Menzie Chinn at Econobrowser recently had fun demolishing the argument that Pro-Koch business policies are good for state economies:
If a higher ALEC-Laffer ranking resulted in faster growth, then the points should line up along an upward sloping 45 degree line. This is not what I see…
In the full sample, the ordered probit regression with 50 ranks yields a coefficient of -0.001, z-statistic of 0.01. Since the ranking is likely to include many cases where the gap in growth is very small, I place the growth ranking and ALEC index rankings into 10 bins, and re-estimate the ordered probit.
The full sample coefficient on ALEC2013 is -0.028, z-statistic of -0.56, so that the p-value is 0.58. Examining the same data, excluding oil producers yields a coefficient of -0.046, z-statistic of 0.85. The p-value for rejecting the null hypothesis of zero coefficient is 0.40.
While the proportion of correct predictions is quite low (the pseudo-R2 is 0.003), the coefficient on ALEC2013 is always negative regardless of specification. The interpretation of the impact of a higher ALEC-Laffer ranking on growth rank is ambiguous in general (and has to be calculated out numerically). However, for the top decile (using the “binned” data), it indicates a higher ALEC-Laffer ranking reduces the probability of being in the top decile. For the bottom decile, a higher score implies increases the probability moving into the lower decile.
Shorter Menzie Chinn — ALEC and Laffer are so full of shit that even when they design a metric to make their prefered policies look good, the metric fails.
These idiots are the top tier of “conservative economists” whose primary job is to throw mud in the air to dirty the conversation. Their policy preferences have been to say no to any health insurance expansion for the past century. An argument is that it will be bad for the state economies as higher taxes will eventually be needed to pay for the state share of Medicaid expansion.
I am wondering: how soon before we begin to see the signal emerging from the noise as states that implement the ACA start pulling ahead, economically, of the others? Enrico Moretti tells me that in the long run each additional state “export” job comes with five other jobs. And from the perspective of a state, a federal government-financed healthcare job is a regional “export”. ACA subsidy plus Medicaid expansion do look to approach 1% of GDP in implementing states. And Chodorow Reich et al. definitely find that federal Medicaid dollars matter a lot in the short (Keynesian) run, and that also means they matter even more in the long (resource shift) run…
Besides having flashbacks to my REMI modeling days, this makes sense.
The biggest winners off the top of my head should be full expansion states that have few high income individuals being hit by the Obamacare surtaxes and relatively robust current medical sectors to keep the new spending in-state. Kentucky, at first thought, should be the biggest net winner with Arkansas trailing behind. West Virginia is slightly below these two states as its medical spend bleeds out to Pittsburgh, Baltimore and Virginia for high end care. The next tier should be the full expansion states that aggressively pushed the Exchanges but have significant tax flows financing both local and national expansion. New York, California, New Jersey would be the prototypical states. New York will benefit a bit from New Jersey expansion as more patients will cross the river, and California will keep almost all marginal new care in-state.
And then there are the massive resistance states which did not expand Medicaid and have low Exchange enrollment and low net new tax outflows. Alaska is a prime example. It had low enrollment against its projection. Medicaid was refused. Very little new care will be delivered and some of that new care will be delivered out of state. The biggest losers though are the full refusal states that are seeing significant tax outflows like Texas. Again enrollment is low so new economic activity via incoming federal subsidies is low, but more cash is leaving the state to pay for expansion in other states.