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Wednesday, September 19, 2012


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Richard, by and large, the big point is clear and hard to argue with but I think the race to the bottom is almost over.
For better or worse, Indiana is hitched to transportation manufacturing (cars, trucks, buses, and jets). For that reason, a good multi-year run of increasing US vehicle sales would probably stop or even reverse Indiana's income declines.
I suspect the people at Honda and Toyota and Subaru might take issue with the notion that they do not emphasize quality in manufacturing.

Chris, I think you are wrong. Many actions of Indiana's leaders suggest that they are gearing up for a protracted race to the bottom. Indiana's manufacturing dependent economy is definitely pro-cyclical, so an overall uptick in the economy would benefit it, particularly with an aging fleet of cars on the road. But we've seen these types of bounces many times in the past and they don't last.

I agree that the transplants pay decent wages, have good working conditions, and emphasize quality. But one plant per decade or so, plus suppliers, does not an economy make.

It would be great if the Indiana per capita income figures would have improved. However, it's highly unlikely, given the years that you selected, that any governor could have improved them. 2005 was right before the recession and 2010 was during the early stages of the recovery.

To prove the point, not one state shows an increase in Per Capita Personal Income between 2005 and 2010. And the average decrease was 17.3%, which is far greater than Indiana's decrease of 11.7%. Granted, Indiana was starting from a lower figure than other states. This is been the norm in Indiana for decades due for various reasons, such as the ag economy that you mention and a lower cost of living.

Here's how IN stakes up:

Per Capita Personal Income by State

State Change 2010 - 2005 % Change
Indiana $(3,667) -11.7%

Illinois $(7,039) -19.5%
Ohio $(3,943) -12.1%
Michigan $(2,481) -7.5%
Kentucky $(4,835) -17.0%
Average -14.0%

U. S Avg -$5,998 -17.3%


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