“Death Spiral,” proclaims a chain mail that an Austin reader brought to our attention Dec. 21, 2012.
That’s the headline on a U.S. map with 11 states highlighted and accompanying text that says, “These 11 states now have more people on welfare than they do employed.”
Is it true?
The “death spiral” phrase and the 11 highlighted states — Alabama, California, Hawaii, Illinois, Kentucky, Maine, Mississippi, New Mexico, New York, Ohio and South Carolina — appear in a Nov. 25, 2012, Forbes column, and the map appears onscreen during a Nov. 29 Fox Business “Varney and Co.” report on the commentary piece.
But the criteria used to identify Forbes’ “death spiral” states were not as simple as welfare and employment.
Forbes investment strategies editor Bill Baldwin wrote that those 11 states were “at high risk of a fiscal tailspin” because they had many people who received money from the government but maintained policies that “chase out the private-sector jobs that support all that spending.”
Baldwin reached his conclusion by comparing “makers” and “takers.” For this purpose, he wrote, “a taker is someone who draws money from the government, as an employee, pensioner or welfare recipient. A maker is someone gainfully employed in the private sector.” Then he factored in an index that downgrades states for “large debts, an uncompetitive business climate, weak home prices and bad trends in employment.”
The results, he said, showed states that were “danger spots for investors.”
We’re not sold on designating government workers or pensioners as takers. Regardless, we wondered: Was there any way the email’s claim could be true?
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