Sunday, January 26, 2014

Tim Hudak and Scott Walker

Tim Hudak is leader of the Ontario PC party while Scott Walker is Governor of Wisconsin and a beacon to those on the North American right who see his small government, anti-union, tax-cutting regime as offering a hopeful model for economic development. I could not find an explicit endorsement of the Walker approach by Hudak but clearly their policies have much in common.  Hudak's pledge of a million jobs for Ontario over four years does seem to echo Walker's promise to create 250,000 jobs over four years.

So how is the Walker economic program working out?  According to this post on Scott Walker's recent State of the State speech, which comes from the blog Econbrowser (based partly in Wisconsin), things are not going so well, especially compared to states run by Democrats including neighbouring (and very similar) Minnesota.  Take a look at this graphic:

Figure 1: Log coincident indicators for California (blue), Minnesota (red), Wisconsin (green), and US (black); observations for 2014M05 are forecasted values using Philadelphia Fed’s leading indices, all normalized to 2011M01=0. Source: Philadelphia Fed and author’s calculations.
We can see that Wisconsin's performance coming out of recession lags that of Minnesota and California, states both controlled by Democratic governors and legislatures.

California is still suffering from the impact of previous cuts but has reversed course in the last couple of years as Democrats have gained ground in the state legislature.

Is the Walker-Wisconsin approach one Ontario should emulate?