MInnesota has an above-average unemployment rate and an above-average GDP per capita. The country also has a top employment-to-population ratio and the third lowest poverty rate.
The state's economic numbers are consistently so outstanding that the political class raves about “the state's unique economic success story” and praises the state's tax and economic policies.
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That sounds reasonable until you realize that despite different tax and economic development policies, all of Minnesota's neighbors have the same “unique economic success story.” North Dakota, South Dakota, Wisconsin and Iowa are consistently in the same top group when it comes to economic indicators.
Maybe it's the water: Maybe it's the proximity to the headwaters of the Mississippi and Missouri rivers, which leads to high employment.
More likely, in the strong economies of America's “Northern” states, public policy is a minor factor and culture is the most important factor, which is quite similar in the Dakotas, Wisconsin, and Iowa.
Economists and other academics dislike culture as an explanation because culture can be difficult to measure. However, economist John Phelan attempted to show the connection and connection between the economic health of these five states and their culture. In fact, he found that Minnesota and its neighbors excel in “social capital,” or community cohesion.
Strong communities, he argues, lead to strong economies. In a quantitative article entitled “The
Phelan also examines Minnesota counties and the various components of the Joint Economic Committee's social capital index. He finds “a positive relationship between levels of family unit, community health, and collective effectiveness of social capital components and levels of economic well-being.”
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At the same time, there is a fairly high level of economic equality in Minnesota. This inequality appears to be largely due to inequality in family stability: counties with more single mothers and more children growing up without fathers are counties that are doing worse economically.
The big conclusion: Stronger communities lead to stronger families, which in turn lead to stronger economies. In other words, Minnesota “nice” could actually be profitable.
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