“In their new book, “Rich States, Poor States . . .”

Christopher Rhoads writes:

Interested to know what your comment would be on the following article, which includes the following lines:

“In their new book, “Rich States, Poor States,” Arthur Laffer, Stephen Moore and Jonathan Williams rank all 50 states based on economic performance over the last decade. Seven out of the 10 best performing are right-to-work states. Eight of the 10 worst performing are not.”

(a) They appear to have stolen half of the title of your book.

(b) Would be great to see an analysis that is more plausibly causal, perhaps along the lines of some of what you do in your book.

My quick thoughts:

1. They don’t owe me anything on the title–as long as they spell my name right and credit my coauthors.

2. Arthur Laffer is still around? Cool!

3. In chapter 5 of Red State, Blue State, we pointed out some patterns that might be relevant to the point made by Laffer et al. One issue is that economic performance can be defined in different ways. For example, from 1981-2004, the five richest states in per-capita income (Connecticut, New Jersey, Massachusetts, New York, and Maryland) performed poorly if you look at incomes of the 10th percentile within each state, but they performed well for the 90th percentile.

In poor states, the poor have been doing better; in rich states, the rich have been doing better.

In answer to the other question: I don’t have much to say causally on this. You’d want a natural experiment of some sort. All I can say is that the rankings of the states from rich to poor have not changed much over the past century.

5 thoughts on ““In their new book, “Rich States, Poor States . . .”

  1. Yeah, Arthur Laffer of the Laffer curve is still around, and is still making a fool of himself. Andrew, had you already left the country when Laffer said this?: "I mean, if you like the Post Office and the Department of Motor Vehicles and you think they’re run well, just wait until you see Medicare, Medicaid, and health care done by the government." Yeah, wow, if there's one thing we don't want to see, it's Medicare run by the government! Can we even imagine what that would be like?

    But Laffer had already become famous, again, in a popular (indeed, "viral") video last year in which repeatedly asserts that the asset bubble is not an asset bubble and that good times are going to keep rolling. It's well worth watching.

  2. I happen to have handy a scatterplot of the per capita personal income by state for a longer time frame (1929 to 2007). I use this to illustrate the effect of data transformations.

    In general, the rich stay rich the poor stay at the bottom, with some notable exceptions likely related to autos (booming in 1929, not now), government (Virginia) and retirement (Florida).


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