Oregon’s Economic “Best Practices” Called into Question Amidst Policy Debates

A recent report from Governor Tina Kotek’s Prosperity Council has proposed that Oregon should adopt “best practices” from other states to bolster its economy. The report asserts that Oregon is lagging behind its “competitor” states and needs to look externally for successful economic strategies. However, a critical examination of the claims suggests a flawed premise: the so-called “best practice” states appear to be significantly underperforming Oregon across a range of economic measures.

Economic Performance Discrepancies

The core argument of the Council’s report is that Oregon has fallen behind its competitors. To address this, it identifies five states—Arizona, Indiana, North Carolina, Pennsylvania, and Virginia—as exemplars of “best practices” that Oregon should emulate. This recommendation is based on the assertion that these states have superior economic performance.

Yet, a comprehensive review of ten key economic indicators, including wages, income, wealth, economic growth, entrepreneurship, innovation, manufacturing start-ups, and exports, reveals a contrary picture. Oregon demonstrably outperforms these five states on most of these crucial metrics. It is wealthier, has experienced faster income growth, offers higher wages for its lowest earners, and shows a greater number of manufacturing start-ups per capita. Furthermore, Oregon exports more per capita, is more entrepreneurial, and is more innovative than any of the states recommended by the Council.

Mid-sized Metro Areas Outperform

The analysis extends beyond statewide figures to examine economic performance in mid-sized metropolitan areas (those with populations between 250,000 and 500,000 residents). Even in this granular analysis, Oregon’s mid-sized cities like Bend, Salem, and Eugene-Springfield are shown to outperform comparable metropolitan areas in the recommended “best practice” states. According to data from the Brookings Institution, these Oregon metros rank highly in measured prosperity, while the mid-sized cities in Indiana and Pennsylvania, in particular, are noted to be struggling and consistently rank in the bottom half of prosperity measures.

Lack of Evidence for “Best Practices”

A significant criticism leveled against the Prosperity Council’s report is the absence of empirical evidence to support its claims of “best practices.” The report simply asserts that these states have superior methods without providing any studies, references, or data to substantiate these claims. It appears these states have been designated as “best practice” models based on unsubstantiated assertions rather than rigorous analysis.

Tax Systems as a Differentiating Factor

One notable difference identified between Oregon and the recommended states is their tax systems. The five states highlighted by the Council have significantly more regressive tax systems compared to Oregon. They rank among the most regressive in terms of state and local taxes as a share of income. Oregon, conversely, boasts one of the least regressive tax systems nationally. This suggests that the economic outperformance of Oregon may be partly linked to its more equitable tax structure, a factor not explicitly addressed as a potential “best practice” by the Council.

Specific Policy Examples Under Scrutiny

The Council’s report points to specific policy areas where these states are supposedly excelling. Indiana is cited for successful tax reform, Pennsylvania for its site investment program, and Virginia for its regulatory slashing. Arizona and North Carolina are highlighted for their prominent economic development agencies. However, the analysis indicates that the economic outcomes in these states do not necessarily validate these policies as universally successful or superior to Oregon’s current approaches. The Oregonian newspaper’s editorial endorsement of the report as “fact-based analysis” is challenged by the lack of presented evidence for these policy successes.

The article questions the validity of the Council’s recommendations, especially when the economic vitality of the supposedly leading states lags behind Oregon’s. The implication is that adopting policies from these underperforming states could be detrimental to Oregon’s economic future, directly contradicting the Council’s stated objective of improving prosperity. The warning from Oregon’s Business Development Department about risking becoming “another Detroit” is contrasted with the reality that mid-sized metros in the “best practice” states often exhibit economic conditions more akin to struggling areas than those seen in Oregon.

Key facts

The analysis suggests that Oregon’s economic strength may stem from a combination of factors, including its more progressive tax system and potentially different, more effective approaches to economic development and regional prosperity. The report’s reliance on unsubstantiated claims about “best practices” from underperforming states raises serious questions about the direction of economic policy advice being offered to the state. For urban planners and policymakers in London and elsewhere, this case highlights the critical importance of evidence-based policy and the need for rigorous comparative analysis when considering strategies for economic growth and urban development. Simply copying policies from other regions without verifying their efficacy and local applicability can lead to ineffective or even counterproductive outcomes.

Source: City Observatory, “Don’t copy losers”, https://cityobservatory.org/dont-copy-losers/