Public policy in Minnesota: It's a 'we' thing

  • Article by: DANE SMITH
  • Updated: August 18, 2014 - 8:52 AM

An emerging equity consensus drove policy in 2013-14. It's a good deal, and it works.

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Gov. Mark Dayton signed the minimum wage bill into law at a ceremony Monday, April 14, 2014, in the Minnesota State Capitol rotunda. The bill increases Minnesota's minimum wage to $9.50 per hour, and indexes it to inflation.

Photo: Glen Stubbe, Star Tribune

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Our political theater in Minnesota over the next 11 weeks will offer distracting scenes focusing on a new State Capitol office building, glitches in the rollout of MNsure, and other little sideshows that remind us of the fallibility of all our institutions, public and private.

Concerns about tax rates and the size and effectiveness of our state and local governments will be aired, too, and they are always valid. Taxes are the price we should happily pay for a civilized community in a thriving free-market democracy. Keeping those costs reasonable also makes sense.

But let’s try our best as voters to think about the whole show — and the moral of the story — and to keep three overarching perspectives in mind:

First, the overall legislative product of the last two years produced perhaps the most momentous shift in 40 years toward reducing economic, racial and social inequalities, while investing anew in the human potential of all Minnesota’s people. Not since the bipartisan Minnesota Miracle of 1971, and ensuing sessions of the reform-minded 1970s, has so much been done to lift up so many people in the middle and at the bottom.

Second, this breakthrough has not appreciably enlarged the size of state and local government relative to the economy. Nor has it prevented Minnesota from actually gaining competitive advantage on other states, and achieving improved rankings in business growth and vitality.

Third, these policies were not foisted on an unwilling majority by a small ideological faction. The main pieces of the policy package were pushed through by a broad consensus that included some business support, our largest mainstream religious faiths, our most respected philanthropies, and nonprofits, and by broad coalitions of labor and social-justice groups. Moreover, many of the major pieces of legislation also enjoyed clear majority support in Minnesota public opinion polling.

In other words, this equity agenda was very much a “we” thing.

By the way, the word “equity’’ is increasingly favored by justice advocates over “equality.’’ Equity captures the idea of investment in human potential, affording more people a larger ownership in our economy, as opposed to seeking perfect equality in wealth and income.

The meat and potatoes of the equity agenda were delivered through two big moves that will have about a $1 billion annual impact in at least slowing the worrisome maldistribution of income and wealth. (To put that in context, Minnesota’s total personal income amounts to about $275 billion.)

The first step was a restoration of higher income tax rates on those at the very top, by about half a billion dollars a year on the fortunate few. The increase eliminated a projected budget shortfall and greatly improved the state’s long-term fiscal health after years of tax policy favoring those who were reaping almost all the gains from economic growth.

The second big equity initiative came at the other end — a long-delayed pay raise for minimum-wage workers, also worth about half a billion dollars annually, for Minnesota’s 325,000 lowest-paid workers.

Add to those equalizing measures literally dozens of other measures: business-backed new investment in scholarships for high-quality early childhood education; a Women’s Economic Security Act with almost a dozen policy changes that help address stubborn disparities in pay and benefits for women; a “Dream Act” that removes obstacles to higher education for aspiring children of undocumented immigrants; a dramatic expansion of health care benefits under MNsure that immediately sliced our uninsured population in half, and a new “World’s Best Workforce’’ education funding bill that not just increases investments for K-12 but focuses on the birth-to-career continuum, improving early childhood readiness and postsecondary completion and eliminating racial education disparities.

Also enacted was a long list of nonbudgetary laws and policy changes, such as removing harsh and unforgiving sanctions against ex-offenders; workforce training system reforms aimed at reducing racial disparities in unemployment; environmental protections and stimuli for cleaner energy and greener economic development; antibullying legislation, and, at long last, marriage equality for same-sex couples.

This much progress all at once can induce motion sickness in the electorate. It naturally invites concern that increasing taxes and overall government spending as a percentage of the economy can retard economic growth.

But the rather astonishing fact of the matter is that Minnesota’s official “Price of Government” is projected to slightly decline over the next few years. This is a statistic maintained by state government fiscal officers for more than 25 years. It is our state’s truest bottom line. Projections show a flat or gradually declining percentage, with total state-local government revenues dropping below 15 percent of personal income by fiscal year 2017. Our Price of Government was above 17 percent during much of the 1990s, when our state economy, incidentally, was performing even better than it is now.

Meanwhile, recent rankings from national economic analysts indicate that Minnesota’s turn toward equity is indeed good for business, or at least not bad. Study after study and ranking after ranking puts our North Star State at the top of the heap or heading in the right direction, with the fifth-fastest-growing economy in the nation, according to the latest analysis by the U.S. Bureau of Economic Analysis.

The most important feature of this sea change toward equity is that it really does reflect a broad consensus. It fits the reality and the spirit of the times.

While the official business lobby may have opposed the tax and minimum-wage increases, substantial business support lined up behind much of the new investment. Groups like the Itasca Project, primarily composed of leaders of our state’s largest corporate entities, actually led the way more than a decade ago, drawing attention to a racial equity gap in school achievement and economic outcome, along with the need for transportation investment. Improved investments in early childhood initiatives, and reducing racial disparities in education have been spearheaded by iconic business giants such as Target and General Mills, and by umbrella groups like the United Way.

Minnesota’s largest religious denominations also lined up strongly, in a carefully nonpartisan way, behind most of the equity agenda. Minnesota’s Joint Religious Legislative Coalition includes the leadership of two of our largest denominations, Lutherans and Catholics, as well as Islamic, Jewish and many other Protestant churches. The coalition has long pushed for sufficient and progressive taxation and a host of specific economic policies that lift up the poor and low-income families. Also coming on strong at the State Capitol in recent years is ISAIAH, composed of more than 100 mostly Christian churches that aggressively push “to establish racial and economic justice.’’

A notion long advanced by some religious fundamentalists that government action to reduce economic inequality is the creature of an “irreligious left’’ was never accurate, and it’s particularly false in Minnesota.

Decidedly nonpartisan philanthropic foundations, and perhaps most nonprofit organizations (which account for about 10 percent of Minnesota’s workforce and economy), also have strongly supported equity policy. Many of the major foundations in Minnesota have elevated the word “equity,’’ or a more inclusive prosperity, in their mission and goal statements. The Minnesota Budget Project, a public-policy voice of the Minnesota Council of Nonprofits, has for years been one of the most effective voices calling for increasing public investment, for reducing economic inequality and for a more progressive tax structure.

So the consensus is strong, if by no means universal. Business interests, despite strongly supporting parts of the equity agenda — especially early childhood and transit investment — will continue to call for tax cuts and back candidates who would cut public investment in a broader equity agenda. Some business voices will argue that the equity investments they seek can be financed through reallocation and redesign of government. That makes some sense.

In the meantime, we can be heartened to see more conservatives reframing their narrative around inequality. And let’s consider the idea that this momentous shift could be cast as a conservative statement, a reaffirmation of a traditional Minnesota culture marked by an unselfish, forward-looking business spirit, strong families and communities, and an egalitarian barn-raising, church-social impulse. All for one. One for all.

This is the ethos that has put Minnesota on the cutting edge of technological innovation and has given us more Fortune 500 companies per capita than almost any other state, while also keeping us at the forefront of improvements in public education and health, and out front on human rights, women’s equality, civil rights and integration, and environmental health.

Most Minnesotans understand that the market forces and geopolitics that drive inequality are global and national in scope and there’s only so much we can do. But we should be proud to have reasserted ourselves as a people who nevertheless will act locally to broaden our prosperity within our borders.

And no matter what the outcomes in November, we can’t turn back from this new imperative.

 

Dane Smith is the president of Growth & Justice, a public-policy organization that seeks to reduce economic and racial inequality in Minnesota.

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