Gov. Dayton is proudly proclaiming that Minnesota is the best state to do business in. He’s basing that propaganda on CNBC’s latest ranking. After looking at how they arrived at the categories that they ranked states on, it’s easy to see how CNBC arrived at their ridiculous ratings. First, it’s important to know this about the rating system:
For example, if more states tout their low business costs, the “Cost of Doing Business” category carries greater weight. That way, our study ranks the states based on the criteria they use to sell themselves.
According to CNBC’s report, workforce is the most important category, followed by cost of doing business and infrastructure, economy, quality of life, technology & innovation, education, business friendliness, cost of living and, finally, access to capital.
Minnesota ranked 13th in workforce, 35th in cost of doing business, 9th in infrastructure, 5th in economy, 3rd in quality of life, 6th in technology and innovation, 2nd in education, 23rd in business friendliness, 32nd in cost of living and 23rd in access to capital.
CNBC’s ratings only tell us what the states think of themselves. They don’t tell us what businesses think of the state. The fact that more businesses are leaving Minnesota than are moving to Minnesota is the best indicator of what businesses think.
That isn’t to say that Minnesota is getting everything wrong. There are some things that we can build off of. It’s just that there’s a handful of important things that we’d better correct if we want to be the best. Lowering the cost of doing business is essential. That’s only possible by streamlining government, especially regulations. Cutting special deals with a couple companies to entice them here, then shafting businesses that are already here, which the Dayton administration has done, needs to change, too.
UPDATE: King Banaian’s article for the Center for the American Experiment highlights similar points. This point is especially noteworthy:
If you’re a state that isn’t particularly business friendly, you don’t talk about that in your marketing materials. You emphasize other things. You puff your materials with discussion of quality of life and how hardworking your workers are and ignore the areas where your policies might make business a little harder to conduct. And CNBC will go right along and take weight off those things, if the rest of the states are doing the same thing.
I can’t emphasize enough the fact that CNBC’s article isn’t a serious economic statement. It’s a statement based off of the states’ PR statements.
Gary:
How can we be second in education when the school districts of Minneapolis and Saint Paul are tremendous failures. If the people who did this study don’t know that then you have to question the quality of the whole study. Did they make Texas 50th by the way?
Walter Hanson
Minneapolis, MN
Unfortunately, it’s a level playing field. Every state has its rotting core city school system or systems. Apparently, on average we just suck less.
Actually, Rex, it’s pretty clear that Minnesota’s business costs and cost of living aren’t that great.