?State Government & Economic Performance? Essay, Research Paper

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State of the State

In this paper we are asked to read the text by Dr. Paul Brace, “State Government & Economic Performance,” from that we are to decide as if we were the governor of the state of Kansas, which economic development strategy would be best for Kansas. Out of the four choices we were given, Arizona, Texas, Michigan, New York, I have chosen to argue for the example of Michigan. Before I go into great detail of the particular example I have chosen, let me give you a brief description of the governmental economic strategies of each state.

Arizona:

Arizona’s economy started out with great funding from the government and also from it’s abundance of natural resources. With the growing number of people moving to the new hot bed of economy, Arizona officials began to take more of a Laissez Faire approach to government. With WWI and eventually WWII, Arizona received several governmental contracts to build ships, planes and new military bases due to Arizona’s natural closeness to the pacific campaign.

Not long after that Arizona’s economy started record numbers of economic increase, due vastly to the tax breaks and other incentives used to bring big business to the area. Large manufacturing, technology and automobile companies looked to relocate to the booming state. This change in opportunities left the natural resources industry in Arizona a distant memory of importance. With big business booming, who needed the small time industry that carried them from its creation to where they were just after WWI. On top of that, governmental procedure had to go along with this change. After all with every action there is a equal and just as great reaction that occurs. With the hands off approach the government had implemented there were also cut backs! Lower spending on education being the biggest one. If they cut taxes, were are they going to find the money to fund the schools that are going to be needed to support the vastly growing population that would come with these businesses. And that’s no even mentioning anything about the several other governmental agencies that would be effected by the lack of revenue to the state. These changes, that made Arizona the hot bed that it was, would ultimately be the same thing that would cause they downfall of the economic resurgence for Arizona.

Soon after businesses stopped coming. They claimed that because of the lack of schooling available in major programs, particularly engineering, it had became increasingly hard to find the engineers that were needed to run these plants and sustain profit.

Ultimately, Arizona’s economic future according to brace, depends on two factors. As long as conditions elsewhere stimulate migration to the state, and as long as Arizona retains a relatively low cost of living compared to other states, Arizona can grow. But it is overwhelmingly convincing that Arizona’s entire economy it based and virtually dependent on help from other states as well as a need for government intervention.

Texas:

Texas like many other southern states relied heavily on slavery and it’s institution of such, to help stimulate it’s economy through the manufacturing of cotton and other harvest “cash crops”. Prior to the civil war, Texas was among the biggest slaves states in the union. Shortly after the Civil War, Emancipation left them with an abundance of under skilled, in a educational sense, workers seeking jobs in a already economic hardship stricken industry. This was due mainly to the lack of incentives in the South to invest in education which would lead to the training of jobs for manufacturing type industry. The South still was going to rely heavily on its agriculture bases economy and at the time had no need nor desire to change. Economically speaking, the supply side of the economy was well fed but the demand side was undernourished.

Shortly after the discovery of oil on Spindletop, Texas began a run on one of the most flourishing economies in the union. Oil and gas would become the big industry in Texas, and governmental regulations on oil would soon be the only real source of governmental influence to be had in a politically week state. With large Tax breaks at the federal level, including the percentage of depletion allowance and the provision for expensing of allowable drilling cost, helped to stimulate the industry’s growth.

Shortly after WWI Texas like Arizona would receive several defense contracts as well as, military installments which would lead to the beginning of a relocation of big business to Texas. Eventually with the Cold War and the space race, the emergence of aerospace and electronic firms would lead to even bigger economic growth. The competitive nature of Americans and the federal government would begin pushing the space race to such highs that companies like Texas Instrument and many others would emerge.

Even more so, when economic crisis hit the country, and gas prices skyrocketed, Texas cam out smelling like a rose due to the overwhelming resources at it’s disposal. Inparticularlly in 1973 with the Arab oil Embargo, Texas’s oil supply helped to bring down oil prices and supply oil for much of the Untied States. Texas seeming with its hands off governmental approach had no worries.

However, even with no state income tax, and virtually no other real major taxes on it’s citizens, Texas was able to support it’s public programs through taxes on oil and other governmental defense contracts. But a week government would lead to major impediments to Texas’s broad based public programs including education. Education was still low, at one time as low as 31st in the country. With fewer quality schools and more people coming to such a hot bed of economic prosperity, educational statistics would continue to drop until courts forced the spending of money’s on education in 1988.

Unlike Arizona, Texas has not yet seen it’s major crisis in economic prosperity, however, its hands off approach still seems to depend greatly on the needs of others and help from the national government. Perhaps without the vast oil resources at it’s disposal, our findings on Texas’s economic prosperity would be different. If forced to rely on another tool to stimulate economy, Texas might be forced into a more hands on approach.

Michigan:

Michigan is different then any of the other two states in that it employs a very hands on and supportive government. Michigan is among the highest in the country in Education, it supports greatly the idea of public welfare through public assistance, and also innovative ideologies in raising taxes to support itself with out asking for the assistance or having “big brother step in and give them a hand.”

In the early 19th century wood and timber as well as chemicals were the leading manufacturing products of Michigan. Michigan, a very big user of it’s natural resources as well as new innovative ways of marketing existing resources, has always been among the leaders in industry in the nation. However, just like several other states Michigan has seen its days too. During war time, it was also used to help manufacture tanks and other war machines and weapons. But automobiles have been the major cash crop so to speak for Michigan since the turn of the 20th century.

The major differences between the Michigan and the other two is styles of government are that Michigan, as I stated before, is a very hands on and helpful. Government seeks to aide it’s citizens through programs and other governmental subsides. But the people only see the now and not the long term effects of raising taxes. They don’t see that the goal is to stimulate growth and to continue to fund government agencies that are there to help everyone who needs it. The creation of committees to figure out a solution and trying to do it with out the advatanges that other states have is what makes there style so unique .

I think the thing that impresses me most about this style of government is that, rather than issuing tax breaks, to existing businesses, they would prefer to find new innovations and new businesses to take the place of those wanting to leave.

New York:

New York like Michigan, is a very hands on style of government. The government for much of the 19th century and the later of the 20th century was highly involved in all aspects of economic growth for the state. Early on government used everything in its power to sustain economic growth for the state, ranging from tax breaks, to low interest rate loans to even grants and subsides to boost the creation of jobs and business for New York.

But government got too powerful and took a step back until after the crash in 1929, and the Great Depression. After 1929, government came on strong. Now that government was going to take complete control of things ,the economy was going to emerge from the abyss it was in. Tax breaks for urban jobs, loans for businesses that would open in urban areas were implemented. But instead of things getting better, in 1950 they got worse. Perhaps too much government again. Some critics would argue that was the case.

But in the long run the state would intervene again. This time with new leadership, different goals and a better plan of attack. State government thought that more jobs paying better money would do the trick and stimulate growth from with in. They thought if the could find in-state fix’s that it would revitalize the economy and in affect would serve as a jump start. Grants, loans, lower prices on natural resources(like power) would create a fix. But ultimately stronger heads would prevail creating a surplus in goods and labor. Unemployment programs as well as, job relocation programs, workman’s compensation, better education and training programs would aide in helping people get better jobs as well as attacking the need for new business’s.

New York like Michigan, also held high value you in education, labor unions and good working conditions, but I think in this case the government interfered too much and may have caused more problems than it fixed. To use an example, if your a baseball coach, your goal is to teach your team to win on there own. The coach has to rely on the team to play. The coach only instructs the team, but it is the team that decides ultimately whether or not they win the game. The state government should in place the tools for growth, but should not try to control the economy to the extent of confusion and over reliance of government. After all to many hands in the pot only make a mess.

Now back to the purpose of the paper. If were governor of Kansas, I would choose the economic strategy of Michigan. The reason I would do so is because It fits me personality the best . I’m a very hands on type leader. I like to have direct control over everything, so that if something goes wrong I have one person to blame. Like Michigan Kansas already has high investment rates in education. And as governor I would seek to keep it high. Kansas also makes use of governmental subsides to aide the citizens of the state through relief, welfare, unemployment, grants for school, subsidized loans for housing and some forms of tax relief for small businesses. Some of our manufactured goods are the same in that the we both have timber industries. Granted we do have some oil industry in the state, its not anything close to the security that Alaska and Texas enjoy, but Kansas relies highly on its agricultural base and insurance to provide for most of its economy. I still think that Kansas would prosper better with a hands on government due to the amounts of farms and subsides that are involved in a agriculture rich state. Without these programs surely Kansas’s economy would not prosper due to so many people’s income riding on our wheat crop as well as soy beans and other cash crops. We can rely on others to buy our goods but drout could cause us to have no crops which would be a devastating blow to our economy, and may force it to plummet.

In conclusion, the economic strategy of Michigan in my opinion best fits Kansas due to our agriculture rich economy and our high goals for education through out the state. Labor safe environments as well as, workers rights and the well being of my citizens would be the primary concern for me as a governor, and the Michigan plans meets