There have been three really good blog posts in recent days, playing off of one another, and emphasizing some points I think are of value in planning strategy for Indiana’s future.
The first was Aaron Renn’s comparison of Gov. Daniels’ economic strategy versus Mike Pence’s. The second was Richard Longworth’s “Debunking St. Mitch.” And the third is Just Harter’s “I was emphatically wrong about my political beliefs.”
My take away, which isn’t really surprising now that they’ve spelled it out, is that racing to the bottom probably isn’t going to work for us. I’m sure there are places willing to go a lot further in that direction than I want to. Cutting fat is fine. Cutting bone is counter-productive. And, if I might mix my metaphors, you don’t want to eat your seed corn. And, again, as Mr. Renn says, you don’t want to live in the cheapest house or the cheapest neighborhood. And, I’m not sure we want the companies that want the cheapest house; at least not if we can figure out a way to attract other types of companies.
As Justin puts it:
[G]iven the obvious reference points we have of spectacular places to live with growth, economic stability, and social mobility like the Netherlands and even Canada and, here in America along the coasts, the trick to making life better is to make your people better and treat them as assets and not operating costs. You race to the top, not the bottom. The bottom is for commodity markets, and I don’t want to be a commodity.
He even has what strikes me as a pretty likely suggestion on what might be driving some of our present decline:
It seems more likely to me at this point that America’s problems are caused by a death spiral of employers withholding exorbitant profits from employees in favor of dubious managers and executives who don’t drive that much value in most places, which reduces consumer spending power around and around.
As Aaron pointed out, Governor Daniels at least had the nominal goal of raising the the net disposable income of individual Hoosiers. Had he succeeded in that, it might have reversed the downward spiral described by Justin. But, he didn’t, and Mike Pence doesn’t even have that as a goal. Pence just wants Hoosiers to have jobs. Working harder without ending up with more money in our pockets isn’t going to fix anything; it’s just going to mean we’re working harder. Work is a proud thing; but it ought to have a purpose.
In fairness, the coasts have their own problems. Mike Bloomberg explicitly said he wanted New York to be a luxury city. These places cater to the Goldman Sachs and Google crowd, but other than some coolies to provide services to the favored few, they really don’t need much beyond super-high end 1% type people. There is little upward socio-economic mobility in such places unless you are fortunate enough to have a first class education and/or connections.
And perhaps the reality is that if you try to do the high service model in a state like Indiana you end up with a place like where I am now: Rhode Island, which is in worse shape than Indiana. (Don’t believe their unadjusted income levels as this place as a cost of living index of 128 vs. 94 in Indiana). This is by far the biggest basket case economy I have ever witnessed. It is so obvious that this place has been depressed for a really long time it isn’t even funny. If you want the worst of all possible worlds, try blue state policies in a red state economy. Places like Massachusetts thrive with high quality services, but that’s because they are already rich.
There’s a big chicken and egg problem. How do you convert your economy to high value without pro-actively investing for many years (Enrico Moretti calls it the “Big Push”)? And how to you pay for the investment without having already converted your economy?
It might well depend on how one defines these things, but Justin mentioned investing in your people and treating them as assets instead of liabilities. (Or something like that). Has Rhode Island been following that approach?
There is certainly a lot of money pumped into social services. As far as I can tell, Rhode Island isn’t really a talent play. The key phrase for almost anything around here appears to be, “I know a guy…”
It’s hard to identify places that treat people as assets except those running an explicitly high end economy. Chicago would be an example, but they have serious problems of their own: fiscal meltdown and a huge shooting/murder problem to start.
Probably the best example otherwise is Houston, the city that opened its arm wide for over 100,000 poor, black Katrina refugees, a huge number of which decided to stay on. The southern boom towns are very forward looking in many ways. Mitch Roob once quipped that Indiana was like the South. He got it a bit wrong. Indiana’s what the South used to be 30 years ago before they got serious about growing their economies.
I should also note that Mitch Daniels implemented at least one policy that is the ultimate progressive dream: he centralized all education operations spending at the state level to all but eliminate disparities in school funding based on the wealth of a community. In fact, he spends far less on well off communities than just about anybody else.
To Calvinists like Pence, Work is its own End. Idle hands and the ol’ Debbil man and all that… His ilk have a very simplistic view of Poverty. You’re poor? that’ll teach you to piss-off Gawd…
I take issue with:
“When Daniels was claiming we needed I-69, he billed it as a job creator, which may be true if your dream job is to work at Cracker Barrel. Maybe we do need I-69, but it’s not so IBM or Apple can relocate to Evansville.”
Yes, Evansville is not getting Apple or IBM because of I-69. However, there is a long way between Apple and Cracker Barrel. How about distribution jobs that need to be able to travel North to Indy and Chicago? How about automotive manufacturing jobs which desire a good route to Michigan (and Northern Indiana)? These jobs might not be C Class positions at IBM, but they improve the median income significantly, and are good jobs to create in your community.
(I should also point out that better transportation possibilities makes it more likely that Evansville keeps some of the jobs it already has, but that is technically not “job creation”.)