INDIANA IN THE POLITICAL ECONOMY OF THE UNITED STATES:Part 2

Harry Targ

Indiana Economic Life

The centerpiece of Indiana public policy since 2004 has been corporate and individual tax cuts and reduced budgets for education, health care, and other public services. Indiana has been a trend-setter for the nation as to privatization of the public sector: including transferring educational funds from public to charter schools; establishing a voucher system to encourage parents to send their children to private schools; selling off public roads; privatizing public services; and recruiting controversial corporations such as Duke Power to support research at the state’s flagship research universities. The manufacturing base of the state has shifted from higher paying, and unionized, industrial labor (automobiles, steel, and durable goods) to lower paying non-union assembly work such as at the Amazon distribution center.

The positive narrative about Indiana economic growth presented by the current Governor Mike Pence varies greatly from recently published data. For example, between 2013 and 2014, despite enticements to business, Indiana grew at a 0.4 pace while the nation at large experienced 2.2 percent growth. Indiana’s economy historically has been based on manufacturing and has experienced declines since the 1980s and then some increases in recent years touted by the Governor. However, the newer manufacturing is mostly in low-wage non-unionized sectors.   For example, the Indiana Institute for Working Families reported on data from a study of work and poverty in Marion County, which includes the state’s largest city, Indianapolis.  Four of five of the largest growing industries in the county pay wages at or below family sustainability ($798 per week for a family of three) and individual and household wages declined significantly between 2008 and 2012 (Derek Thomas, “Inequality in Indy - A Rising Problem With Ready Solutions,” August 13, 2014, (www.iiwf.blogspot.com).

Further, Thomas quoted a U.S. Conference of Mayors’ report on wages and income:  “wage inequality grew twice as rapidly in the Indianapolis metro area as in the rest of the nation since the recession.” This is so because new jobs created paid less on average than the jobs that were lost since the recession started.

Thomas pointed out that the mayors’ report had several concrete proposals that could address declining real wages and stimulate job growth. These included “raising the minimum wage, strengthening the Earned Income Tax Credit, public programs to retrain displaced workers,” universal pre-kindergarten, and programs to rebuild the state’s crumbling infrastructure. They may have added that declining real wages also relates to attacks on unions in both the private and public sectors and the dramatic reduction in public sector employment.

Thomas added that Indianapolis (and Indiana) should take these data seriously because in Marion County “poverty is still rising, the minimum wage is less than half of what it takes for a single-mother with an infant to be economically self-sufficient; 47 percent of workers do not have access to a paid sick day from work, and a full 32 percent are at or below 150 percent of the federal poverty guidelines ($29,685 for a family of three).” 

More recently, November 10, 2014, the Indiana Association of United Ways issued a 250 page report on the state called the “Study of Financial Hardship.” The study, parallel to similar studies in five other states and prepared by a research team at Rutgers University, refers to Asset Limited, Income Constrained, Employed or (ALICE). ALICE refers to households with incomes that are above the poverty rate but below “the basic cost of living.” The startling data revealed that:

-a third of Hoosier households cannot afford adequate housing, food, health care, child care, and transportation.

-more precisely 14 percent of households are below the poverty line and 23 percent above poverty but below the threshold out of ALICE, or earning enough to provide for the basic cost of living.

-570,000 households are within the ALICE status and 353,000 below the poverty line.

-over 21 percent of households in every Indiana county are above poverty but below the capacity to provide for basic sustenance.

Referring to those within the ALICE category of wage earners who struggle to survive but earn less than what it takes to meet basic needs, Kathy Ertel, Board Chairperson of Indiana Association of United Ways said: “ALICE is our child care worker, our retail clerk, the CAN who cares for our grandparents, and our delivery driver” (Roger L. Frick, “Groundbreaking Study Reveals 37% of Hoosier Households Struggle With the Basics,” Indiana Association of United Ways, November 10, 2014, (Roger.Frick@iauw.org).

Assessing the current state of the Indiana economy depends upon where one is located in terms of economic, political, or professional position. Those Indiana men, women, and children who come from the 37 percent of households who earn less, at, or slightly above the poverty line probably have a negative view of their futures. For them, the tax breaks for the rich and the austerity policies for the poor are not positive. 

Indiana Politics

Perhaps the starkest fact to note in reference to the growing economic insecurity in the state of Indiana over time is that in 1970 forty percent of Hoosier workers were in unions, then the state with the third highest union density. Today only 11 percent of workers are in trade unions. The most recent legislative defeats Indiana workers have suffered include passage of a Right to Work law and repeal of the state version of prevailing wage. The Daniels/Pence administrations have used charter schools and vouchers to destroy teachers unions. In addition, in his first day in office in January, 2004, newly elected Governor Mitch Daniels signed an executive order disallowing state employees the right to form unions on their behalf. 

In 2005 the Indiana state government (legislature and governor) passed the first and most extreme voter identification law. Voters were required to secure voter identification photos. Michael Macdonald a University of Florida political scientist estimated that requiring voter IDs reduces voter participation by 4-5 percent, hitting the poor and elderly the hardest. In addition, Indiana law ends voter registration in the state one month before election day (the polar opposite of same day registration). And, polls close at 6 p.m. election day, among the earliest closing times in the country. Finally, requests for absentee ballots require written excuses. 

Republican control of the executive and both legislative branches led to redistricting which further empowered Republicans and weakened not only Democrats but the young and old and the African American community. Nine solidly Republican congressional districts were drawn in 2000.  As to the state legislature, by 2014 of 125 state legislative seats up for election, 69 were uncontested. Most shockingly, 2014 Indiana voter turnout was 28 percent, the lowest state turnout in the country. Indiana government has been controlled by Republicans (the governorship since 2004, and both legislative branches since 2010). 

Traditionally when Democrats were in the Governor’s mansion and/or controlled a branch of the legislature, they too tended to support neoliberal economic policies, but less draconian, and had been more moderate on social policy questions. In recent years, many legislators and the two most recent governors have been friends of or received support from the American Legislative Exchange Council (or ALEC) funded by the Koch brothers. 

With ALEC money, some active Tea Party organizations, the growth of rightwing Republican power, and centrist Democrats, Indiana government has been able to initiate some of the most regressive policies in reference to voting rights, education, taxing, and deregulation in the country. And as the data above suggests, the political economy of Indiana has increased the suffering of the vast majority of working families in the state. Other data suggests that the quality of health care, education, the environment, and transportation have declined as well.

The political picture is made more complicated by the fact that Indiana is really “three states.” The Northwest corridor, including Gary and Hammond, are cities which have experienced extreme deindustrialization, white flight, and vastly increasing poverty. The politically active from the area look to greater Chicago for their political inspiration and organizational involvement. Democratic parties are strong in these areas but voter participation is very low. 

Central Indiana includes a broad swath of territory with small cities and towns and the largest city in the state, Indianapolis. Much of the area is Republican, many counties have significant numbers of families in poverty, and some smaller cities have pockets of relative wealth. Democrats hold some city offices but the area is predominantly Republican.

The southern part of the state, south of Indianapolis, in terms of income, political culture, and history resembles its southern neighbor Kentucky, more than the northern parts of the state. The state of Indiana was the northern home of the twentieth century version of the Ku Klux Klan. In the 1920s, the KKK controlled Indiana state government. That reality, the institutionalized presence of overt racism, must be remembered as an aspect of Hoosier history that may still affect state politics.

Part 3 will address resistance and the development of social movement responses to the changing national and state political economy.

INDIANA IN THE POLITICAL ECONOMY OF THE UNITED STATES:Part 1

Harry Targ

Economic History

The United States burst forward as the superpower after World War II. At that time, 1945, the United States had ¾ of the world’s industrial capacity and 2/3 of its invested capital. The problem for the United States in 1945 was not the dynamism of its economy coming out of the war but whether it could be sustained. What each presidential administration did from the 1940s until the election of Ronald Reagan in 1980 was to support a political and economic system that coupled promotion of super-sized corporations and banks, the globalization of capital, and the provision of a modest safety net for workers and wages that allowed the increase of mass consumption of the goods and services produced by the 200 corporations that accounted for 1/3 of all that was produced on the face of the earth. 

But beginning in the late 1960s, however, the “golden age” of the US economy evaporated. Corporations sought to reverse declining profit rates. Public services were seen as too expensive. Worker rights were challenging profit rates. And as a result of the threat to more and more profits for big corporations and banks, the economy began its shift from investment in manufacturing (with attendant higher paying jobs) to financial speculation. The whole world shifted from prosperity for some to a system of accumulating debt, challenging the rights of workers to form unions, and reducing low cost access to education, health care, and transportation. The US economy, which had led to an income distribution in which there was a broadening middle sector from the 1940s to the 1960s, began its steady transformation to a two-tiered economy based on a tiny percentage of the super-rich and a broadening marginalization of almost everyone else. And during every period from the Golden Age until now inequalities in wealth and income between whites and people of color and men and women continued or grew. 

Politics

In the United States, the long tradition of economic populism and socialist movements, inspired by post-civil war reconstruction, came to fruition in the 1930s when millions of heretofore manufacturing workers successfully organized an industrial labor movement (the Congress of Industrial Organizations or CIO) that demanded a New Deal for them and for the millions more who were unemployed, living on the streets, and traveling across the country to desperately find work in the agricultural fields of California. The New Deal, for all its limitations, brought jobs, Social Security, worker rights, support for the arts, and a codification of peoples’ culture. Perhaps most importantly a vision emerged across the land that the nation was (or should be) a community. This vision was based on the fundamental proposition that human development only occurs when people live, work, and respect each other. Unions were about workers but the idea of union was also about human community. And the struggles for workers’ rights in many locales were paralleled by the movement for racial justice. And after the World War the vision of economic and social justice was greatly expanded and inspired by the Southern civil rights movement. Dr. Martin Luther King became the metaphorical embodiment of the fusion of economic and racial justice and the pursuit of peace.

But, in reaction to a half century of peoples’ struggles for justice, a counter-offensive was launched by market fundamentalists to reverse the gains achieved by workers and people of color. The Goldwater candidacy for president in 1964 was not an aberration but rather a launch pad for a movement to reverse the modestly progressive economic and social policies adopted by the Roosevelt, Kennedy, Johnson, and even the Nixon administration. The old Social Darwinian vision of each against all in the social and economic world, the magic of the marketplace, the belief that government is not the solution but rather it is the problem became common currency in political discourse. The hero of this historic force was Ronald Reagan, elected president in 1980. Many liberals in both parties, with ties to banks and corporations, articulated a softer message, paid homage to the problems of the needy, and were more sympathetic to some women’s, African American, and gay/lesbian rights. But they also supported the dramatic reversal of economic policy embedded in the so-called “Reagan Revolution.” 

The radical right supporters of Reagan built their campaigns around so-called social issues. And the centrists of both the Republican and Democratic Party pursued an economic transformation designed to preserve and enhance profits while sometimes opposing the most egregious recommendations of the radical right. While centrists and the radical right differed on many issues they shared a common commitment to reverse the economic gains workers, people of color, and women had achieved in the prior years.

From the late 1970s until today, both political parties pursued “neoliberal” international and domestic policies. Neoliberal policies included; down-sizing government  (except for the military), privatizing public institutions, deregulating economic activity, opposing workers’ rights to form trade unions, revising tax laws to reward the rich and shift the burden of public spending to the economically marginalized, and developing policies that enticed greater investment and financial speculation at the expense of ordinary citizens. These policies have been supported by international financial institutions, banks, and governments all across the globe. In the United States every presidential administration from Reagan through Obama has backed these policies. Both parties, most politicians, leading advocacy groups, corporate and financial cabals such as those organized by the Koch Brothers, and the handful of media conglomerates who control at least half of what we read, watch, and listen to, all have worked to fully institutionalize the neoliberal agenda at home as well as overseas. And importantly, the neoliberal agenda has been most enforced at the level of state government. 

Part 2 will examine the political economy of neoliberalism in one state, Indiana.