut persist against a headwind that drives them
continually backwards, and they call this striving, this pointless thrashing
about in chains, progress. If the results of such ego-driven, walleyed, ideological madness were not inevitable
– richer politicians, poorer people – we all could laugh ourselves silly at the
comedy. But it hurts to laugh.
It hurts.
It hurts.
Comments