Opinion and Forefront

LADWIG: Indiana run 'like a business'? Not quite

December 24, 2011

Craig LadwigNapoleon had us journalists pegged: We’re the ones who ride down from the hills after the battle to shoot the wounded.

And that is the proper sense in which to read this critical assessment of the battle that has been the Daniels administration.

There is no argument that Indiana has been fortunate to have a man of Mitch Daniels’ ability in its public service. I would list his accomplishments right here except that it would waste space, his public-relations machinery having done that expertly and often.

So what’s not to like?

Before getting into that, a defense of journalism: Yes, we have an unearned vantage, but a vantage nonetheless.

There is a historic example. James Buchanan, an economist and Nobel laureate, writes of the confusion after the Battle of Midway among the fleet admirals, who had no idea how it had unfolded until they flew in a hapless young aviator, shot down early and left floating on a seat cushion. The admirals took notes as the ensign explained how exactly the Japanese had lost.

So, here’s my view: Daniels has been more of an accountant (plus or minus $320 million) than an economist, more Beltway than Hoosier. And although he claims to admire the classical liberal philosophy, you strain to see any sign of it in his governing.

An early Daniels appointee, a corporate retail manager, asked the governor how to supervise his assigned bureaucracy. Daniels, he says, told him to simply, “Run it like a business.”

Every time this man applied that advice to his particular corner of government, “All hell broke loose.” He finally resigned, not really in disgrace but under a media cloud that he was not quite up to the job.

We asked him to write his story for our quarterly journal. We thought it would increase understanding of the public-private divide.

Now the Daniels administration has a reputation for personalizing its politics. Whatever the truth of that, our man, after initial enthusiasm and several weeks of consideration, declined to speak further about his experience.

But others told their own story. Tad DeHaven, disowned as a Daniels economic whiz but now valued at the Cato Institute, testified before Congress as to what he believed was the ineffectiveness of the Indiana development model, one he had dubbed “press-release economics.”

And there were questions asked inside and outside the Statehouse about why Daniels put his weight behind such crony capitalist ventures as professional sports teams and natural-gas pipelines, arguably at the expense of a broad economic climate for all enterprises.

Right there is where I see the wrong turn, the tactical error, the misspent cavalry charge.

On my desk is a Web posting that appeared early in the first term. The author, Fred McCarthy, a former chamber of commerce executive, now edits the blog IndyTaxDollars. McCarthy suggested what would have been the correct strategy:

“The state of Indiana hereby announces a new policy for business development. In the belief that businesses locate or expand more productively using long term, genuine economic logic, we will no longer offer temporary tax incentives. Instead, we pledge the efforts of government to create and maintain the very best business climate for you.

“Within the limits of fairness and justice, rules and regulations inhibiting such productive operations will be reduced or eliminated whenever possible. Grants, abatements, subsidies and/or other tax gimmicks that depress governmental revenues and increase other taxpayers’ bills will cease. On the other hand, be assured that tax dollars you may pay in the future will never directly finance your competitor. All private businesses will be treated in the same way.”

Daniels, instead of using his political skills to thus position the Indiana economy for 2012 and beyond, built an Emerald City on the fiction that government could be run like a business, wasting a chance to make a real difference in Hoosier lives.

It’s time to ride back up into the hills and get a good seat for the 2012 General Assembly.•

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Ladwig edits Indiana Policy Review, a quarterly journal studying local public policy. Send comments on this column to ibjedit@ibj.com.

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