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Thursday, December 5, 2019 2:55 PM

How’s business? “Wonderful,” is the answer you’ll probably get from those who only know the stock market continues to rise. 

How is business in Indiana or in your sector of the economy? That answer is often hard to find. 

  • INDIANAPOLIS – I’ll confess. Last week, I walked the line between growth and contentment. All right. I’m for economic development. My vision of economic development involves non-economic improvements. My ideal Indiana does not have decaying cities and suburbs that pretend they are cities. My ideal Indiana transforms itself from a stagnating mid-19th century state into a 21st century partner in the development of this country. In my Indiana, Hoosiers welcome cooperation with others in forming more effective institutions. They cease their incredible resistance to regional cooperation and dispense with the fake “regionalism” of current institutions. A few examples: Counties need to go through the process of internal consolidation. We have too many local governments. Most are antiquated ego enrichment programs enabling inertia. They are bolstered by state money for regional agencies which funnel money to local entities for questionable projects.
  • INDIANAPOLIS – For many readers data do not matter. Any number can be satisfactory or disturbing according to their beliefs. It’s like the protests on the streets. Some hear anguished cries for justice while others see mobs tearing the social fabric. Nonetheless, let’s look at the data. Real GDP measures the value of goods and services produced by business and government in the market economy, independent of inflation. When divided by population, Real GDP becomes Real GDP per capita where that output is produced. It can be interpreted as the capacity to produce for the people what they expect from the economy, what the people demand of the economy. Since some portion of Real GDP is exported to other communities, it also reflects what the world chooses to buy from a given place. Exports, however, rise or fall as local businesses decide to seek customers beyond local, state or national borders. Therefore, exports too reflect the local population’s world view. Real GDP per capita for Indiana in 2008 was 9.2% below the national figure, ranking 31st among the 50 states. Ten years later, we were 13.6% below the U.S. and in 33rd place. Over those years, our Real GDP per capita grew by 6.0%, 29th in a nation expanding output per capita by 11.0%.
  • INDIANAPOLIS – Hank Hoosier explains his low income by saying, “We have a low cost of living in Indiana, so our incomes doesn’t have to be as high as elsewhere.” He pays no attention to me telling him, “Your low income is why your cost of living is low.” Today, I just lay it out flat for him. “Inflation is all we really know about. We don’t know beans about the cost of living. The Consumer Price Index (CPI), which so many people incorrectly call the cost of living, is just what it says it is, an index of consumer prices. “The cost of living is hard to define. We all have a different idea of what standards should go into that concept. It can get rather personal, tied up with our expectations. We can know actual rental and grocery prices plus the quantities bought and then compare them over time. But a “cost of living” is a different beast for which we don’t have any official measure.” 
  • INDIANAPOLIS – Flora Fetid, our friendly former neighbor, was visiting, sitting eight feet away, as currently fashionable. “Fred and I,” she said, “are going to rent out our house when we go to Morocco. We’ll be gone about a year and it makes sense.” “Oh my,” I said. “I hear that’s ‘a country of dizzying diversity.’ Will you be on the Atlantic or Mediterranean coast? “No, idiot,” she said sweetly. “We’ll be continuing our research about families of Newton County and elsewhere along the Kankakee River. Morocco’s the perfect location.” “Exciting,” I responded. To cover my geographic error, I asked, “For how much will you rent your house?” “We don’t know,” Flora replied. “How much would you say?”
  • INDIANAPOLIS – With apologies to Rod Serling, consider, if you will, Rob and Rhonda, two ordinary Hoosiers doing what they customarily do each weekday in the Economic Zone. Rhonda leaves the house to be at the job site by 7 a.m., hard hat on, blueprints in hand. Rob takes off at 8:10 with the kids for elementary school and then to the public library where he will drive the bookmobile and serve as its librarian until mid-afternoon. Rhonda is proud of the building her crew is constructing to green standards with the latest technology. Rob delights in bringing reading opportunities to people who find it difficult to reach a library branch. Both are warm-hearted do-gooders. Neither is prepared for the crushing truth about to fall on them. Clouds darken over the city. Lightning flashes and thunder rumbles in the distance. A voice without a direction says softly, but for all to hear, “From this time forward, you will all pay for the costs you impose on others. You are not being punished. You are merely doing right.”
  • INDIANAPOLIS – Recently, we examined the median incomes of all households in the nation and Indiana, with a special focus on Black households. Now, let’s look more broadly within our state. The Census Bureau provides median household income data for 2018. The racial or ethnic characteristic of a household is determined on the basis of the person responding for the household. Therefore, if a Black person answers, the household is considered Black despite the partner of that person being Asian. It’s imperfect but has both statistical and practical validity. The median, you will recall, is where half of all households are above and half below the reported number. The 2018 median income for all households in the state was $55,746, ranging from $94,644 (Hamilton County) to a low of $42,217 (Blackford). Black households (9.3% of all Indiana households) reported a median income statewide of $32,290, going from $83,588 (Putnam) to a low of $20,271 (Miami). Counties with small minority populations may give rise to results with large margins of error.
  • INDIANAPOLIS — Let’s go shopping. The most recent data (2018 from the Census Bureau’s County Business Patterns) tell us that Indiana supported more businesses associated with autos than food. The count was 8,700 to 3,600.  Restaurants are not included; no one I know says, “Let’s go shopping at Swill Burger.” Yes, it’s distressing. Auto and truck dealers, parts suppliers, and gasoline stations are more than twice as common as places to buy food. Of course, this Covid-19 has restaurants now specialized in take-out food, thus again destroying our carefully constructed statistical structures. Indiana has 571,000 business establishments, of which one in nine (10.9%) is engaged in retail trade. Oh, we did in 2018, but how many will we have in 2021?
  • INDIANAPOLIS  — I salute the unexpected bravery of the Indiana Utilities Regulatory Commission. Knowing the lobbying to come, on June 29 the IURC rejected a request from a gaggle of Indiana electric utilities to charge customers for power not used because of the virus sequestration. Now, to get this straight, think of your favorite restaurant. It has been closed for a while. Its revenues are down from what they might have been because you and other customers were not there. Today, they are open, and their prices might be increased to make up for the revenue they did not get while they were closed. You could be charged for the meal and the beer you did not consume. Or you could go elsewhere. Who should bear that loss? You? The restaurant workers? The suppliers? The owners? In the case of these monopolies, these utilities, it’s no different. Except the customers are stuck. There is no convenient substitute today for electric service.
  • INDIANAPOLIS — One of the strangely brilliant slogans of the Bush II administration’s wars in the Middle East was “the Alliance of the Willing.” This came to mind when I read the recently released Indiana Chamber of Commerce report, “INVision-2025, 2020 Snapshot.” The report is a wonderful agglomeration of statistics concerning Indiana and its workforce regions. It is a task well-conceived and skillfully executed. The Chamber’s report is very informative about where Indiana stands among its neighbors and its peers. I urge you to examine it online. It spells out many of the inadequacies of our state and a few of our better metrics. It’s not the standard fluff you might expect from the Chamber. But something was missing. There is nothing I recall seeing about the level of taxation. There are specific suggestions to remove nettles in the corporate corpus. Yet, with the level of taxation not addressed, the level of expenditures is ignored. Thus, raising the question of how willing are Hoosiers to support the Chamber’s goals?
  • INDIANAPOLIS - Some see the protesters and their eyes fill with tears. Others, however, only see the looters and their hearts fill with rage. The looters are opportunists taking advantage of a storm raised by the protesters. Some protesters are the thunder released by the guilt of being silent too long. And those of us who do not rise up in protest, who allowed decades of injustice to pass, we wait out the storm, knowing without our efforts the clouds will never disperse. Whether we protest now or not, by our prior silence we have been complicit in an injustice. No matter how sophisticated the analysis of the data, one simple fact summaries the result of many factors contributing to the conditions faced by African Americans: The median income of African American households in the Unites States was 33% below that of all households in 2018. Indiana’s African American households were 38% below all Hoosier households.
  • INDIANAPOLIS — Citizens are the final line of defense against misdeeds by business and government. Often these social soldiers are derided as cranks obsessed with unwarranted concerns of environmental, health, and safety matters. Business and government are simultaneously seen as irresponsible and unresponsive. They plunder, endanger, defile, and destroy communities too weak or too greedy to resist the “investments” being proposed. These conflicts characterize American history. Early on, with so much open land and little understanding of nature, questionable “progress” was invited to move further away, somewhere down stream, somewhere out of sight. But real progress is an inexorable force benefiting many despite any adverse consequences for the few.
  • INDIANAPOLIS — Everyone seems to be wishing we’d get back to normal from our attempts to evade the enemy virus. I earnestly hope we move ahead from normal. Let’s aim for something better than the normal we have known since the end of WWII. Last week the Bureau of the Census released the 2019 population estimates for cities and towns across America. I eagerly downloaded the Indiana data anticipating an article about increases and decreases among nearly 600 Hoosier hometowns. Yes, there is a story there. The 567 cities and towns (the incorporated places) of Indiana gained 265,700 residents between 2010 and 2019. That’s 17,300 more than the entire state. Much of that is rearranging the chairs on our landlocked cruise ship.
  • INDIANAPOLIS — We are endowed with 24 hours each day. That, in a sense, makes us all equal. However, if we have it, money can be substituted for time. Thus, from here to there, the poor man walks for a longer time than the rich man rides. Our use of time is, partly, a measure of the value we place on an activity. Most economic information about us is expressed as money spent by individuals and households. We are called consumers. In truth, we are both consumers and investors. An automobile and a lamp are both investments which we will use in varying amounts over many years. Or which we won’t use, but will have the option to use, which itself has value. Economists have been occupied for generations trying to put a dollar figure on time spent. What’s the value of outdoor recreation? When I started studying economics, 60 years ago, that was a hot topic. It remains so today.
  • INDIANAPOLIS — Between 2008 and 2019, from the Great Recession to the most recent year in which “The Best of Times” was proclaimed, the nation’s Gross Domestic Product (GDP) averaged 3.5% growth annually. The West Region (AK, CA, HI, OR, WA), as defined by the Bureau of Economic Analysis, was the fastest growing regional economy in the nation at 4.1%. The Great Lakes (IL, IN, MI, OH, WI) managed to be seventh of the eight regions by averaging 3.10%, thereby beating out the bottom dwelling New England Region by a robust 0.02%. If you didn’t get lost in those postal abbreviations of state names, you noticed a spread among the regions of just one percent per year in GDP growth. Put that way the difference is small. But over the course of 11 years, that’s a 56% increase for the West Region and a 40% increase for the Great Lakes and New England.
  • INDIANAPOLIS - Last week I planned to extend my discussion of Indiana regionalism, if nothing more exciting comes along. Two referenda on the June 2nd Indiana primary ballot in my area diverted me from that course. Washington Township Schools, (WTS, Marion County) seeks approval of two school district bond issues. You may have similar matters to decide on your ballot. Because I respect the educators, their programs and results at WTS, I will vote for the Operating Bond issue. This provides $16 million annually for eight years in the WTS budget. Those funds enable both improved compensation of all personnel as well as additional teachers. However, I will vote against the $285 million Construction Bond issue to revamp and improve classroom, athletic, and transportation facilities.  It is time to think and act big on changing American education. And I’d start at home where good education is already available. Why? Rightly or wrongly, Americans blame schools and parents when children are not adequately prepared as citizens or workers. The consequence: our everyday quality of life (our culture) is diluted.
  • INDIANAPOLIS  — Nothing focuses our attention on the future like becoming a grandparent. From the day the first grandchild is born, we see the world differently. Suddenly, our hopes and fears extend well beyond the present to decades far away. The COVID-19 virus is changing our calendars. Thus, my granddaughter in Maryland has postponed the wedding to her firefighter husband-to-be from May to August. He was a Marine who chose a profession in which he could serve others. As a first-responder to medical emergencies, his life and their lives are on today’s front lines. Their future is our future. With this killer virus afflicting the planet, we want to return to life as it was just a few weeks ago. However, our burden today -- constrained interactions, limited economic activity, and legitimate fear of what is yet to be for ourselves, our families, our communities -- will pass. The big question is: What will we learn from this world-wide catastrophe? Can we use these days of enforced idleness as a foundation for improving our lives, not just returning to what was, but developing what should be? We should have learned from our viral “vacation” there are no national boundaries for sunshine or storms. There is but one world of the environment and human activity. Walls may be built, edicts proclaimed, but nature and human desires deny all borders.
  • INDIANAPOLIS  — State Senator Barry Ballyhoo called last week. “How ya doin’, boy?” He asked the familiar question during this era of sequestration. “OK,” was my reply. “Well, youngster,” he said. “I was ruminatin’ about this here computer census. We done filled out our online form. ’Twasn’t any problem. But it done left me wonderin’ if anybody really cares.” “Oh, Senator, you can bet they do,” I replied. Then I repeated the many reasons Hoosiers have a stake in the census: The federal and state money distributed by formulas using population data, the drawing of political boundaries, and not incidentally, the issuance of permits by the alcohol and tobacco commission. “Yes, yes, I know all that,” he said impatiently. “But do Hoosiers care? Does it bother them last week’s figures show 55 of our 92 counties shrank in population between the census in 2010 and the estimates for 2019?”
  • INDIANAPOLIS  —  The virus pandemic has disrupted our lives and, in many cases, done serious harm to our livelihoods. Working from home helps some, but not all workers can benefit. Without such serious disruption, we take commuting for granted. Most Hoosiers work and live in the same county, but there are many who cross county and state lines for work. In doing so, they move a lot of money. According to the U.S. Bureau of Economic Analysis, in 2018, workers in Indiana earned $220.6 billion. But not all of that appeared in their paychecks. They, and their employers, contributed $24.7 billion (11.2%) to federal government insurance programs (Social Security, Disability Insurance, Medicare, etc.) that provide our economic safety net. Thus, working for Hoosier businesses and governments netted $195.9 billion. Yet, as we know, “foreigners” from Illinois, Ohio, Michigan and Kentucky come into our state and take home money earned here. Fortunately, Hoosiers also cross state lines and bring back money they earn in those “alien” lands.
  • INDIANAPOLIS  — I didn’t title this column “Women at Work” because it suggests only women who are employed are working. At the same time, I don’t do what the Bureau of the Census has done in a recent graphic release: Provide you with only the most recent differentials between the earnings of men and women. Truth requires context. And the truth is, as it has been for ages, women earn less than men. In 2018, the most recent year available, the median earnings of women employed in all types of jobs, full-time, year-round, was 81.2% of men with the same employment profile. This figure is the most recent measure of the economic disparity between men and women employees. What we aren’t told is about a  two-point improvement in the relative earnings of women from 79.2% in the preceding five years. Nor do we see the deterioration of the relative earnings of African-American and Hispanic women vis-à-vis men of the same description
  • INDIANAPOLIS  — The first warmish day brought forth green shoots of nascent flowers. And, lo, Faye of the Forest was on my deck railing, feisty as ever. “You waste a lot of time,” she announced. Not waiting for my defensive counter-thrust, she continued, “Every week you turn data sets into kindling for your writing fire. You spend hours on spreadsheet manipulations. What you want is already out there, done by others and available for free.” “And you know this how?” I asked. “I have my ways,” she said coyly, tossed her hair as women do, and flitted off into the forest. She was right! Last week, the Brookings Institute posted economic comparisons of the nation’s 192 largest metropolitan areas. Indianapolis was in the group of 53 metros with over one million persons and ranked 27th in growth of jobs, Gross Metro Product (GMP) and change in jobs at young firms, from 2008-18.
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  • Coats calls for bipartisan election oversight commission
    "The most urgent task American leaders face is to ensure that the election’s results are accepted as legitimate. Electoral legitimacy is the essential linchpin of our entire political culture. We should see the challenge clearly in advance and take immediate action to respond. The most important part of an effective response is to finally, at long last, forge a genuinely bipartisan effort to save our democracy, rejecting the vicious partisanship that has disabled and destabilized government for too long. If we cannot find common ground now, on this core issue at the very heart of our endangered system, we never will. Our key goal should be reassurance. We must firmly, unambiguously reassure all Americans that their vote will be counted, that it will matter, that the people’s will expressed through their votes will not be questioned and will be respected and accepted. I propose that Congress creates a new mechanism to help accomplish this purpose. It should create a supremely high-level bipartisan and nonpartisan commission to oversee the election." - Former national intelligence director and Indiana senator Dan Coats, in a New York Times op-ed published Thursday morning. 
     
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  • Woodward on why Coats didn't speak out on Trump
    Bob Woodward, the author of the new book “Rage” discussed the way in which President Trump diminished former Defense Secretary Jim Mattis and former DNI Dan Coats and why he thinks Mattis and Coats have not publicly spoken about the president. “It’s almost a book in itself,” Woodward said on MSNBC’s Morning Joe on Wednesday. “This was a man who was a senator from Indiana. He was retiring and he was offered this job from Mike Pence, and felt he could not say no. He went in with these Republican values and was stunned, shocked and, in a way, just ground down from Trump’s refusal to accept reality.” Woodward said that at one point Mattis and Coats talked after a National Security Council meeting. “Mattis says that Trump has no moral compass. And Coats says, ‘Donald Trump,’ their leader, ‘does not know the difference between a lie and the truth.’ They were in the latter phase of their lives. (Trump) pulled all of these stunts in a way that led them to the point where, in Coats’s case, his wife Marsha said to him, ‘Look, Dan, God put you in this job. You’re not just failing the country, yourself and your family, but God and you need to get organized.’ Trump expelled him when it did not serve Trump’s purposes.”  - Brian A. Howey, publisher
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