GEORGE A. GONZALEZ - fieldi

30THE POLITICS OF AIR POLLUTIONREGULATORY POLICIES, ECONOMIC ACTIVITY,AND ECONOMIC ELITESGabriel Kolko (1977), in his work on Progressive Era politics, demonstratesthat economic elites and large firms can and do benefit from government regulatorypolicies. Such policies can protect the value of investments, stabilizethe operation of the market, and enhance the long-term profitability of capital.In the realm of urban politics, Marc Weiss (1987) shows how local zoninglaws, and regulations regarding the building of housing and retail structures,were championed by large land developers beginning in the ProgressiveEra. They did so to protect land values and local investment climates.Despite these seminal works, and others like them (e.g., Stigler 1971;Gordon 1994; and Higgens-Evenson 2003), Barrow (1998) points out that itis assumed by numerous scholars who study state behavior that a negativerelationship exists within jurisdictions between business investment and regulatoryrules applied to business activities (e.g., Poulantzas 1973; Offe 1984;Block 1987; Elkin 1987; Aronowitz and Bratsis 2002). Theorists that forwardthis view will normally link it to the “dependency principle,” wherein it isposited that governments are reliant on private investment for a healthyeconomy and stable tax base (Offe 1974). Barrow explains that “in the literatureon state theory, the operation of the dependency principle is alwayslinked to a laissez-faire concept of the business climate and therefore to thebasic presuppositions of neoclassical economic theory and the model of perfectcompetition” (111). Barrow goes on to point out that theorists of thestate that argue the dependency principle generally equate a “favorable businessclimate” with“low” taxes (and therefore minimal state expenditures); low employee mandatessuch as minimum wages, unemployment insurance, workmen’s compensation,and family leave; minimal social regulation and environmentalprotection; right-to-work legislation to protect a “free” labor market andcorrespondingly low wages. (111)Hence, public officials, in order to attract investment to their specific nation,region, or locality, must provide investors the type of low tax and low regulationmilieu called for in neoclassical economic theory (Bartik 1991; Fisherand Peters 1998).The linkage of the dependency principle to neoclassical thought, however,is empirically unwarranted. Neoclassical assumptions about businessinvestment prove to be poor predictors of where investment and economicgrowth in the United States occur. The General Manufacturing Climates, forexample, was a ten year effort (1979–1988) to “operationalize neoclassicalassumptions through an index that compares and ranks business climates inthe 48 contiguous American states” (Barrow 1998, 112). It was sponsored by