TheTimesTribune.com, Corbin, KY

May 2, 2014

April showers bring May rumblings


The Times-Tribune

CORBIN — 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.

April in Kentucky began with thunder and lightning striking in Jamestown as Fruit of the Loom announced the closing of its last remaining factory in Kentucky and the relocation of its manufacturing operations — and 600 jobs — to Central America.

The month ended with strong economic winds blowing through northern Kentucky as Toyota announced it was consolidating its operations — including those of its Erlanger facility — at a new headquarters in Plano, Texas. Kentucky will lose most of those 1,600 jobs.

None of the blame and spin found in abundant supply among the politicians’ reactions to these announcements really matters.

What does matter is the understanding that Kentucky must create an economic umbrella that helps it weathers future storms created by a volatile economy.

For years, large companies have been consolidating their operations just as manufacturers shed low-skilled textile jobs in favor of cheaper labor elsewhere.

While some clinch their fists and pound their tables, swearing to “buy American” while promising never to buy another package of Fruit of the Loom undies, there’s a better way.

It’s found in following, not fighting, these companies’ approach. They have made these decisions based on what will make their operations more competitive. Kentucky should do the same.

Gov. Steve Beshear bemoaned Toyota’s announcement, saying his administration “would have welcomed the opportunity to discuss options with Toyota.”

More talk, discussion and spin by a lethargic and risk-averse gubernatorial administration isn’t what’s needed. Rather, our economic times demand bold action to improve Kentucky’s competitiveness.

The discussion must no longer be limited to questions like: How can we keep these jobs from leaving?

Rather, our economic policies need to provide the answer to: How do we convince the Toyotas of the world not just to keep those 1,600 jobs here, but to actually consolidate their operations and build their headquarters here, including bring all of those other jobs to the Bluegrass State?

And, it’s: How can we create an economic atmosphere so dynamic that a textile manufacturer leaving is a few raindrops versus a torrential downpour?

I haven’t heard any such higher-level discussion coming from the governor’s office.

Common economic sense tells us that a state with high corporate tax rates, heaping helpings of debt, a lack of business-friendly labor practices and a poorly performing education system will not be competitive.

Kentucky for several consecutive years has remained one of the Institute for Truth in Accounting’s five “sinkhole states,” meaning the commonwealth continues to have some of the highest per-taxpayer debt in the nation.

Each Kentucky taxpayer carries a $26,700 burden as a result of that debt, compared to a taxpayer burden of only $7,400 in Texas.  

How does having an economy, like some of its Corvettes, disappearing in a sinkhole make our state more economically competitive?

How does having a state education system where, according to the National Assessment of Educational Progress, only 36 percent of its fourth-graders are proficient readers, 30 percent of eighth-grade students are math-proficient and 28 percent of eighth-graders are adequate writers position Kentucky not just to keep some manufacturing jobs but to get the plum headquarters jobs of the future?

How do we compete with a state like Texas, where 178,000 kids today attended 550 public charter schools (with hundreds more opening soon) while Kentucky has no school choice and an entrenched teachers union committed to keeping it that way?

How does Kentucky with its punitive income taxes, lack of a right-to-work law and citizenry increasingly dependent on government programs and “benefits” compete with the likes of the Lone Star state, where there are no income taxes, lots of freedom and apparently just as much opportunity to go along with it?