Opinion: Apply Gilderson to state and city
Writing in this space recently, Peter Gilderson, mentioned conditions detrimental to the development of nations, states and cities: high taxes; policies that reduce incentives to work; political arrangements that benefit politicians; high crime rates; and anti-business policies. Most urban development experts would agree with his list. However, the word “high” here is ambiguous.
If my memory serves me right, that’s not a sure thing in my retired state, his comments were mostly aimed at the Jackson metropolitan area and possibly the state. After a brief discussion of federal taxes, this will also be my focus.
Determining whether taxes are high requires a comparison with the overall tax bite in other states or nations. The same idea applies to determining if crime rates are high. The Organization for Economic Co-operation and Development tracks tax-to-GDP ratios (the usual measure of tax effort) and other data for developed countries. In 2020, the OECD average was 33.5%. Of the 37 countries rated, the United States ranked 31st with 25.5%. Federal taxes are therefore relatively low.
We ask governments to provide services; education, public safety, national defense, etc. For that, they must impose. Zero tax cannot be the norm. Now back to Mississippi.
The state’s current tax-to-GDP ratio is 11.73%, the 11th highest. The national average is 9.62%. So Mississippi is a little high but our utilities are not up to that. Apparently our income tax is about to go down a bit, maybe even go down to zero. That’s not likely to improve Mississippi.
Crime rate, fuhgeddaboudit! Jackson’s murder rate in 2021 was 99.5 per 100,000 people. The highest in the country! The state as a whole is in better shape. USA Today finds Mississippi’s crime rate the 23rd lowest in the nation.
Mississippi’s policy arrangements work well for lawmakers but not so well for citizens. Exhibit A is the Legislature’s dithering on the issue of legal marijuana, Initiative 65 during the November 3, 2020 ballot. Despite strong headwinds from various government entities, the measure passed with approximately 70% of voters voice. I voted 65 but didn’t inhale.
Initiative 65 was designed by citizens. The legislator added 65A apparently to confuse voters. Even before the election, another politician sued the state for throwing out any votes 65 might get. Also, to date, the legislature has not fixed the flaw in the initiative process created when Mississippi lost a congressional district after the 2000 census. I see no other way to read this than the government effort to avoid ceding power to citizens.
If other states are like Mississippi in this regard, perhaps that’s why the Economist (magazine) Intelligence Unit views American democracy as flawed. Given the vote-limiting measures, several states, including Mississippi, have already implemented or are planning and the entrenched power of the two political parties seems right. There’s more to say on this, but I’ll apply Scarlet O’Hara’s theory and think about it tomorrow.
Governor Reeves likes to say, “Mississippi is open for business. He is right, for large companies perhaps. Nissan recently announced a multimillion-dollar expansion of its Guangzhou plant, and the Continental Tire plant is about to go live. The story is quite different for other companies in the state. U.S. News and World Report ranks Mississippi’s business environment 49th among states. Unfortunately, near the bottom is where we end up on many lists of good things states do.
Let’s move on to the Jackson area. A recent Freakonomics podcast discussed the rapid growth of Dallas and surrounding suburbs. One of the interviewees was Cullum Clark, urban economist at SMU. Dallas is poised to knock Chicago off the podium for the bronze medal in the city’s people’s free skate. Clark attributed this to three factors; great schools, especially in suburban Dallas, public safety, and affordable housing.
How does Jackson measure up? Jackson’s school is third-rate at best. As already mentioned, crime is out of control. However, property prices are relatively reasonable. It’s one in three. Jackson doesn’t even live up to the late Meatloaf’s “Two out of three ain’t bad” standard. One in three gets a baseball player into the Hall of Fame, but it’s a loser in urban development.
Neither Gilderson nor Clark mention infrastructure, but it is a critical factor in companies’ decision to locate in an area. Jackson’s infrastructure is a mess, especially its water system. To be fair, Jackson worked on improving the streets, especially North State Street.
As a Mississippian and resident of the Jackson area, I fervently hope that one day soon our leaders will realize that the way we have always done things hasn’t worked for a very long time. Paying attention to Gilderson and Clark would be a good place to start.
Pat Taylor, Ridgeland