Last week I posted on the flawed Good Jobs First study purporting to demonstrate that business climate rankings are worthless, ideological exercises. My column today debunks the charge that the studies are bunk. I encourage you to read it and share your thoughts with me.

It’s nonsense to argue that there’s nothing to be gained by looking at business climate indicators. States learn from the competition. The best approach considers the key factors contributing to business success, including taxes, regulation, infrastructure, and education.

. . . A state with competitive business costs that can also boast an enviable quality of life, excellent schools, and a superior transportation system will fare well. And it will dominate every business climate ranking.

The column cites the Washington Roundtable’s benchmarks, which do a good job of ranking Washington on a handful of dimensions important to business and economic success. Erik Smith writes about the Roundtable benchmarks in the Washington State Wire.

Walter Russell Mead considers the role of business climate rankings in Via Meadia. I agree with this observation.

Ultimately the choice of where to set up a business or where to live is determined by individual factors which no set of rankings however thoughtfully assembled can capture.

That doesn’t mean such rankings serve no purpose; if nothing else they can serve as preliminary screens which help people zero in on locations worth a closer look. And they can also serve as guides for local governments looking at ways to enhance the standing of their communities.

More to the point, the rankings – whether based on public policies, economic performance, or executive perception – roughly align. Over time, even in sunny California, adverse public policy will depress the state economy, and CEOs know it.

Stephen Malanga explains how it works.

In our current mediocre recovery there isn’t enough economic froth to lift all boats. One result is an ever more hard-hitting battle among states.

Read the whole thing. Of particular interest is Malanga’s discussion of how desperate states are stretching tax nexus claims to capture more revenues.