IBJOpinion

Hicks: Economic geography changed with labor

Mike Hicks
November 30, 2013
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Mike Hicks

Thanksgiving weekend sees most of us huddled with three or more generations of family. That makes these holidays a good time to think about long-term economic changes and how they affect us. Let us begin by picking two dates 70 years apart, say 1940 and 2010.

In 1940, about one-third of all U.S. workers were involved in manufacturing, 15 percent in agriculture, 5 percent in providing energy, and more than 10 percent in moving goods. Altogether, about 65 percent of folks worked in industries in which most of the goods produced were “exported” to places outside of where they lived.

This was a less-affluent time, and much of household income was spent on food, clothing and heat. To no surprise, by 1940, cities had sprung up around the places where people manufactured goods; mined coal; or loaded goods, coal and food products onto transportation equipment.

Over the coming seven decades, households got richer because we got better at food production, mining, manufacturing and moving all that stuff around.

Instead of 65 of 100 workers mining, growing, making and moving goods, fewer than 14 were needed to meet demand.

As households got richer, they also bought fewer things that could be exported from the region and spent more money on things that could not be readily moved around—health care, financial services, restaurant visits, amusements and recreation, telecom services and housing.

What does this mean to the geography of wealth and affluence?

In 1940, vibrant cities had big factories, rail yards and lots of associated workers. In 2010, vibrant cities had lots of people in many occupations whose product is mostly consumed locally.

This doesn’t mean there aren’t a few fantastic towns with factories, but it is the vibrant town that ultimately makes the difference.

If this is so, why are so many communities so dead set on luring the next factory instead of making the town a good place to live?

The answer is simply that too many folks don’t know what else to do.

I believe we still need to attract business at the state, and maybe the regional, level. A new factory anywhere in Indiana will draw workers from a dozen counties.

Still, the simple truth is that, for Hoosier counties, efforts to lure a new factory in hopes it will spur economic growth is like filling the bathtub during a house fire. It involves something that seems like it might be able to put out the fire, and it keeps you busy, but it won’t make much difference in the long run.•

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Hicks is director of the Center for Business and Economic Research and a professor of economics at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

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  1. If I were a developer I would be looking at the Fountain Square and Fletcher Place neighborhoods instead of Broad Ripple. I would avoid the dysfunctional BRVA with all of their headaches. It's like deciding between a Blackberry or an iPhone 5s smartphone. BR is greatly in need of updates. It has become stale and outdated. Whereas Fountain Square, Fletcher Place and Mass Ave have become the "new" Broad Ripples. Every time I see people on the strip in BR on the weekend I want to ask them, "How is it you are not familiar with Fountain Square or Mass Ave? You have choices and you choose BR?" Long vacant storefronts like the old Scholar's Inn Bake House and ZA, both on prominent corners, hurt the village's image. Many business on the strip could use updated facades. Cigarette butt covered sidewalks and graffiti covered walls don't help either. The whole strip just looks like it needs to be power washed. I know there is more to the BRV than the 700-1100 blocks of Broad Ripple Ave, but that is what people see when they think of BR. It will always be a nice place live, but is quickly becoming a not-so-nice place to visit.

  2. I sure hope so and would gladly join a law suit against them. They flat out rob people and their little punk scam artist telephone losers actually enjoy it. I would love to run into one of them some day!!

  3. Biggest scam ever!! Took 307 out of my bank ac count. Never received a single call! They prey on new small business and flat out rob them! Do not sign up with these thieves. I filed a complaint with the ftc. I suggest doing the same ic they robbed you too.

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  5. So Westfield invested about $30M in developing Grand Park and attendance to date is good enough that local hotel can't meet the demand. Carmel invested $180M in the Palladium - which generates zero hotel demand for its casino acts. Which Mayor made the better decision?

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