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Monday, January 23, 2017
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  • INDIANAPOLIS - The Indiana General Assembly has a wonderfully easy-to-use site for the citizen who wants to know about bills introduced by subject or author. I don’t know who is responsible for this site, but hats off to him, her, and them. Today I found 43 bills on the subject of drugs. There may be many others if I searched more diligently. Imagine that: Indiana, A State in Denial, is concerned about drugs, a well-known scourge, and the primary cause of many safety, economic, education, and health problems. State Sen. Jim Merritt has authored 14 of the 43 bills. Naturally, I find the most compelling to be SB 244 which mandates a fiscal impact study of drugs and drug addiction. Normally, a fiscal impact study concerns the revenues and expenditures of government. But SB 244 goes further. It calls for an economic impact study which includes work force concerns and private expenditures on prevention and remediation. 

  • INDIANAPOLIS – This is a note of hope to the General Assembly’s Funding Indiana’s Roads for a Stronger, Safer Tomorrow Task Force, known by its friends and family as the FIRSST task force. The hope is FIRSST will continue the work done on House Bill 1002 modernizing Indiana’s road financing policies. That bill has begun its travels and travails through the sausage machine of state government. The guiding factors in a road finance bill, where new construction is not the center piece, should be road use and safety, plus changes in the costs of maintenance and reconstruction. HB 1002 allows a 10-cent increase in the 18-cent tax per gallon of gasoline. This is double the increase in consumer prices since the last change in 2003. Was 10 cents an estimate of what a gullible public would accept? Or is it because the bill creates an index for future increases based on the changes (does that include decreases?) in consumer prices and personal income?
  • INDIANAPOLIS – One week ago, I promised recommendations for improving the state’s economy. In the past I’ve done that extensively, but somehow readers don’t remember. Here are some more thoughts to be forgotten. It’s time for business leaders to stop seeking subsidies from the same public sector they deny adequate funding to do its job.  Businesses complain of a shortage of qualified labor. Is it government’s responsibility to train the labor force? Are our elementary and secondary schools to be merely preliminary settings for vocational training? What does business do directly to improve the labor force? If they find too many workers disabled by illiteracy, drugs and alcohol, a common complaint in this state, do they sponsor work-prep programs, including alcohol and drug treatment efforts? Do they increase wages to attract more qualified workers? Do they separately or collectively offer intensive training programs for workers?
  • INDIANAPOLIS – After the 2016 election, some people saw sunshine ahead with a return to greatness. Others expected moonless nights with a great nation degraded. Indiana has few anticipations. We really don’t know Governor-elect Eric Holcomb. Is he the second coming of Mike Pence, as his supporters believed? Or is he Pence 2.0 as the billboards of his opponents declared? This much we do know, the state’s public relations folks aren’t as enthusiastic about the latest state economic news as they were just six months ago. Last week the U.S. Bureau of Economic Analysis reported Indiana’s real Gross Domestic Product (affectionately known as GDP, the inflation-adjusted value of goods and services produced in the U.S.) grew in the Spring or second quarter of this year by a 1.25-percent annual rate. This was a smidge over the 1.16 percent at which the whole country grew. We enjoyed a very slim lead over Montana for the honorable 25th place in growth among the states. Contrast this with the ballyhooing last June when Indiana’s GDP growth was reported as first among the nation’s 50 states during the last quarter of 2015.
  • INDIANAPOLIS – He didn’t ask, but I have some advice for our in-coming governor, Eric Holcomb. I’ve had advice for all our governors since 1970, but none has been taken. Nonetheless, we press on. What do so many Hoosier like? Our convenient smaller towns. What do folks beyond our borders think of, if they think of Indiana? The 500, corn, Larry Bird, and small town life. What are we trying to attract? Imaginary people: Millennials who have a perverse passion for trolley cars and the skills to earn $90,000 a year, the first year out of college. These people, we think, want to live downtown, in quaint, restored old buildings, riding bicycles to work, buying groceries from small neighborhood shopkeepers, but having elevators so they don’t have to lug baby and carriage upstairs, in the unlikely event they ever have a baby. Yet, what do we have in abundance? Our convenient smaller towns losing, or struggling to gain, population. Do we promote those places? No. We have no specific program to encourage businesses and their workers to locate in Logansport, Peru, or Wabash.

  • INDIANAPOLIS  – Suddenly, on Nov. 9, the majority in the United States woke up to find it has been silent too long. In fact, it realized, it might not be a majority at all. The combined Republican and Libertarian vote was 50.59%. From what I know, many of the Libertarian votes were from Republicans who were embarrassed to be known as Republicans this year. The 48.76% who voted Democratic or Green believed strongly in their causes and could not understand how others could believe otherwise. But they were not the majority. Now, instead of taking to the streets, this silent minority needs to be heard. Now, if it wishes to be successful in the political arena, it must recognize the urgency of political action. This means ending the corruption of gerrymandering by political parties and restructuring the Electoral College. Gerrymandering is the practice of state legislators drawing district lines to protect their seats and their party in the General Assembly. Here in Indiana, through a study committee report, we have made a good start toward taking extreme partisanship out of the process. But that effort must continue and be intensified next year.
  • INDIANAPOLIS – It was disappointing, but not surprising, to learn from the Indianapolis Business Journal (Oct. 10-16) that both John Gregg and Eric Holcomb endorse public-private partnerships (P3s). These candidates for governor are experienced in the ways of our Indiana government. Mr. Gregg has served at the highest level of the legislature while Mr. Holcomb is our lieutenant governor. P3s are agreements between governments (national, state, or local) with private companies to assume control, but not ownership, of public assets. Hoosiers know them in the form of the new bridge over the Ohio River, connecting the east end of Louisville with Clark County. I-69 moving north from Evansville and Bloomington toward Indianapolis is a P3. The Indiana Toll Road, extending from Ohio to the Illinois state line, is a successful P3. The Chicago Skyway, used by thousands of Hoosiers traveling to the home of the Cubs, is a P3.

  • INDIANAPOLIS – The campaigns for governor and 125 seats in the General Assembly are winding down. We’ll be relieved soon from the slurs and insults of competing camps. Commercials will return to products supposed to make us regular again. The big question of these elections is, “Will anything be done by state government to make Indiana more attractive as a place to live and a place to run a business?” Every candidate told us s/he has a plan. That’s wonderful. But plans don’t do well in our legislature because most Hoosiers believe we don’t have any real problems and they elect people who agree with them. Our state government tells us how fine life is here and most of our news media print and broadcast all the good news they can find in self-serving press releases. However, Indiana is trending down relative to other states. We currently rank as the 16th most populous state, with 6.6 million residents. We gained 136,000 since the Census of 2010 (22nd among the 50 states), which translates to a 2.1 percent increase (32nd) compared to the national growth rate of 4.1 percent.
  • INDIANAPOLIS – A few days ago, the U.S. Bureau of Economic Analysis released the 2015 Gross Domestic Product (GDP) figures for all 382 metropolitan areas of the nation. Of these, 10 are exclusively within Indiana and five others (Chicago, South Bend, Cincinnati, Louisville and Evansville) include one or more Indiana counties. How are these 15 metro areas doing since the Great Recession ended in 2010? In a word: Poorly. What kind of recovery have they had compared to the rest of America? Weak. Hoosier politicians of both parties love to celebrate urban areas as the engines of economic growth while declaring that our rural communities protect something called “Hoosier values.” Collectively, our 15 metro areas grew at a slower rate than American metros as a group every year for the past five years. Does being “business-friendly” mean Indiana retards business growth? The average annual rate of growth in real GDP for Indiana metros from 2011 through 2015 was 1.56 percent compared with a national metro growth rate of 1.90 percent. 
  • INDIANAPOLIS – A reader from Bloomfield wants economists to explain why free trade does not deliver benefits as advertised by politicians. Free trade is a concept, not a reality. It is much like other concepts so dear to some economists and most politicians, such as pure competition, open markets, free enterprise, level playing fields, the gold standard, and the ever-popular balanced budget.  But we do not live in the world of concepts. Our world has millions of people demanding protection from change. When they get that protection, it is usually at the expense of other people who are worse off. Many Hoosiers use the loss of Indiana’s jobs at Carrier to Mexico as an example of the injustice of trade deals and free enterprise. But do we hear Hoosiers complain when the Indiana Economic Development Corporation announces a company moving jobs from another state to Indiana? Or from one Indiana county to another?
  • INDIANAPOLIS – After the housing bubble collapse of 2007-8, I thought of forming Economists Anonymous, a self-help group of forecasting addicts. I couldn’t get anyone to join me. Forecasts and projections are in demand. Someone will do them and they are best if done by people who are informed, trained, and cautious. Caution is important because statements about the future are taken seriously; lives and fortunes may depend on them. Forecasts and projections are compared to what we believe we know about the present. Annual population estimates by the U.S. Bureau of the Census are as close as we can get to how many people live where. These estimates, however, are not perfect. Thus, measuring projections against the estimates involves using two imperfect sets of numbers. Matt Kinghorn at the IU Indiana Business Research Center (IBRC) does population projections. He meets all the criteria for a good forecaster and he doesn’t give up.
  • INDIANAPOLIS –  Somebody is sure to ask, “Are you better off now than you were in 2007?” That was probably the one year most folks think of as “pre-Great Recession,” when the Good Times last rolled. Your answer is going to depend on where you live now, what you are doing now, compared to where you were and what you were doing back then. We’ll use 2007 and 2015 annual averages at the county level from the Indiana Department of Workforce Development to get some idea about how the Hoosier economy is now compared to then. Let’s start with the unemployment rates. Back in 2007, the highest unemployment rate fell on Fayette County at 7.2%. In 2015, Vermillion had that “honor” at 7.1%. In both periods, Hamilton County could boast the lowest unemployment rate of Indiana’s 92 counties, although the rate did rise there from 2.9 to 3.4%. Hamilton was just one of 40 Hoosier counties with a higher unemployment rate in 2015 than eight years earlier. By contrast, 32 counties saw their unemployment rates fall over that period, while 20 counties had negligible changes from -1 to +1%.
  • INDIANAPOLIS – Basketball may be king in Indiana, but the king is losing his castles. They demolished the Wigwam in Anderson last week. Soon the 1928 Fieldhouse in Muncie could meet the wrecker’s ball. Sentimentality may extend the life of this structure, but cannot erase certain facts: Anderson and Muncie are part of a 12-county neglected region. This Distressed Dozen, stretching from Logansport through Peru and Wabash, to Richmond and Connersville, encompass massive tumors of economic and social decay, despite the remedial efforts of local leaders. When the state recently awarded millions of dollars to three regions, this area was totally neglected. Ten of the 21 Indiana counties that lost population in the past 20 years are part of the Distressed Dozen. In total they have seen their population drop by 4% (26,700) while the balance of the state enjoyed a 16% increase (830,000). At the heart of this population decline was the loss of 47,100 jobs in the region.
  • INDIANAPOLIS – It seems awfully early, but our youngest grandchild returns to school this week. It’s part of the changes made possible by advancing technology and its adoption by society. In this case, it’s the installation of air conditioning in our schools. My thoughts are not so much about what is taught in our schools, but what students are learning. Are they learning civility? Are they learning that civility is the behavior expected of a citizen? Are they learning civics, the study of government? It’s not the turning of the calendar to August that brings all this to mind. No, it was a caption of a newspaper picture showing the Indiana Lottery paying out the $536 million from the Mega Millions jackpot last week. The caption stated, “The family will take home $271 million after taxes.” The statement is factually correct, but readers are left to believe that the government will take $265 million in taxes. That would be 49% of the jackpot. Oh, hear the outcry from the righteous Rightwing about the greed of government. Equally loud are the protests of the indignant Leftwing with cries of inequity.
  • INDIANAPOLIS – Back in the Reagan era (1984), as we emerged from the recession of those years, 73 of Indiana’s personal income was generated by non-farm employment. In this Obama era (2014), as we emerged from what we call the Great Recession, non-farm jobs accounted for 70% of personal income. Many will dismiss three percentage points as trivial, but that’s about $8 billion of 2014 income for Hoosiers. This shift of income is accompanied by an increase in the share of personal income represented by government transfer payments (Social Security, Medicare and Medicaid payments, plus Unemployment Compensation). In the U.S., this increase was about 3% over the past 10 years and 5% in the Hoosier state. As of 2014, nearly 20% of Indiana’s personal income was derived from government transfers. This is a core issue in our nation, particularly in this election year. Government transfer payments are considered by many people as excessive burdens imposed on higher income people by elderly, low income voters. At the same time, these government transfers are seen by those with little wealth as necessary components of a social safety net readily afforded by a wealthy nation.
  • INDIANAPOLIS – If you Googled Indiana’s economy recently, you found our governor, lieutenant governor, and State Sen. Hershman all yahooing our employment situation. That’s good. The numbers do look good for Indiana as they do for the nation. It’s nice to see these Indiana leaders harmonizing with President Obama. It was a particular delight to have Sen. Hershman cite the fact that Indiana led the nation’s growth in Gross Domestic Product (GDP) in the last quarter of 2015. That’s a rare distinction for us. We weren’t just ahead of the national average. Indiana was the number one state in the union with an annualized growth rate of 3 percent compared to a rate of 1.7 percent for the nation. What makes this special is twofold: First, this seems like the only time I recall a leading Hoosier politician paying attention to state GDP figures. I suppose when Indiana is number one in anything, it brings out our yahooing instincts. Second, the last time Indiana led all states in GDP growth was the fourth quarter of 2009. Imagine the statewide celebration if we had gone as long as the Cubs or the Cleveland teams without such a stellar achievement.
  • [This column is dedicated to the memory of Raymond Moscowitz, a newspaper man,  who died June 8.]

    INDIANAPOLIS – First and foremost, I apologize for raising the anxieties of many readers last week when I reported that Indiana had gone from 1,008 to 1,009 townships. That was my fault; gross neglect by failing to check my work and my sources when I got an unexpected result. Anyone who works with data knows unexpected results are very likely wrong. Triple check your work before you declare startling news to the world. The U.S. Census of Governments in 2012 reported Indiana had 1,006 townships, a loss of two since citizens restructured governments in two counties. Gone is Eagle Township from Boone County, replaced by Zionsville and Whitestown. Gone is Mount Pleasant Township from Delaware County, replaced by Yorktown and part of Muncie. Those four places have assumed the governmental functions of the two former townships. Indiana now has 1,010 county subdivisions.
  • INDIANAPOLIS – According to the U. S. Census Bureau, 34 (37 percent) of Indiana’s 92 counties gained population between 2010 and 2015. Thus, 58 (63 percent) of our counties lost, or had no change in, population. Since this was competently discussed in the press by Matt Kinghorn of the IU Indiana Business Research Center, I look to the township data for a column that goes deeper into the data. Wrong turn. The first thing I do is count up all the townships that added population (388) and those that lost population (609), plus those unchanged from 2010 (12). It’s then I should have quit. That sum is 1,009 and, as every Hoosier fourth grader knows in this state of exemplary education, there are 1,008 townships in Indiana. I double check my count. Again it’s 1,009.
  • INDIANAPOLIS – They’re telling tales now, like they never usta. My now-departed friend, George Bond, sent me many emails with verses to that old refrain, “They’re laying eggs now, like they never usta, ever since the roosta came into our yard.” It comes into my head, and doesn’t leave, every election year. I’m told a hen will lay eggs whether or not there is a rooster, but some say she’ll be more productive with the noisy fellow about. Politicians tell tales whether or not there is an election, but they are more proficient at it during election periods. Gov. Pence and former Speaker Gregg are running about the Hoosier barnyard crowing about our economy. The governor proudly points to many thousands of new jobs for Hoosiers during his term in office. Speaker Gregg laments Hoosier earnings are lagging. Both have facts on their side, perhaps somewhat embellished, but facts none the less. Let’s look at those facts. The governor was inaugurated in January 2013, so let’s say his influence started in April of that year. From April 2013 to April 2016, private sector jobs in Indiana increased by 146,600.
  • INDIANAPOLIS – After a column on income distribution two weeks ago, I received numerous disapproving e-mails. Be assured I am not a bloodless, unfeeling conservative who would rip the ragged covering from a homeless, shivering child on a winter’s night. Nor am I a drug-crazed liberal preparing to equalize income, independent of effort and ability, in the name of an ancient goddess of justice. Let’s move on. Annual income alone does not signify poverty or affluence. Public policy should not rest on how much an individual or a household makes in a single year. Down the street from each of us lives an elderly lady who has no income beyond her small Social Security check. However, she may not be poor. She may not suffer for anything other than companionship. She may have substantial savings, no mortgage, no household maintenance or utility expenses. She may be blessed with a son and a daughter-in-law, further down the street, who pay all those bills.
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