This Could Have Been, and Still Could Be, Ohio
E-mailer Joe C pointed me to an important subscription-only Wall Street Journal op-ed by Fred Barnes that appeared on Saturday.
Barnes goes over the results of Indiana’s privatizations of its toll road and other services, noting the long-term economic and political results. They are cause for Hoosier State hoopla, and Buckeye State blues (bolds are mine):
When Mitch Daniels was elected governor of Indiana in 2004, his role models were Republican governors Jeb Bush of Florida and Bill Owens of Colorado. “They were both solid conservatives who were activists and had done big things,” he told me. Now, reform-minded governors — Mark Sanford of South Carolina, for one — regard Mr. Daniels as a governor they’d like to emulate.
….. In June 2006, Mr. Daniels opened eight bids for leasing the 157-mile Indiana Toll Road, accepting the $3.8 billion offered by a consortium of Macquarie Infrastructure Group of Australia and Cintra, the giant Spanish construction firm. The lease, he insisted, was “the right thing to do,” since the consortium agreed to upgrade the deteriorating road, add new lanes and install E-Z Pass computer billing to keep traffic flowing through toll booths. But polls found Indiana citizens disapproved by a 2-1 margin.
Now, 15 months later, Mr. Daniels has been vindicated: The money from the lease will pay for a 10-year road-building program that requires no new taxes or borrowing. Construction has begun on projects originally planned two decades ago.
Had the state continued to operate the tollway and rely on the gasoline tax to pay for road work, Indiana would have fallen further behind in making critical highway repairs. “The gasoline tax doesn’t come close anymore,” the governor said. “The need keeps growing.” In one year, interest on the $3.8 billion raised by the lease brought in roughly $250 million, more than the state earned running the tollway for a half a century.
Mr. Daniels has also privatized thousands of state jobs and numerous state functions. Prisons used to cook their own meals; by outsourcing food preparation, he said, the state is saving $14 million a year. “And the food got better.” Administration of the welfare program was turned over to an IBM-led consortium, with savings estimated by Mr. Daniels at $500 million over 10 years. He also refused to extend an executive order that had forced state employees to pay union dues. Once the dues became voluntary, 85% of the state work force stopped paying.
Mr. Daniels is not the perfect model of a conservative governor. But he’s bold, he’s lured Japanese companies to Indiana, notably Honda, and stirred a stagnant economy. And he’s privatized inefficient state functions despite union opposition and minimal public support. Other governors can benefit from what Mr. Daniels learned the hard way: Don’t propose tax increases when spending cuts are possible.
He is running for re-election next year, but not with much relish. “I was never obsessed with holding office,” he says. That may be good. Because some conservatives dislike Mr. Daniels, Democrats think there might be an opening to defeat him.
At re-election time, Indianans of any political persuasion who minimize the impact of Daniels’ economic performance (of course if continued), will have to be blind in one eye and not able to see out of the other.
Ken Blackwell, Ohio Governor Ted Strickland’s 2006 GOP opponent, proposed privatizing the 241-mile Ohio Turnpike during the 2006 gubernatorial campaign. Perhaps voter caution was understandable at the time, given that the only toll road privatization success story available was the 7.8-mile Chicago Skyway.
Today, it’s hard to argue with Indiana’s much more substantial success. More important, the Hoosier State’s toll-road and other privatization decisions have collectively made it a clearly superior choice in the competition for jobs and economic development — and it shows. Though hit hard by the slumps at GM, Ford, and Chrysler (to be fair, not as hard as Michigan and Ohio), Indiana’s 4.6% unemployment rate (link content will change on September 25) was the same as the rest of the nation, and significantly lower than each of its neighbors (OH - 5.8%; IL - 5.2%; MI - 7.2%; KY - 5.7%).
Buckeye State voters and taxpayers should be asking Governor Ted Strickland and the Ohio Legislature when they will privatize the Turnpike. Not if — when.
Tom;
Look at the historical trend of the eastern Midwestern states of Indiana, Ohio, Michigan, and Illinois since the “rust belt days†of the 1970s. Of the four states, Indiana had the most difficult time during the 1980s because of its weak industrial base, while Ohio, Michigan and Illinois were able ride the wave created by Reagan through the remnants of their once strong industrial base.
However, by the 1990s Ohio, Michigan, and Illinois suffered from out-sourcing, foreign competition, and dramatic shifts in the industrial sector, and have steadily declined. Yet, Indiana made some very long term pro-growth decisions that took a little longer, but have been fruitful during 00-07. The learning curve has been steep for Indiana, but in the end they have learned; where as Ohio, Michigan, and Illinois have not.
More to the point, Ohio voters will not demand privatization from Strickland because they one, are truly ignorant (in the literal sense) of privatization as they are of most economics; and two, as whole are more to the “left†than anytime in our State’s history.
Please note my response to The Pullins Report (12 Sept 2007):
“While I agree with you that the spending was inappropriate, I have to wonder if the average Ohio voter will really care. For 13 years Ohio citizens have voted for big spending and big government republicans time and time again. I think that the only way the republicans could lose if confronted with democrat candidates announcing “more spending,†basically being out spent. I see the average Ohio voter as fiscally undisciplined at home and in government. Ohioans have really lost their way.
“Here is another indicator supporting this, currently the two top presidential candidates for Ohio are Hillary Clinton and Rudy Giuliani. Both of the candidates are big government and big spending candidates that have the record to back it up my statement. So what does that say about Ohioans; they like big government politicians.
“A second indicator is the number of elected officials that are in fact socialist. Now I am not trying to be incendiary, but we have a number that are in fact present day socialists; even one, Kucinich could be classified as a modern communist. But think about this, in your life time and those of your parents, when in the history of Ohio would it be possible for a known socialist to be voted to national office. Yet today we have Kucinich, Strickland, Brown, and Tubbs. Again, what does that say about Ohioans; it says they have moved decidedly to the left.â€
http://oneoarinthewater.blogspot.com/2007/09/one-oar-response-to-pullins-report-ohio.html
I don’t think in my life time I will ever see the level of privatization needed to reduce the scope and size of government in Ohio. The only way this can happen is for a complete paradigm shift, and I don’t think this is going to happen when you have folks like Husted (R-Kettering) calling for universal health care insurance for all Ohioans, and the negligible difference demonstrated by the ORP and its rival the ODP.
The lesson not being learned by Ohio republicans and the Republican Party, as is in IN, FL, and CO, is that “conservative†policies WILL PRODUCE PROSPERITY. And let’s face the fact, the ORP’s populist polices are sinking this state. So until Ohioans change their voting habits nothing will change.
Comment by Brian — September 18, 2007 @ 1:52 pm
#1 Brian, so well said.
We’ve had the ORP problem since the days of Jim Rhodes. I had hoped Voinovich as Guv would turn the tide, but after about 3 years, he wilted.
There really is a need for a third party and/or independent candidates in Ohio.
Comment by TBlumer — September 18, 2007 @ 1:58 pm
Brian,
You have a great point about Ohio turning left. Too many were spoiled with easy to get, great paying factory jobs when the Big 3 had a presence here. I simply cannot understand why Buckeyes have turned. Too many out there afraid to stand up on their own two feet. Electing Communists? Unreal!
Ohio will really have to collapse economically before people start to change their minds. Politicians like Voinovich, Taft have only made matters worse. They encouraged the “handout mentality” pandering for votes. What a breath of fresh air a Daniels or Blackwell governorship could have made here.
Remember Atlas Shrugged? It will take a hell of a lot more suffering before people and politicians wake up and change their minds about the goodness of big government. Perhaps its time for the producers to go on strike!
I hope John Galt lives!
Comment by WildBill — September 18, 2007 @ 11:32 pm