IBJOpinion

MARCUS: Small gains do not deserve a celebration

Morton Marcus
April 3, 2010
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Morton Marcus

Julius Jolley burst into the pancake house, his smile a banner across his face.

“Coffee, please. Eggs Benedict, easy on the sauce, no potatoes, no pancakes, fruit cup if it’s fresh,” he called to a waitress, not stopping until he reached the table where I sat with my newspaper.

“Wonderful day,” Julius exclaimed. “See the story, spoilsport?”

“Which story?” I asked, although I knew the answer.

“The state personal income data just released by the U.S. Bureau of Economic Analysis,” he said with a smile like a poppa wolf bringing a fresh carcass back to the den.

“I saw it,” I said flatly. “It was OK; Indiana’s annual average growth rate for personal income from 2007 to 2009 (0.64 percent) exceeded that of the U.S. (0.57 percent) and of our industrial neighbors (Ohio, Michigan, Illinois and Wisconsin).”

“Yes,” he beamed. “And … what else?”

“Our population growth rate (0.60 percent),” I said, then paused to gulp some coffee, “was higher than any of those other four states, although lower than the national rate (0.90 percent).”

“Isn’t that cause for a big smile?” he taunted.

“It is,” I said, “if small differences in pathetic numbers make you happy.”

“That’s cruel and unbecoming commentary from a gentleman,” he said and turned his attention to his order, which had just arrived.

“Public relations and puffery are not my business,” I said. “Both the Indiana and U.S. income growth rates are extremely small and each rounds off to a measly 0.6 percent. To be somewhat healthier than your sickly neighbors does not mean that you are well.”

“You’re refusing to get to the heart of the matter,” Julius scolded. “From 2007 to 2009—during the worst times since the 1930s—Indiana’s per-capita personal income, the general standard of economic well-being, rose, climbed, expanded, improved while the per capita personal income of the nation fell, declined, contracted and deteriorated. Do you deny it?”

“No,” I admitted. “But it’s nothing to be excited about. The Hoosier increase you cite was a pathetic 0.03 percent, and that’s without taking into account the low 1.7-percent average annual increase in consumer prices during those years. That means real income in Indiana fell. Yes, the U.S. was worse, but we were still in the lower half of all states. So what’s to celebrate?”

“We need to celebrate,” Julius insisted. “Hoosiers need to hear the good news. That’s why you hear so much about positive plans, intentions and aspirations. These give us hope, which is the currency of bad times.”

“What does hope buy?” I asked. “Are banks crediting mortgage payments when a homeowner brings in a bushel of hope?

“Indiana has hard realities to face. We are hobbling local governments with our irrational opposition to local property taxes. We do nothing about wasteful township governments. We refuse to consider a progressive income tax.

“All the while, our economic base is shrinking. Indiana’s share of U.S. earnings from durable goods manufacturing is smaller today than it was in 1990. In the past two years, earnings in this sector fell an average of 10.6 percent here, compared to a national drop of 7.2 percent. This is our primary economic issue, not protecting horse racing and casino profits.”

“Aren’t you asking a lot?” Julius demanded. “What do you expect to do about durable goods manufacturing or whatever you said?”

“The Legislature could increase funding for the technical assistance program at Purdue. They could employ faculty or staff from our various universities to help solve management problems, like lazy thinking and lack of imagination.”

“You’re not an economist anymore,” he told me. “You’ve become a comedian.”

I didn’t find anything funny to laugh about.•

__________

Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.

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  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.

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