State must address ‘tangible realities’ to build competitive advantages

By JIM WATERS
Bluegrass Institute for Public Policy Solutions

The question is rhetorical, but opens the door for other not-so-rhetorical queries about how Kentucky can move from the bottom of the pack to the top of the mountain currently inhabited by other states that actively – and often successfully – lure jobs away from the Bluegrass State.

That mountain top is inhabited by states like Texas and the Dakotas – as indicated by CNBC’s “Top States for Business 2013.”

As you approach the top of that mountain, you will hear Lone Star State Gov. Rick Perry issuing one of his now-famous recruiting calls to businesses in other states.

“Texas is calling,” Perry says in recent TV ads that aired in New York and Connecticut. “Your opportunity awaits.”

Considering Kentucky is ranked No. 36 on CNBC’s ranking, one wonders to which states Kentucky Gov. Steve Beshear might go to tout Kentucky’s economic atmosphere.

Beshear got roiled recently when Florida Gov. Rick Scott wrote to invite businesses in Kentucky to relocate to the Sunshine State.

“Florida has cut over 2,500 regulations, cut taxes 25 times and paid down state debt,” Scott wrote. “As a result, over the past year Kentucky’s unemployment rate remained relatively stagnant while Florida’s has dropped 1.7 percent.”

Beshear responded with a blog containing several bullet-point facts, none of which addressed any of Scott’s points. Nothing could be found in his rant about cutting taxes, reducing regulations or lowering Kentucky’s unemployment rate.

Instead, Beshear mentioned increases in manufacturing or exports that Kentucky’s manufacturers accomplished in spite of being in a less-than-competitive state.

Also missing from Beshear’s missive was the fact that Chief Executive Magazine pointed to the governor’s recent blue-ribbon tax panel recommendations to raise taxes on services “and other business disincentives” as culprits for reducing the commonwealth’s economic competitiveness.

CNBC’s rankings were highlighted recently in Frankfort by Maurice McTigue at an event co-sponsored by the Bluegrass Institute, Mercatus Center of George Washington University and State Budget Solutions.

McTigue, Mercatus Center’s vice president of outreach, helped lead a robust economic turnaround that became known as the “New Zealand Miracle” as a former cabinet minister and member of that nation’s parliament.

In his Facebook entry, Beshear took McTigue to task for stating recently in an op-ed that Kentucky is “stuck in the economic doldrums” and unlikely to attract the kind of capital investment that will make the state competitive.

“Theoretical conjecture is trumped by tangible reality,” Beshear wrote.

Precisely!

Here are CNBC’s “tangible realities” for Kentucky – “realities” that McTigue insists must be addressed if Kentucky is ever going to shout its own competitiveness from that mountaintop:

· No. 42 in overall economy

· No. 43 in education

· No. 39 in access to capital

· No. 37 in business friendliness

· No. 31 in its workforce

· No. 38 in quality of life

What kind of a recruitment letter to businesses in other states would these “tangible realities” make?

“Please come to Kentucky because only seven states perform worse in education than we do, and 38 states have better access to capital, but please, please, please come to our state anyhow!”

Contrast this with what Perry can say: “Come to Texas, which created nearly half of all the nation’s new jobs between June 2009 and June 2011. More than 226,000 jobs were generated statewide just in the past 12 months. C’mon now, y’all hear that?”

Y’all will hear more next week on what McTigue and other experts believe is needed for Kentucky to go to the mountaintop.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

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