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Mike Hicks

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ECONOMIC ANALYSIS: Talk of corporate greed falls flat with this economist

It is an election year again, and talk of corporate greed, that stalwart in the lexicon of electioneering, once again fills the airwaves. An economics columnist usually wouldn’t write about matters of sin. But attacks on greed always seem to have a policy message attached, and that is a big problem for all of us. Formally, corporations cannot be greedy. Corporations, not being human, cannot feel the weight of sin and so do not exhibit greed any more than they…

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ECONOMIC ANALYSIS: Final version of tax reform deserving of accolades

The practice of economics certainly can compel a man to cynicism. Take, for example, tax reform. I’ve testified on tax reform before legislatures in three states and one foreign country. Each had much bigger tax problems than does Indiana. Today, in each of those places, several solid proposals languish under the assault of special interests, much to the chagrin of taxpayers. Here in Indiana, the story is different. The past few months have seen reasoned and informed debate on property…

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ECONOMIC ANALYSIS: Financial services sector unfair in attacking Fed chief

The Federal Reserve’s Ben Bernanke has come under a lot of glib criticism from the financial-services sector. Generally, Wall Street types are unhappy because they think he should have addressed the subprime crisis with a greater sense of urgency. The truly bizarre rant by Jim Cramer on “Mad Money” has morphed into lower-level critiques of Bernanke’s experience and judgment appearing in columns and trade journals. But is this characterization fair or even correct? I think not, and here’s why. The…

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ECONOMIC ANALYSIS: How the property tax reform plans stacked up

As this year’s short legislative session comes to a close, I want to recap the property tax proposals that were bandied about. I probably should begin with the problem. Though Hoosiers pay less in state and local taxes than most Americans, the growth in state and local tax bills has been way out of sorts with income growth. Also, in some places, property taxes are astoundingly high-and in the most expensive places, taxpayers are not getting anything like the value…

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ECONOMIC ANALYSIS: Telecom reform is paying off big for Indiana

In the relatively unromantic world of economic policy, telecommunications research is notable for its blandness and practicality. Yet few things matter as deeply as good public policy toward the deployment of telecommunications. Here, Indiana has a remarkable story to tell. In the waning days of the 2006 legislative session, Indiana lawmakers passed a telecom reform act that quickly became the national standard for reforming access to broadband communications. It bears repeating: Indiana’s video franchising reform has become the national standard….

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ECONOMIC ANALYSIS: Study exposes unfortunate work-force realities

For more than a half-century, we have built complex statistical models to attempt to explain why regions enjoy different levels of prosperity. Virtually every conceivable variable-from ethno-linguistic similarity indexes to existing natural resources to government structures-have been tried, with the models proving enormously successful. One critical insight in this extensive body of research is that human capital-the quality of a labor force-yields the strongest explanation for differences in prosperity. When we apply these models to the United States, the importance…

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ECONOMIC ANALYSIS: Why Hoosiers should shed distrust of referendums

Should Indiana’s taxpayers vote on school construction? This seemingly simple question is a vexing issue for the Legislature. The debate surrounding the issue is surprisingly misguided and emotional. A few ill-informed editorials have not added value to the debate. Let me add a bit of data to the discussion to enlarge our understanding. Under Indiana’s current system of government, no elected official reviews the complete budgetary process for local government spending. This, perhaps more than anything else, has caused our…

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ECONOMIC ANALYSIS: From economic perspective, immigration bill misguided

Few issues garner as much vitriol as the debate over illegal immigration. The dimensions of the debate are wide-ranging, but as with most aspects of public policy, they are heavily influenced by economic issues. Indiana has embarked on an immigration debate, so a bit of economics might be helpful. First, according to the most reliable recent data, Indiana is underrepresented by illegal immigrants compared with neighboring states. I have seen estimates of immigrants in Indiana of between 45,000 to more…

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ECONOMIC ANALYSIS: Why subprime ‘crisis’ is not as severe as it seems

Over the next few years, quite a few doctoral dissertations are going to be written about the subprime loan market, and its effects on the overall U.S. economy. And whatever the effects turn out to be, it is certain that this financial mess has all the twists and turns of a spy novel. Here is part of the plot: Over the past decade and half, home prices skyrocketed. The causes included rapid growth in the U.S. economy, aging baby-boomer purchases…

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ECONOMIC ANALYSIS: Lobbyists lob lots of bad ideas into tax debate

I am a huge fan of the Discovery Channel TV show “Dirty Jobs with Mike Rowe.” I don’t get to watch if often. “SpongeBob SquarePants” dominates the Hicks household. But when I do, I revel in the host’s exploits in some of the nastiest jobs imaginable. But I think there’s one job I am more afraid of than anything I’ve seen on his show. There’s no amount of money that could make me a state legislator during a fiscal crisis….

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ECONOMIC ANALYSIS: Property-tax fix may keep more Hoosiers in their homes

Economists don’t favor tax changes to achieve short-term gains. The long lag time between recognizing problems, legislating solutions and implementing tax changes argues against fiscal policy as a remedy for economic woes. Monetary policy is faster. This does not mean taxes don’t matter. Several instances of accidental economic stabilization have occurred. The most recent example is President Bush’s tax cuts. Designed as early as 1999 as a permanent reduction in income taxes, they were implemented just as the country started…

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ECONOMIC ANALYSIS: Those fearing China’s economic prowess miss the point

Fear of China is a staple of protectionist rhetoric. Concern about China’s emergent power comes from the formerly thoughtful broadcasters from CNN, the presidential primary trail, the Pentagon and, of course, the blogosphere. What really is China’s economic role, and what do we have to fear? China’s billion souls, strategic location, emergent market economy and long history of tyranny make it an interesting, and now quite dynamic, area of study. China’s economy looks to be a powerful engine of growth,…

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ECONOMIC ANALYSIS: Indiana’s economy: The fundamentals are in place

Predicting the size and scope of economic activity for the nation, state and region is one of the more important roles played by university economists. But 2008 is the kind of year that really tests economic forecasting. The Bureau of Business Research just released its forecasts for Indiana and two regional labor markets. In total, we examined eight different data series and have stressed the performance of net employment and wages. Our forecast is fairly optimistic. We predict job growth…

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ECONOMIC ANALYSIS: Why state’s job growth is better than neighbors’

For the past week or so, I have been flooded by phone calls from colleagues in Illinois and Michigan, chortling over a new marketing campaign launched by Hoosiers. The privately financed billboards and radio spots ask businesses and residents whether they are tired of high taxes and unresponsive government. If so, they are invited to “Come on IN” to Indiana. It’s high-order fun this holiday season. Indiana sits as a small island of growth in the Midwest, and it is…

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ECONOMIC ANALYSIS: Commission’s reforms are just what Indiana needs

The recommendations of the Shepard-Kernan report are a tonic to anyone who cares about local government efficiency and improved local services. The commission r e c o m m e n d e d changes to the way Indiana’s government provides local services. Our current system looks much like a pre-statehood government, where services are provided in a disconnected fashion with budgetary decisions answerable to state bureaucracies, not local voters. It is this organization of government that has caused much…

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ECONOMIC ANALYSIS: How globalization benefits Hoosier companies

The debate on globalization most often focuses on imported goods. This is natural, for it is the sole source of pain associated with increasing international trade. The pain accrues to workers and investors in businesses that cannot compete internationally. Of course, the net impact is positive, in part because trade reallocates workers and capital to more productive activities. These more productive activities pay better and so are ultimately better for the economy-both here and abroad. One often-overlooked element of the…

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ECONOMIC ANALYSIS: Why eliminating property taxes is a bad idea

Judging from the many yard signs I’ve seen, a repeal of property taxes is a popular sentiment in the state. Too bad, because that would be an uncommon departure from Hoosier practicality and wisdom. Like most states, Indiana taxes income, consumption and wealth. We use these taxes to fund different levels of government. Critics of Indiana’s property taxes are right to be flummoxed. I’ve even argued that many of the consequences of Indiana’s property taxes are worse than most critics…

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ECONOMIC ANALYSIS: Reforms could create barriers to homeownership

Thanksgiving is my favorite holiday. Maybe it is because no one wants me to help cook, or perhaps it’s due to the stream of college football. Mostly I think I like it because it is such an unhurried, fun, shared day. This year, many of us gathered for Thanksgiving at family homes and we gave thanks for the many gifts life brings us in this nation. What many of us didn’t conscientiously dwell on is how important the simple act…

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ECONOMIC ANALYSIS: Subprime concerns overblown; so spend, spend, spend

An emerging holiday tradition in my family is for the womenfolk to rise very early on the Friday after Thanksgiving to go shopping. The same thing happens across the nation. This event aptly named Black Friday, corresponds to the unofficial beginning of the Christmas shopping season. For the record, I would rather spend the weekend in a chain gang than tag along, but this year I will be encouraging them to shop. Here’s why. The subprime mortgage mess has not…

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ECONOMIC ANALYSIS: World War II veterans built economy into juggernaut

Veterans Day is upon us again, and the slow passing of the World War II generation sparks thought on their contributions. I will let others dwell on their considerable wartime achievements. I am an economist, not a historian, after all. Our 16 million World War II veterans emerged from conflict in the late summer of 1945 to a muchfractured world. The production of goods-where facilities had survived bombs and artillery-was almost wholly focused on the demands of war. A worldwide…

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