What Some Rich States Could Learn From a Well-Managed Poor State

I was born and reared in West Virginia but now live in California. The contrast between the economies of the two states could not be more stark. West Virginians (who thank God that Arkansas and Mississippi sometimes keep us from being 50th on lists of economic and social indicators) rank nearly dead last on median personal income. West Virginia’s tax revenues consistently rank in the bottom third nationally. California in contrast has a much wealthier population and takes in by far more tax revenue than any other state in the union, a stunning $104 Billion in 2010.

Yet for all its wealth, California is a fiscal disaster. Through times of growing and shrinking tax revenues, the state’s elected leadership (and its voters through the batty initiative process) have consistently spent more than the state took in. Our credit is now shot and massive cuts that will gut the public sector are the future of the no-longer-so-Golden State.

Meanwhile, throughout the recession to the present day, West Virginia’s elected officials have successfully balanced the budget either with current revenues or with the money they salted away in surplus years (fancy the concept). As mocked as West Virginians may be for a lack of West Coast level sophistication, their state has been well served by the quaint Appalachian habits of not spending more money than you have and putting extra money away for a rainy day.

As I have worked with West Virginia legislators on the state’s addiction problems this year, I have been struck by the fact that they actually have time to think about substantive issues and attend to the practical problems of the citizenry. Most state legislatures used to be that way before fiscal crises and emergency special sessions became the order of the day, and most politicians became too frazzled and pressured to think of much else beyond all the red ink.

Will West Virginia ever have the wealth and health of California? Of course not. But could my adopted state (and many others) learn something about public management from my home state? Absolutely.

Author: Keith Humphreys

Keith Humphreys is the Esther Ting Memorial Professor of Psychiatry at Stanford University and an Honorary Professor of Psychiatry at Kings College Lonon. His research, teaching and writing have focused on addictive disorders, self-help organizations (e.g., breast cancer support groups, Alcoholics Anonymous), evaluation research methods, and public policy related to health care, mental illness, veterans, drugs, crime and correctional systems. Professor Humphreys' over 300 scholarly articles, monographs and books have been cited over ten thousand times by scientific colleagues. He is a regular contributor to Washington Post and has also written for the New York Times, Wall Street Journal, Washington Monthly, San Francisco Chronicle, The Guardian (UK), The Telegraph (UK), Times Higher Education (UK), Crossbow (UK) and other media outlets.

20 thoughts on “What Some Rich States Could Learn From a Well-Managed Poor State”

  1. Step 1: Get rid of the term limits. When the most experienced representative has 6 years under their belt (maybe 12, if they did the other house as well), there’s just going to be a real lack of leadership.
    Things were more orderly when Willie Brown was still running things.
    Step 2 is tackle the initiatives.
    Fortunately, California already is reforming redistricting, which should help break some of the legislative impasses.

  2. “I have been struck by the fact that they actually have time to think about substantive issues and attend to the practical problems of the citizenry. Most state legislatures used to be that way before fiscal crises and emergency special sessions became the order of the day, and most politicians became too frazzled and pressured to think of much else beyond all the red ink.”

    I think it’s great that you give Cali pols so much credit by implication. But I think the differences have much more to do with the need to fundraise, our stupid term limits, and the ridiculous 2/3rds requirement that means Republicans don’t need to actually *do* anything to get their way. And I think all three of these burdens were imposed *upon* the pols by the rest of us, one way or the other.

    So, the problem is Cali voters, not the pols.

    But I’d love to hear more about what you think explains W. Virginia’s greater functionality. And I hope it will be prosperous some day.

    1. Though I have no sympathy for the fix the Golden State is in, I think it is only fair to point out that Senator Byrd kept a steady stream of Federal money coming into West Virginia (well out of proportion to its population) for decades. This played no small part in its fiscal “prudence.”

      1. Redwave72: Louisiana, New Mexico and Mississippi are among the states that outrank West Virginia on the index of federal dollars taken in versus collected — and all three have big budget deficits.

  3. California’s system of government is, obviously, catastrophically broken.

    However, the scale of the problem is dramatically different. According to official West Virginia Digest of Revenue Sources, general-fund revenues were down just a hair from 2007-08 to 2008-09 and then fell just under 4 percent from 2008-09 to 2009-10, and has since bounced back nicely.

    From 07-08 to 08-09, California’s general-fund revenue fell from $102 billion to $82 billion. That’s a cliff. And the brittle political system sort of explains the rest.

    1. Bruce: It depends what you do when you take in $102 Billion. If you recognize that boom and bust cycles are part of state life in California, and as a result spend $92 Billion and put $10 Billion in rainy day fund, you are fine the next year when the predictable fall off in revenue comes. But if you do what the California legislature tends to do, namely spend all $102 Billion or even spend $110 Billion on the assumption that every year will be better than the last, then you are in the mess we are currently in.

  4. When I think of West Virginia I think of the 1931 test for 8th graders at http://voices.washingtonpost.com/answer-sheet/history/take-this-1931-8th-grade-gradu.html .

    I think that the problem of what to do if you are under-weight has been pretty well conquered. In other respects I am not so sure that today’s kids are all that far ahead of those of 1931.

    Keith, do you happen to know more about this test and how it was used in the school system of the time? I would like to know more about this rather remarkable relic of the past.

      1. The test seems impressive only because we don’t have the textbook the questions are drawn from.
        For all we know it could be a straight one to one relationship.
        And of course, we didn’t sit in the class and hear the lectures.
        More one to one relationships there…

        Beyond that, stuffing kids heads to answer something like this seems a waste of neurons.
        Name and locate the principal health resorts in the United States.
        (Especially for a poor kid that has to walk miles to school in the snow.)

        But beyond all that I suspect Ed is correct here: I am not so sure that today’s kids are all that far ahead of those of 1931.
        Except I would put it like this: I am not so sure that today’s kids and today’s schools are all that far ahead of those of 1931.

        I mean really: Given that IBM has made a machine that can beat the best humans at Jeopardy, and Apple has made Wolfram|Alpha’s calculations instantly accessible via Siri’s voice: What should we be teaching our flesh and bone these days? Whatever it is, it must be a radical rewrite of the curriculum as currently taught. My father had a saying that education was 5 years behind the culture. My experience? It was 10 years behind? Now? I’d say it is at least 20 years back and losing ground by the galloping moment….

      2. I agree with koreyel, to a point. The test seems unremarkable to me because 1) it is similar to Soviet era school tests for even younger students (which directly reflects the content of the respective courses) and 2) because majority of West Virginians either never sat for the test or never passed it. There is also the question what “diploma” means here–was that the ultimate achievement for an eigth-grader or simply a mark of completion?

  5. West Virginia is a hilly region with poor soil. The best cash crop available for that topography is probably tobacco. The most useful substance extracted from the earth there is coal. So far the main ingredients to the economy of West Virginia seem rather bad for people’s health I should say.

    As far as prudent governance goes, I question that. West Virginians should have seen the end of coal and tobacco a long time coming. What strides in education did they make in order to create a modern 21st century economy?

    California is a place where the climate allows for abundant agriculture. It is also a leading producer of oil and is a valuable part of the Pacific trading region. California has bad governance because they can get away with it, owing to the natural resources that have enriched the state.

    1. Benny Lava says: The best cash crop available for that topography is probably tobacco..What strides in education did they make in order to create a modern 21st century economy?

      Well, they invested enough so that people there know that there was a civil war in the U.S. in the 1860s, during which West Virginia became its own state — even though many people today, incredibly, still confuse it with Virginia (The big tobacco state of which you are thinking, West Virginia grows very little, could never really compete with the flat land, better soil and better weather on the other side of the Blue Ridge).

  6. @Benny Lava–actually, the best crop available may well be hemp (any variety, although the illegal kind is likely to be less hardy and less potent than competition).

    In any case, California problems that put it on nearly equal footing with WV, AR, LA and MS stem from Prop 13 and a handful of constitutional issues (e.g., any educational program must completely free for for every student in it, which is great in theory, but not in practice–for one, it means that if the state does not pay for all the sports equipment of every member of a team, there is no team). Lack of sound political leadership is only a part of the problem. A sizable, intransigent Republican minority is another. But 80% comes from Prop 13. Economy of Scale only goes so far… The question is not just how the money is spent (i.e., efficiency in distribution), but what it’s spent on. Unlike another small state, Vermont, there is little money spent on roads off Interstates (and there is not a whole lot of Interstate mileage either). Educational attainment is not far from the bottom–comparable to California’s but for entirely different reasons (and when was the last time you’ve heard of West Virginia higher education outside of football and basketball scores?). And California has much thirstier infrastructure that demands constant investment, including transportation, urban development, water distribution, etc. West Virginia barely has a pulse when it comes to infrastructure. And, then, there is that fine Appalachian tradition of social welfare–NOT! (At least, not beyond federally mandated minimum.) This is where scale actually works against you. A state that spends no money would never run a deficit, no matter how much it brings in. I’m no Herman Cain (thank God!) but it seems you’re comparing apples and oranges.

  7. It helps that West Virginia is a very homogeneous state, demographically. There isn’t really a significant number of people that the majority would like to deprive of all rights, exterminate, or get revenge on for real or fictional past injustices. So they’re all sort of on the same page in terms of priorities.

    And the lack of any particularly affluent areas means there aren’t a bunch of Michele Bachmann types whose exurban megachurch constituents have no need for government to do anything but reinforce the teachings of James Dobson.

  8. I should google for links, but there was a point, I think in the first Jerry Brown governorship, when there was a surplus in the budget that was to be retained for a downturn. The Republicans, natch, raised a stink that this money should be returned to the taxpayer since it was “their money”. Good stewardship requires an underlying structure that supports it, and responsibility on the part of ALL the stewards. What is the party breakdown in the WVA state government over time?

  9. “Will West Virginia ever have the wealth and health of California? Of course not.”

    Why is this an “of course not”?
    Or, to put it differently, perhaps the message to take away from this is that there is more to being “well-managed” than the superficial factors that Keith lists?
    Let’s assume that being well-managed (in the terms Keith lists) is important. Then we would presumably continue on to argue that California today is coasting off what it did well thirty years ago, that it’s all downhill from here; whereas West Va might have been badly managed 30 years ago but is on the righteous path. But Keith does not have much conviction of that set of outcomes.

    So what SHOULD we conclude? That Richard Florida is right — make your cities and your society welcoming of gays, immigrants, the creative and the different, and everything else will take care of itself — and that CA (at least the part of it that generates the real money — LA and the Bay Area) has those fundamentals in place, whereas West Va does not?

  10. I think that most of all this is an example of Sutton’s Law. What do you get by corrupting the west virginia legislature, unless you’re in the coal business or want to put down a particularly polluting but not very big factory? (Yeah, that’s glib and reductionist; there are probably a few other folks who could gain from corrupting that legislature, but still not on the scale as california.) What do you get if you turn the local media into a circus? If west virginia is well-managed, I submit that in part it’s for the same reason that all those central-european mountain towns still have their 15th-century buildings, only we haven’t gotten to the economic-revival part yet.

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