August 20, 2007
The Final Word
The nice thing about economics is that we never really do figure anything out. Markets soar and markets stumble, predictions are too high or too low, and we’re still trying to figure out why. In fact, one of the most popular notions in economics circles these days has it that we will never know why – that markets are such efficient processors of information that what makes them move must be random and unknowable in advance.
That hasn’t stopped folks like me from writing about economics and papers like this one from printing what we have to say. As I have often said to those who have remarked on these writings, nature abhors a vacuum.
Someone else will be filling that vacuum next week, because this is my last column -- for Indiana readers, at least. I am happy to leave you in the capable hands of Michael Hicks, the new director of the Bureau of Business Research at Ball State, who will take over this space while I ply my trade west of the Continental Divide.
But that still gives me one last shot at solving all the problems and challenges facing the Indiana economy in the last few hundred words or so I have left.
That’s a joke, of course, but so is the idea that any one person stands at the helm of the ship, steering us all to safety or to ruin. It may be reassuring to think that there are smart people someplace thinking very hard about how to make the economy stronger – and there are, of course – but in truth it is problem-solving at the micro level, in individual companies and even households, that gives the economy its spark.
And it is gratifying to see that problem-solving mindset arriving in government in Indiana as well, even with its occasional setbacks. This governor may pay a political price for disturbing the comfort of a few toll booth collectors and township assessors, but the generations of Hoosiers who will enjoy more bang from the public buck for years as a result should thank him.
Yet Indiana faces some serious challenges in the coming years. Indeed, some of those challenges are at our doorstep right now. Big Three automakers’ market share has dipped below 50 percent. Chrysler is private. So is Allison. The national forecasting company Economy.com considers Indiana to be one of four Midwest states in recession.
That judgment is wrong, in my opinion. But the national economy has become more fragile of late, and the industrial sector isn’t done evolving yet. So we aren’t done with the seismic shifts in our economy that have caused so much worry in many communities.
As I leave Indiana, I see plenty of reason for optimism despite these challenges. Indiana has an outstanding business climate. We are a state that works in partnership with business. The spirit of cooperation that helped pull off events like the Pan Am games twenty years ago stands in stark contrast to the adversarial relationship that exists in so many other states. There is high quality leadership in so many companies, in cities and state government, and in our universities. It has been a privilege to work with you all.
But there are roadblocks to progress as well. The biggest one I see is difficult to measure, but hard to ignore. That is our collective attitude towards education and training, by students and parents, and workers and managers. There is a very strong, loud message coming from the labor market. It’s telling us that skills and training, and yes, college, are very, very important for earnings and economic security.
Yet too many of us have our heads in the sand. We don’t want our children to move away, or our workers to leave for better jobs. We treat education as a frivolous luxury instead of the vital building block it actually is. And individually and collectively we pay a price.
I’m not sure we’ll ever figure that problem out either. But let’s never stop trying.
About the Author
Educational Attainment, the 21st Century Fund and the Future of SchoolingIndiana ranks 42nd in educational attainment.
Big Savings for Ending Prevailing WageMy statistical models show that repealing state prevailing wage laws save taxpayers money.
Re-Thinking Economic Development A large share of the most mobile families—perhaps half—no longer need to live near where they work.
Money Illusion and InflationPrice fluctuation could cause inflation to last longer, but it didn’t cause the inflation, it simply extends the pain.View archives