Pharos-Tribune

September 10, 2013

MARCUS: Being the worst isn't good enough


Pharos-Tribune

---- — Are Hoo-siers satisfied to be the best of the worst? Is medio-crity our highest level of aspiration? I like to believe the answer to those questions is NO, but I have my doubts.

This round of questions is brought up by the latest estimates of per capita gross domestic product for the individual states by the federal Bureau of Economic Analysis.

State gross domestic product (GDP) is the market value of all goods and services produced within the boundaries of the state over a given period of time. The latest data are for 2012. Private firms, public agencies and not-for-profit organizations are all included. It is the states’ counterpart to the more familiar national GDP figures.

Per capita GDP indicates the total an economy is producing relative to the population of the nation or state. That population includes all persons — the very young and the very old, the infirm and the incarcerated. Per capita GDP will vary with the composition of the population. As such it is a poor measure of worker productivity.

However, the number does give us a measure of output compared to the population — the consumption units — in a nation or state. It approximates the potential for the well-being of a population.

What do the data tell us about Indiana? In 1997, the Hoosier state ranked 31st among the 50 states in per capita GDP. In 2012, we again ranked 31st. No change.

You can praise our leaders for the relative stability of the Indiana economy. Or you can condemn them for not doing enough to improve our relative standing.

In 1997, we saw Indiana with a per capita GDP 7.9 percent below the national figure, while in 2012 we stood 8.7 percent below the nation. That is not a catastrophic decline, but it is a movement in the wrong direction.

Between ‘97 and ‘12, Indiana ranked 26th in its rate of growth (average annual rate of 1.07 percent) or just below the national average rate of 1.13 percent. This put us at the top of the bottom half of all the states, a solid expression of mediocrity.

Where Indiana did excel was in comparison with the other four states of the Great Lakes (Ohio, Michigan, Illinois and Wisconsin). Our rate of growth was the best experienced by any of these neighboring competitive states.

But these five states together had the worst growth rate of any region in the nation. To lead the worst is not a great honor or distinction.

Do Indiana’s leaders in business and government believe this is the best we can do? Fifteen years covers a strong start at the end of the century, followed by two recessions and two recoveries. During these years we have had much talk about Indiana’s innovative programs and expensive efforts to strengthen existing firms and to attract new businesses.

Perhaps we need a re-examination of what we believe is innovative and just how we do spend our money.

Morton J. Marcus is an economist, writer and speaker formerly with the Kelley School of Business at Indiana University. He can be reached at mortonjmarcus@yahoo.com.