In November, Georgia was ranked 4th in the nation for its pro-business environment by Site Selection magazine, which specializes in corporate relocations. The Georgia Department of Economic Development was understandably quick to seize on that happy news, giving it prominent play on the department’s website.
Such rankings appear to validate a concerted, decade-long effort by Georgia’s leadership to make the state as business-friendly as possible. Our state and local business tax burden, for example, ranks eighth lowest in the country, according to a 2012 analysis by Ernst & Young. And as Site Selection noted approvingly, the 2012 Legislature continued that effort by eliminating the sales tax on energy used in manufacturing, enhancing tax incentives and “strengthening” open records laws by delaying public release of economic development deals.
When the 2013 Georgia Legislature convenes Monday, it will no doubt attempt to continue that crusade. For example, while state legislators are likely to approve using tax money to help finance a new stadium for the Atlanta Falcons, they could balk at renewing a much-needed hospital tax that will help keep tens of thousands of poor Georgians covered by Medicaid.
You see, using tax money to help the Falcons and the NFL, the most profitable sports league on the planet, is “economic development”, while helping poor families get medical coverage is considered welfare.
The larger question, however, is whether the state’s strategy is achieving its goals. And that in turn depends on what you choose to measure. For example, here is how Site Selection has ranked Georgia’s business climate each year from 2002-2012:
For more than a decade, in other words, Georgia has never ranked out of the top 10 for business climate, and over that period it has averaged in the top five. That tells us that year after year, for an extended amount of time, our leaders have succeeded in crafting government policy to produce exactly the kind of regulatory and tax environment that business leaders say they need to produce growth and prosperity. So by that measure it has been a great success.
But what do we have to show for it?
— We have an unemployment rate of 8.5 percent, significantly higher than the 7.8 percent national average and the ninth highest rate in the country, tied with Mississippi. And it is not a short-term phenomenon. Our unemployment rate has exceeded the national average for each of the last 64 months.
— In 2001, Georgia had the 17th highest poverty rate in the country. By 2011 it had the nation’s sixth highest poverty rate. We are slipping and slipping fast.
— In 2001, the state ranked 25th in per capita income and was rising rapidly in that critically important category; today, it ranks 39th in per capita income. In fact, after adjusting for inflation, state per capita income has declined by 3.5 percent since 2001.
To make matters worse, while trying to create a diligently “pro-business” environment, state government has also attempted to shrink the social safety net substantially. In a piece headlined “Georgia’s Hunger Games,” Slate reported last month that thanks to aggressive government efforts to deny benefits, fewer than 7 percent of the 300,000 Georgia households in poverty collect benefits through Temporary Assistance to Needy Families, more commonly known as welfare. Nationally, the comparable number is 27 percent.
Is that punitive approach working? Not so you’d notice. We also have the nation’s fifth highest rate of those without health insurance, and the fourth highest differential between rich and poor.
In other words, there is no sign that pursuit of a narrowly defined “business-friendly” climate has resulted in a more people-friendly climate. And isn’t that the real goal?