Ball State Economist, Michael Hicks, has a column explaining that, while there is strong evidence that a community’s quality of life investments spur economic growth in that area; Indiana’s policymakers have mostly chosen to pursue the less reliable “agglomeration” model for economic growth.
Quality of life investments are amenities like outdoor recreation, cultural attractions, dining & entertainment, etc. Quality of life can also refer to things like education, public safety, access to quality housing options, and a clean and healthy environment. Meanwhile:
Agglomerations is the technical term for the magic that happens when businesses cluster in a certain area. … The idea is simple. Businesses that locate close to one another inadvertently share innovation and skills. They may do so through formal cooperation, by hiring one another’s staff or just by having people from the same trade hang out at a bar or go to church together.
One way or the other, the trick to economic growth basically involves getting educated people with their attendant abilities and skills to live in your area. Hicks tells us that the former is much more reliable than the latter. In spite of this, Indiana’s policymakers have spent far more resources on agglomeration than quality of life – spending gobs of money trying to attract employers to various places.
Part of this – maybe a large part – might simply be a matter of imbalanced lobbying power. Companies who want government money have a pretty compelling incentive to hire people who can advocate for policies that direct public money to their private interests. The general public has a much more diffuse interest in the benefits that come from quality of life investments – particularly before they are actually built.
But I also have a sense that there is a strain in Hoosier thought that regards spending money on quality of life as frivolous. Maybe this goes back to our Calvinist/Puritan roots. Spending money on business and work is serious and productive. Spending money on a more enjoyable life is wasteful, possibly sinful. This world is a testing ground for the faithful, not a place for joy! (To be clear, this is me speculating; not something Prof. Hicks has ventured.)
The one place in Indiana that people want to live is Carmel. Carmel has first rate schools. Not only do they have close to 100 extra curricular activities at the high school, but their athletic work out building is called the palace. The Carmel dads club runs all the youth sports and is well staffed with volunteers and has plenty of funds to keep up the facilities.
The downtown district reminds you of a small town from the 70ies.The area is walkable with apartments, small independent businesses and occasional chain stores. The downtown is safe and crime is rare.
The Palladium delivers performing arts performers, first rate bands and solo acts. There is a inside and outside skating rink only minutes away in the town of Fishers..Carmel has many first class restaurants and outside family activities. The roundabouts make it easy to go from one side of town to another. Traffic jams are almost unheard of.
All of these amenities are paid by taxes businesses that are sprinkled all over the town. These businesses have come to Carmel (there are many immigrants) for all of above activities that make living enjoyable.
The Carmel politicians spent millions of dollars in taxes making the town a first class place in Indiana to live and it helped to entice corporate businesses to come to Carmel.
As for Indianapolis they spend the majority of their money downtown. Professor Hicks is right when he states that low property and businesses taxes makes it harder to make a township a enjoyable place to live.
As you said, “Spending money on business and work is serious and productive. Spending money on a more enjoyable life is wasteful, possibly sinful.”. Not in Carmel.
IIRC, the state response was not to encourage other places to do what Carmel did, but to instead change the law to prevent any other town in Indiana from doing the same with tax dollars.
I definitely heard a lot of resentment directed toward Carmel and its extravagant spending. It’s hard to argue with results, but detractors almost certainly will give it a try.
They’re not just resentful due to the money, they’re resentful because their neighbors and kids are leaving and moving to the large cities in Indiana, places like the Indianapolis area or Carmel. As the original article pointed out, the “cut taxes and businesses will fall over themselves to come to Indiana!” hasn’t worked out that well.