State Watch

New England’s Blue-State Blues

Once known for its stiff-lipped prudence, the region is now a case study in fiscal insanity.

By 7.25.14

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They call it the “Texas Miracle,” though California doesn’t think there’s anything heavenly about it. Texas’s economic boom, driven by low taxes and a business-friendly regulatory climate under the cocksure leadership of Governor Rick Perry, is the envy of the rest of the country. There’s a running joke that California’s biggest export is its own people, headed straight for the Lone Star State.

But it’s not just California that has the blue-state blues. Outside the West Coast, the most cerulean part of the country is the Northeast, and specifically New England, the six-state region once bound together by Puritan values, now bound together by mandatory sex education classes. But while New England has embraced looser social values, economically it’s a case study in high taxes, obscene spending, and coercive regulations.

Let’s start with Rhode Island, which has become perhaps the most calamitous state in the country. Aaron Renn at City Journal recently crowned the Ocean State “America’s basket case.” It boasts the nation’s highest unemployment rate, fourth worst tax climate according to the Tax Foundation, and second worst business climate according to CNBC. Its unemployment and disability insurance programs are an unmitigated disaster.

Rhode Island is the sickest patient in the New England infirmary, but there’s plenty of hacking and wheezing to go around. Were it not for its wealthy New York bedroom communities in Fairfield County, Connecticut would probably be as destitute as Rhode Island. The Nutmeg State has the forty-second worst tax climate and the forty-fifth worst business climate in the nation.

And what little life remains in the Connecticut economy is being squashed by its monolithically liberal lawmakers. In 2011 its governor signed into law the largest tax increase in its history. Since then tax receipts have plummeted (surprise!) and the state’s 2014 budget numbers, initially projected at a $505 million surplus, have now shriveled to a projected $1.4 billion deficit next year. In 2012, Connecticut was the only state in the nation with negative economic growth.

New England was once a manufacturing powerhouse on the cusp of economic progress. Today the region’s cities are blighted by hollowed-out factories and crumbling warehouses. Of course manufacturing has seen a precipitous decline nationwide, but New England’s drop-off has been worsened by its terrible policymaking.

The aerospace company Pratt and Whitney, once the crown jewel of Connecticut’s manufacturing sector, discovered in the early nineties that it could save 30 percent by moving to business-friendly states like Georgia. Since then Pratt has relocated tens of thousands of jobs overseas and to the South. Plenty of other manufacturers have followed suit.

So why does New England keep doing this to itself? Those of us who grew up there used to point to New Hampshire as the proud exception—our last center-right bulwark. And while it still doesn’t have a sales tax, and features such oddities as roving gangs of libertarians that harass parking cops, New Hampshire isn’t nearly as business-friendly as we thought. The state has a confiscatory property tax and a swamp of other fees and charges. Its business climate is rated twenty-seventh, making it non-competitive with states like Texas and North Dakota, and its economic growth is tepid.

Expansion is pretty sluggish throughout Northern New England, whether in crunchy Maine or Stalinist Vermont. Part of this is due to stagnating demographics. Maine has the oldest average population in the country, while Vermont is second and New Hampshire is fourth. (New Hampshire residents don’t live free, but they do frequently die.) Chances are if you live in Northern New England, you were born in Northern New England and you’ll die in Northern New England. That doesn’t make for a vibrant economy, though perhaps it does make you open to loony schemes like Vermont’s looming single-payer health care system, sure to make that state’s high taxes even higher.

Not everything in New England is dire. Massachusetts, once derided as “Taxachusetts” and still regarded by many red-staters as a grotesque progressive lab experiment, has decreased its tax burden over the past fifteen years and is growing significantly faster than the rest of the region. But that growth is mostly limited to Boston and its suburbs. Renn quotes Jim Stergios of the Pioneer Institute describing Massachusetts as “Greater Boston and three Rhode Islands grafted onto it.”

Cities alone won’t keep a region as rural and populous as New England afloat. Its residents might not be fleeing to Texas, but with New York setting up free enterprise zones and Pennsylvania humming along, they certainly have somewhere to go. Willem Lange once described New England as “a place where dry humor and perpetual disappointment blend to produce an ironic pessimism.” As long as its residents support progressive policies, that haunting disappointment will linger.

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About the Author

Matt Purple is The American Spectator's assistant managing editor.