The Outstater: A Broader Measure of Business Climate

July 7, 2015

For the use of the membership only (628 words)

“We have the best state legislature in America. Together we’ve made Indiana the fiscal envy of the country. We’ve balanced budgets, funded our priorities, maintained strong reserves, and still passed the largest state tax cut in Indiana history.” — 2015 State of the State Address

IMAGINE AN INDIANA in which voters have an independent, unscripted gauge of economic policy, one that projects actual opportunity for workaday Hoosiers. In mind is something more substantive than the usual posture and boosterism or, worse, political manipulation.

For Republicans, sorry to say, the closest thing is the “Legislative Vote Analysis,” released each summer by the Indiana Chamber of Commerce. This is analysis that doesn’t analyze — not, at least, in a way that measures the climate for business here. Rather, it prescribes the preferences of the special interests du jour by “scoring” a list of select floor votes.

Fred McCarthy, an Indianapolis lobbyist for almost four decades, critically examined this role in a special issue of The Indiana Policy Review, “Reawakening the Chamber.” He related our situation to that of airline passengers having been informed by the captain that, although they were lost, they were making good time with a strong tailwind.

“Such is the governmental-business relationship in Indiana,” McCarthy wrote. “There is a certain amount of economic activity, but there is cause to question where it is headed, who are its navigators.”

Writing for the Wall Street Journal, economist Stephen Moore is less circumspect: “Thanks to an astonishing political transformation, many chambers of commerce on the state and local levels have been abandoning (traditional) goals. They’re becoming, in effect, lobbyists for big government.”

The realpolitik is that the majority of the super majority worries less about whether a vote makes economic sense for a  constituency than whether the Chamber will score it. Republicans who rank low can expect to meet well-funded opposition in a primary election.

Taking a look at this session’s Chamber rankings, our Tom Huston found that solid conservatives in the Senate ranked in the bottom half of Republicans. “You get a pretty good idea of what the Chamber is interested in when they single out a liberal Democrat, Christina Hale, for praise for help in moving its agenda,” he concludes.

Finally, Dr. Tyler Watts has reviewed in detail the method behind the Indiana Chamber’s scoring. He warns that there are both social and economic costs to state policies driven by a Chamber agenda: “Those who have the most to gain from a more liberalized, competitive marketplace, such as the unemployed and the poor, tend to be economically uninformed and not prone to activism. And opportunities that are lost because resources are politically shifted to favored constituents are invisible but nonetheless real. Subsidies are not free.”

Watts looked forward to legislative analysis that takes greater care to address free-market principles, “especially when faced with proposed legislation that so clearly smacks of waste, cronyism and subsidies.”

For discussion’s sake, on the desk is a draft copy of such an independent analysis that covers the last two sessions. It is based on free-market considerations and stands in dramatic contradistinction to the Chamber rankings. The average score of Republicans in both the Senate and House (most of whom scored high on the Chamber ranking) falls below 50 percent on average. Indeed, only three hit 75 percent in the Senate; none did in the House.

If those percentages hold in a final analysis, it suggests that Indiana’s super majority serves primarily to protect a political class. It does so with pro-business rhetoric that obscures continuous rounds of vote trading that undercut or circumvent market and labor forces. And the Chamber directors, like the mercantilists of Shakespeare’s England, have the political skill to turn such hypocrisy to their advantage on any given issue.

There may not be any such thing as economic morality. It is difficult to accept, though, that the Chamber’s position on, say, regional economic development is less corrupting than organized labor’s position on wage controls. Both are damaging to the whole but not before benefiting the few.

Democrat voters don’t seem bothered by any of this. Republicans just seem befooled.

— Craig Ladwig

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