The State That No Longer Works

Having more or less given up on California, New York and Illinois, liberals now tout Minnesota as the golden left-wing state–the state that shows liberal policies can succeed, after all.

This effort to valorize–to borrow a liberal cliche–Minnesota is nothing new. Way back in 1973, Time magazine touted Minnesota as “the state that works.” Minnesota’s “working” at that time consisted partly of the fact that it had recently raised taxes.

Those halcyon days are long gone. Minnesota was blessed with a strong and remarkably diverse economy, founded on agriculture but with lots of capital-intensive manufacturing, mining, and, at one time, a major tech sector. Historically, Minnesota has always had higher than average GDP per capita and, consequently, better than average incomes.

But in recent years, the conservative policies that contributed to Minnesota’s success have been reversed, with increasingly dire results. Unlike California, Minnesota has not yet driven out its middle class, but we are working on it. Every year, as my organization has relentlessly documented, Minnesota loses (on net) residents in every income category over $50,000, while attracting residents (on net) only in the income category 0-$25,000. This is obviously not a sustainable business strategy. Economist John Phelan refers to it as the “deskilling” of Minnesota’s work force.

And now, after years of horrific government policy, the inevitable has happened: for the first time since statistics have been kept, Minnesota is below average in per capita GDP. John Phelan reports:

Minnesota has long been able to boast a level of per capita GDP above that of the United States generally, a ‘premium’ for living in the state. In 2004, this premium peaked at $4,973 per Minnesotan, as Figure 2 shows.

2004 fell during the first term of Minnesota’s last Republican governor, Tim Pawlenty.

As recently as 2014 this premium was $4,669.

Minnesota’s DFL party passed a big tax increase in 2014.

Since 2014, however, this premium has fallen in every single year and was down to just $43 in 2023.

Minnesota’s decline has continued into 2024:

As Figure 3 shows, in the third quarter of 2023, GDP per capita was lower in Minnesota than it was for the United States generally for the first time for which there is data available. In the 22 quarters for which we can calculate real GDP per capita growth rates, Minnesota lagged the United States in thirteen.

There you have it. What was once a prosperous state had been dragged down to below-average status by left-wing government. Let Minnesota’s decline be a lesson to voters in every state who wonder whether they should elect Democrats.

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