State and local governments in the United States have wide latitude in setting economic policy. In the first half of the 20th century, the progressives chose an economic model for Wisconsin that called for high levels of taxation and government expenditure coupled with extensive regulation of business and labor. The progressives did so because they considered capitalism and market processes as morally unsound and obsolete.
The progressives were wrong. Experience and research show that states in which individuals, businesses and entrepreneurs have greater freedom to work and invest grow more rapidly, have better labor market outcomes and attract more people than states that follow the progressives’ economic model.
Wisconsin has moved away from the progressives’ economic model during the past few decades. Still, there is a long way to go. Here, economist James Bohn looks at what a wide body of research has determined should be done to keep Wisconsin on track.