IBJOpinion

SHOBERT: Indiana continues to mind the store

Benjamin A. Shobert
February 19, 2011
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Benjamin ShobertIn mid-January, United Van Lines released its annual study of migration patterns across the United States. The resulting map paints an interesting picture: States in yellow are those they define as “high outbound” (where more people are moving out than in), those in blue are the opposite, and those in white are neutral, where the population has been stable.

Perhaps it’s no surprise that Indiana is one of the stable states, but what may come as a bit of a shock is that Indiana appears to be floating in a sea of yellow, with almost every one of the neighboring states, except Kentucky, indicating more people outbound than inbound. Michigan? Yellow. Ohio? Yellow. Illinois? Yellow.

Well, maybe that last one shouldn’t come as a surprise, given the mid-January passage of a 66-percent personal income tax increase and 46-percent business-tax-rate increase from the cash-strapped state government. Regardless of our respective political differences, these two facts should give every Hoosier a sense of pride in what has been built (or, some might say, what hasn’t been built) here in the seat of Indiana’s government, Indianapolis. Indiana now enjoys a meaningful comparative advantage relative to its surrounding states, one that is likely to grow only more attractive to new businesses if other Midwestern states find themselves in similar positions as Illinois, with declining tax revenue and increasing spending obligations.

Many local business and thought leaders have wrestled with the questions of what Indiana needs to do in order to be considered more seriously by expanding businesses, or what the state should try to do to prevent the entrepreneurial brain drain from our universities. And for all the angst that many have felt over not having great answers to these questions, Indiana has managed to quietly foster an answer that is entirely consistent with our values: good fiscal government.

The result of this sort of base-running versus swinging for the fences may not find Indiana playing host to Google or the next great biotechnology industry. But a stable state with attractive personal and business tax rates will—at a minimum—drive labor-sensitive businesses to look more seriously at Indiana. Look around the state and it’s easy to find pent-up industrial know-how, the sort of capabilities other states simply cannot match. And, to paraphrase Tom Cruise in the movie, “The Firm,” manufacturing “may not be sexy, but it’s got teeth!”

For some, these sorts of industries are too old-school to drive the new economy. And while the criticism is legitimate, Indiana’s current strengths lie in embracing a vision of our future that is authentic to what we do truly better than others, while not shutting the door on exploratory efforts to cultivate higher-technology startups.

These are delicate matters, because some of the things that characterize Indiana can’t be changed. After all, our topography and climate really aren’t up for adjusting. But what we can do is stay true to what we are and what we aren’t, and in doing so, foster an environment of stability, something business very much desires.

Perhaps most important, Indiana’s current fiscal position points a way forward, illuminating what the next decade of good government, and good partnership between municipalities and businesses, should look like—not only at a regional level, but for the nation as a whole as well.

As Gov. Daniels’ second and final term comes to an end, business and policymakers need to pay attention to what Indiana has going for it: good government that understands its limitations, seeks to ensure its fiscal stability, and empowers business to worry about everything other than double-digit increases in taxes.•

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Shobert is managing director of Teleos Inc., a local firm specializing in taking products and technologies to market.

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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