The Outstater

March 25, 2022


A cover essay of The Indiana Policy Review some years ago featured a study entitled “The Nine States of Indiana.” It described with various metrics the nine distinct economic regions of the state. Wouldn’t you think that each would develop a different economic strategy — perhaps different even from city to city?

We haven’t seen that. Indeed, the strategies look pretty much the same: old-fashioned Chamber of Commerce schmoozing to attract middling corporations that would have come here in any case and new “investment” attracted by promising up-front profits to cronies with financing that will fall on future generations, all sprinkled with assorted packages of state and federal subsidy.

That is the Regional Cities Initiative in a nutshell. A scholar of this foundation, a former economic aide to Mitch Daniels, dubbed it “press-release economics.” Now we are looking at the results in the mid-term Census showing Indiana’s population congregating in Indianapolis as the outstate cities stagnate or fail.

For 17 years now, one governor after another has rounded up all of the state’s rent-seekers and constructed Potemkin villages here and there with reshuffled taxation, federal grants, Tax Increment Financing, bonding schemes, etc. They like to call it “development.”

Maybe, but mostly for those who sell concrete and rebar, plus the politically connected law, engineering, real estate and architectural firms. They built it but too few came to justify the cost.

Check out the 2021-22 U.S. Census population map and see if you can find any indication that the tens of millions of dollars spent on Indiana’s eco-devo strategy is panning out. That, please know, is the only statistic that matters — how many people are coming and how many are going. And don’t let them tell you it’s Covid’s fault.

It is somebody’s law that says scientific theories are rarely disproven, a new generation of scientists merely grows up not believing them. Something similar is true about economic-development projects. They don’t fail, they just go bankrupt after everyone responsible has retired and left the state.

That thought occurred as a picture crossed my desk of the governor being fêted at this week’s board meeting of the Indiana Economic Development Corporation (IEDC). This being the day after his disastrous veto of sexual reality, his handlers must have wanted to broadcast that the governor may be bad at biology but he knows his economics.

But he doesn’t.

Our cities, our regions, will prosper not because someone clever in Indianapolis has put together a package of government-financed incentives. They will prosper because Hoosiers are more productive and hard-working — that and their government is kept out of their way in all regards, especially in taxation and regulation.

And that last is exactly what has not been happening. Jason Arp, in the upcoming issue of The Indiana Policy Review, writes about a “legislature in lockstep,” where there has been a growing expectation that government is to have an expansive role in economic development here.

“It is an expectation vigorously promoted by the political class and reflected in our legislative data,” Arp says. “This transfer of economic decision-making from entrepreneurs to bureaucrats is seen in the proliferation of bills to that effect, the expansion of the Indiana IEDC.”

The head-counters at the Census Bureau are trying to tell us that isn’t working. We should listen. — tcl


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