Some of this economics stuff just doesn’t add up

Economics are an utter mystery.

For example: I thought I understood a central economic belief of the past 30 years, a value going back to Reagan and JFK, that when you put money in people’s hands, it ripples through the whole country. Trickles, if you will. But this turns out to be much more complicated: If you cut a rich person’s taxes, that money will radiate outward, turn into jobs and make everyone’s lives better. But if you supply, say, 1 million poor people with money to buy groceries, that money does no rippling whatsoever. It simply bankrupts the country, financially and morally.

They’re not for dummies, these economics.

Or: If you want to help someone who’s looking for work, what you do is take away their government benefits. That may not seem helpful to those who do not understand economics, but hold on. If you cut benefits and give tax breaks to wealthy people – if you un-redistribute the money – then those wealthy people, who have been champing at the bit to create jobs, will suddenly do so, even though demand has not changed at all, and might have even gotten worse, simply because their personal surplus has reached a very specific, low-tax point.

Surpassingly strange.

It’s like quantum physics – don’t even try to understand it. Just listen to the experts.

In this case, one of those experts is ALEC – the American Legislative Exchange Council. ALEC has been in the news a lot lately, in part because it claims to be a nonprofit, nonpartisan educational organization, when in fact it’s somewhat blatantly a lobbying organization for large corporations to help almost exclusively Republican lawmakers develop strategies and write legislation.

Many of the main thrusts of recent GOP campaigns – the ideas themselves as well as the word-for-word rhetoric – come more or less fully formed from ALEC. Among other initiatives, the council’s corporate and legislative members draft “model bills” that can be introduced more or less word for word. Hundreds of ALEC-written bills – legislation co-written by corporate members of the group – have passed around the country in recent years.

ALEC also produces an annual report, “Rich States, Poor States,” which purports to demonstrate that “states with the most responsible spending and competitive tax rates enjoy the best economic outlook.”

High-tax states will suffer. Low-tax states will thrive. Simple as that.

Of course, “best economic outlook” means “best economic outlook as calculated by ALEC.” ALEC measures 15 criteria. If states have no income tax or a right-to-work law or low work comp rates for employers – credit! If they have a “death tax” or higher-than-average taxes in any of six categories – demerit!

This process tells us that Utah has the very best economic outlook for 2012, and New York has the very worst. Utah, where personal per-capita income is $33,790 and has grown by 33 percent in the last decade, has the very best economic outlook, and New York, where personal per-capita income is $50,545 and has grown by 38 percent in the last decade, has the very worst.

In ALEC economics, recent income growth is not even 1/15th of a state’s economic outlook. Otherwise, a state like, say, Washington (33 percent income growth over 10 years) might not be ranked 33rd, far below No. 6 Idaho (30 percent). Washington has no income tax and several citizen-initiative tax caps, but its future prospects look dim because it has “forced unionization” and the death tax.

In addition to looking forward, the report looks backward, so you can see how well its outlooks match up with actual performance. It doesn’t show what you might expect, given the certainty of ALEC’s pronouncement about what it’s supposed to show.

For example, Washington had a 33rd-place outlook for 2011; it had the 14th-best performance by the end of the year. ALEC then assigned Washington another 33rd-place outlook for 2012.

In 2011, Idaho had the No. 5 economic outlook in the nation. Then Idaho ranked 17th in performance that year. Naturally, ALEC assigned Idaho the No. 6 outlook for 2012.

Or take Utah. The thrivingest place in the country. Utah’s tax-friendliness has given it the No. 1 economic outlook for each of the five years the report has been produced. Last year, it ranked just 12th in performance, but that didn’t have an effect on its outlook, which once again was tops in the nation.

Does this suggest that ALEC’s formula – low taxes equal economic prosperity – is somehow incorrect? Does it suggest that, even by its own measure, low taxes alone do not magically produce booming economies? That low-tax wonderlands like Idaho, Wyoming and Utah – where incomes are as low, relatively, as the taxes – are not universal models of economic health? That the pat anti-tax phrases – the eminently repeatable lines – are not actually supported by even the cherry-picked facts in the report?

Is that what you think? Perhaps you just don’t understand.