Johnston, Louis D

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College of Saint Benedict and Saint John’s University: DigitalCommons@CSB/SJU

College of Saint Benedict and Saint John's University DigitalCommons@CSB/SJU Economics Faculty Publications Economics 6-20-2012 What’s good for Minnesota's businesses isn’t always good for our economy Louis D. Johnston College of Saint Benedict/Saint John's University, ljohnston@csbsju.edu Follow this and additional works at: https://digitalcommons.csbsju.edu/econ_pubs Recommended Citation Johnston, L.D. 2012. "What’s good for Minnesota's businesses isn’t always good for our economy". MinnPost, June 20, 2012. https://www.minnpost.com/macro-micro-minnesota/2012/06/what%E2%80%99s-good-minnesotas-businesses-isn%E2%80%99t-always-good-our-economy. This Article is brought to you for free and open access by DigitalCommons@CSB/SJU. It has been accepted for inclusion in Economics Faculty Publications by an authorized administrator of DigitalCommons@CSB/SJU. For more information, please contact digitalcommons@csbsju.edu. REUTERS/Francois LenoirU.S. sugar subsidies may help the domestic sugar beet industry, but they also raise prices for consumers of sugar throughout thecountry.By Louis D. Johnston | 06/20/12At first blush, there’s little in common between import restrictions on sugar and the medical devicetax included in the Affordable Care Act. But recent public-policy debates have made clear that bothDemocratic and Republican lawmakers share a common perspective when it comes to these policies:What’s good for an industry is good for the economy.Unfortunately, this isn’t a good guide to economic policy. The economy is more than simply the sumof its companies. It’s an interdependent system of organizations and individuals working together toproduce goods and services people need and want.  (I elaborated this point in my May 5 column.) Inparticular, keeping in place sugar quotas and eliminating the medical device tax definitely benefitMinnesota businesses but they may not be best for Minnesota’s economy.What’s good for Minnesota's businesses isn’t always good for our econo... https://www.minnpost.com/macro-micro-minnesota/2012/06/what%u201...1 of 7 10/9/2017, 10:10 AMThe U.S. Senate recently tabled an amendment to thefarm bill that would have phased out the supportprograms for American sugar producers. According tothe Star Tribune, Sen. Amy Klobuchar stated: "Thesugar beet industry supports good jobs in the Red RiverValley and is one of the major foundations ofMinnesota's strong rural economy." Similarly, Sen. AlFranken asserted: “The U.S. sugar program supportsthousands of Minnesota jobs and brings millions ofdollars into communities all over the state.”Is this good for Minnesota’s overall economy? Itdefinitely puts more money in the hands of those whogrow and process sugar beets. At the same time, however, some of this increased income comes byraising the costs to bakers and others who use sugar. These firms might be better off without the sugarprogram.So, the relevant economic policy question to ask is: Do the sugar industry’s gains outweigh the otherfirms’ losses? Implicitly, Sens. Klobuchar and Franken answer yes.Does the program support good jobs? It’s hard to tell, especially if you are a worker locked out of anAmerican Crystal Sugar plant.  (See Liz Fedor’s article on the labor dispute.) Again, the policyquestion is: Do the sugar industry’s gains outweigh the losses being inflicted on workers who havemore slowly growing (or even declining) real compensation?  I haven’t heard this question asked , letalone answered.The Star Tribune editorial page recently argued against repealing the medical device tax.  Theeditorial prompted a strong response from Dale Wahlstrom, CEO of LifeScience Alley, in which heasserted that the tax cost Minnesotans jobs, income and lives.Do the benefits of repealing the tax outweigh the costs? For instance, do the increased income ofdevice makers and those who are employed by them outweigh loss of tax revenue and the resultinginability to subsidize insurance for low-income families?The answer isn’t obvious. Studies commissioned by the medical device industry indicate that thebenefits of repealing the tax far exceed the costs. On the other hand, analyses reported by the Centerfor Budget and Policy Priorities and MinnPost point to the opposite conclusion.Yet all eight Minnesota representatives voted to repeal the medical device tax. None of themexpressed any doubt or hesitation despite the lack of consensus regarding the economic effects of therepeal.What’s good for Minnesota's businesses isn’t always good for our econo... https://www.minnpost.com/macro-micro-minnesota/2012/06/what%u201...2 of 7 10/9/2017, 10:10 AMOur senators and representatives seem to believe good economic policy starts with ensuring thehealth of companies such as American Crystal and Medtronic. I don’t agree. A better way to encourage economic growth and development is to ensure thatMinnesotans are well-educated and healthy and that all businesses, including newer businesses inemerging fields besides medical technology, have access to private capital and public infrastructure.Neither continuing the sugar support program nor repealing the medical device tax does anything inthese regards.Louis D. JohnstonLouis Johnston writes Macro, Micro, Minnesota for MinnPost, reporting on economicdevelopments in the news and what those developments mean to Minnesota. He is Joseph P. FarryWhat’s good for Minnesota's businesses isn’t always good for our econo... https://www.minnpost.com/macro-micro-minnesota/2012/06/what%u201...3 of 7 10/9/2017, 10:10 AMprofessor in the Eugene J. McCarthy Center for Public Policy and Civic Engagementat Saint John’s University. He is also a professor of economics at the university.MinnPost | 900 6th Avenue SE | Minneapolis, MN 55414 | 612.455.6950MinnPost is a nonprofit, nonpartisan media organization whose mission is to provide high-quality journalism for people who care about Minnesota.

What’s good for Minnesota\u27s businesses isn’t always good for our economy

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What’s good for Minnesota\u27s businesses isn’t always good for our economy

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