In an editorial on Thursday, May 13, the Star Trib ran an op-ed (“A business lesson in dynamic Dakotas“) extolling both North and South Dakota, claiming they offered a “business lesson” and formed a model for a well-run state. To paraphrase Sarah Palin: “thanks, but no thanks.” I find little in the way of the Dakotas to emulate; and further, the editorial skews the success of both those states in a way, that in reality, Minnesota likely would not or could not copy.
While it is true that both have had smaller deficits and fewer job losses than Minnesota, the reasons are not necessarily related to their acumen or intelligent management of their governments. Each of those two states has well less than a million residents, limited infrastructure and minimal amenities. Minnesota, on the other hand, has over five million residents and a complex and sophisticated economy, with far greater infrastructure needs. Extending this logic, note that the state with the largest deficit and greatest problems, is also the largest state: California.
Minnesota’s economy is diverse and connected with agriculture, technology, tourism, medical development, retail centers, and others, all greatly affected by the economic recession. North Dakota, on the other hand, as the editorial states, has an economy essentially built on a single driver: oil. Considering the demand for this single commodity, no wonder they have a surplus and ample jobs. South Dakota is a bit more varied, and they have striven for job development with some success. They do have no income taxes, and they do offer a few more benefits than their neighbor to the north. But again, their economy and infrastructure needs are far less demanding than Minnesota’s. Further, the one industry they have successfully attracted is credit card banking. Why? Because they have no usury limits! I am not sure that is a redeeming quality; and that advantage may soon be gone because of the new credit card reform bills and the competition from several other states who have also eliminated their usury limits.
Moreover, let’s consider a number of other factors beyond the economic ones mentioned in the Strib editorial. As deep as Minnesota’s economic slide has been under the Pawlenty administration, Minnesota still has four cities ranked in Money Magazine’s “Top 100 Places to Live” (with Chanhassen #2). South Dakota has none. North Dakota scores with West Fargo at #81. When it comes to Gross State Product (a significant measure of a state’s economic production, on a per capita basis), Minnesota ranks 9th; but South Dakota ranks 25th, and North Dakota 28th. Not stellar comparative results.
Though, as the editorial points out, there is a strong move to retain and recruit natives back to their home state, both the Dakotas have not done very well. In the past 10 years (since the 2000 census), Minnesota has grown over 7 percent, as has South Dakota. But North Dakota, for all its vaunted jobs and strong economy, has grown a puny 1 percent. That is not a vibrant record.
Basically, what the editorial has done is selected two areas in which to compare the Dakotas and Minnesota: jobs and deficits. But, there are numerous other areas in which comparisons should and could be made to rate the states. And, of course, quality of life is at the top of the list. Frankly, both the Dakotas are for the most part barren tundras with limited amenities and scarcity of cultural activity. Sorry, but there is no other way to say it. Minnesota, on the other hand, is rich in diversity, educational opportunity, culture and the arts, research and development, a skilled work force, ample transportation facilities, and a long history of economic success. The proof-headquarters for 21 Fortune 500 companies currently reside in our state. The Dakotas, which entered the union within a year of Minnesota, have…one!
It is certainly worth noting that much of Minnesota’s growth occurred when we were considered a “high tax state” (which we no longer are according to state tax rankings). The point is, despite claims to the contrary, economic growth it not necessarily correlated with taxation as the editorial (and South Dakota promotion) suggests. Indeed, as our taxes have slowly been going down under our current administration, so has the vitality of our state’s economy, infrastructure and general services. If you wish to draw a correlation to taxation and economic health, it might even appear to be inverse.
The bottom line: the Star Tribune editorial offers some nice kudos to our two neighbors to the west, but the compliments are overrated. The Dakotas’ model is definitely not a model I would suggest Minnesota follow. Again, “thanks, but no thanks”