Trust-But-Verify Economics

http://wicfg.wordpress.com/2011/11/23/trust-but-verify-economics/


NOVEMBER 23, 2011

Ronald Reagan described his stance toward the Soviet Union on the dubious undertaking of arms control: “Trust, but verify.”

It’s not much of a stretch to see that same attitude coming through in a survey of business leaders released Friday by Wisconsin Manufacturers and Commerce (WMC).

Local chambers of commerce are generally upbeat about the direction of attitudes toward the business community in Wisconsin and they see good things ahead. Not only do overwhelming majorities of chamber executives say the state is on the right track, the numbers released last week represent a striking, 180-degree turnaround compared with responses to a similar survey in 2009.

According to the survey:

A large number of chambers (74%) think the state is on the right track. This is a mirror image of survey responses 12 months ago when 74% thought we were heading in the wrong direction and a vast improvement over 2009 when only 18% thought we were on the right track. Seventy-nine percent of the local chambers feel strongly that Wisconsin is very or somewhat pro-business, compared to only 18% two years ago.

Somehow we doubt the dramatic shift is mere coincidence, given that in between, Wisconsin government took a similar one-eighty as a result of the 2010 elections.

So how does this sunny optimism square with the disappointing employment numbers reported for the past few months?

We strongly suspect this is an example of “trust-but-verify” economic decision-making. Employers are happy about the state’s current policy direction but they also realize how fragile that happiness may be. Optimism is tempered by the realization that thousands of Wisconsin residents are fully dedicated to tearing down the reasons for their optimism with more recall elections.

Only their complete and utter defeat will convince business that pro-growth policies are durable. Once that is established, just watch Wisconsin’s economy grow.