by T. Norman Van Cott T. Norman Van Cott, an adjunct scholar of the Indiana Policy Review Foundation, is a professor of economics at Ball State University, Muncie, Indiana. by T. Norman Van Cott
T. Norman Van Cott, an adjunct scholar of the Indiana Policy Review Foundation, is a professor of economics at Ball State University, Muncie, Indiana.
NEWS FLASH: Purdue University professors have developed an orange-production technology for Indiana. Indiana economic development experts laud the news, saying hundreds of new jobs are coming to the state. “The hemorrhage of Hoosier dollars to Florida is over,” says one expert.
So can residents of Indiana, who affectionately refer to themselves as Hoosiers, ride oranges to the economic promised land? A land filled with new jobs and retained dollars? The news flash is fictional. Nevertheless, it captures what passes for thinking about state and local economic development these days. To wit: quick fixes, cutting-edge technologies, lots of new jobs, and buying less from others.
That Purdue University professors could develop such a technology is not impossible. Purdue, Indiana’s land-grant school, is a world-class research university. Construction, monitoring, and maintenance of climate-controlled facilities obviously require engineering and agricultural expertise, expertise that commands premium salaries. That's what makes the new jobs “good” in media-speak.
How good is “good?” That depends on what the skills pay in their non-citrus jobs. Jobs don’t have intrinsic value. Orange producers will have to match market wages, or they won’t hire anyone. Will the jobs pay above market levels? No. Employers who pay such wages end up with overqualified/overpaid employees and uncompetitive cost structures. That’s a prescription for business failure.
What if Hoosier orange producers were major employers of particular skills? Would that put upward pressure on wages? Sure, but the pressure would be temporary. Spikes in wages like this trigger in-migrations of people from other areas. The incentive for these in-migrations continues until the wage disparity is eliminated.
Land and housing prices rise as a consequence of the in-migrations. And contrary to wages, the land and housing price rises will endure. That’s because new land can’t migrate to Indiana. Property tax revenues will piggy back on this rise in land values. Maybe this explains why real-estate and local-government interests figure so prominently in the jobs hype that surrounds development schemes. Slogans about good jobs divert attention away from the true beneficiaries of the schemes — landowners and local tax collectors.
The bottom line is that the vaunted orange jobs would be good jobs only to the extent the industry employs people who already have good jobs. New employers don’t magically transform workers' sows'-ears skills into silk-purse skills. Skill enhancement runs the other way. It’s a long process of people investing in themselves, making themselves more valuable to employers. Even on-the-job training is a time-consuming activity in which workers are anything but passive.
It is important to remember that jobs are the means by which we achieve ends — in this case, consumption of oranges. Jobs aren’t ends in themselves, except for workaholics. It follows that the fewer productive resources — that is, the fewer jobs — Hoosiers devote to getting oranges, the higher will be their living standards. Fewer jobs tied up in getting oranges frees up resources to produce other things. Even, it should be noted, if getting oranges involves a so-called hemorrhage of Hoosier dollars to Florida orange producers.
This latter lesson gets lost in the state and local economic-development experts' jobs hoopla. Their message begins and ends with the number of jobs — the more the better. Never mind what is being produced by these jobs. Never mind whether Hoosiers are getting more for less. Never mind that any gains to workers will be at best ephemeral. And most important, never mind that hiding behind the hoopla are the true beneficiaries of the development experts' agenda — landowners and local tax collectors.