News From Terre Haute, Indiana

Flashpoint

October 16, 2011

FLASHPOINT: Scoring the Indiana Chamber

“Thanks to an astonishing political transformation, many chambers of commerce on the state and local levels have been abandoning (traditional) goals. They're becoming, in effect, lobbyists for big government.”

— Stephen Moore, Wall Street Journal, June 1, 2007

It is a question asked routinely — almost reflexively — during the last days of a General Assembly: “Will the Chamber score this?” The answer has consequences for legislators facing an electorate in a bad economic mood. It begs, though, a second question.

Each vote on selected bills counts for one percent of a legislator's total score in the “Legislative Vote Analysis” published each session. Vote wrong too many times and you lose the Chamber’s support. Consequently, you lose campaign contributors and gain challengers — primary challengers, if you are a Republican.

But here comes the second question: “Are the ratings grounded on economic principle?”

That answer has consequences as well — but for the Chamber itself. The introduction to the Chamber's annual ratings promises to determine whether a legislator is “part of the solution or part of the problem.” This is a boast that had better have something more behind it than hubris.

Fred McCarthy, a veteran Chamber executive and business lobbyist, posed questions about the Chamber's efficacy in his cover article for our fall journal. Dr. Tyler Watts, an economist and adjunct scholar of the foundation, also has questions.

“If the Chamber truly desires maximum prosperity and economic opportunity for Hoosiers, it must come to terms with some glaring inconsistencies in its legislative analysis,” Dr. Watts writes in a white paper released earlier this month by the foundation.

His analysis makes clear there is a difference between crony capitalism, which often includes the politically convenient public-private partnerships, and an economic climate that maximizes opportunity and prosperity for all Hoosiers — entrepreneurs, workers and taxpayers.

The Chamber’s most-recent ratings fall short of that ideal in three specific instances, Dr. Watts will argue:

n SB 584/HB1183 Local Indiana Business Preference — “The Chamber’s argument in support of this economically absurd bill essentially said that spending more on public works by state and local governments somehow promotes economic prosperity.”

n SB 72 Carbon-Dioxide Pipelines and Eminent Domain — “The ends don't justify the means. If they did, and our highest public goal was jobs, why not let any number of demonstrably able private entrepreneurs use state power to accumulate other people's resources for the sake of building their commercial empires?”

n SB 260 Clean-Energy-Improvement-Financing District — “The bill in question purports to subsidize energy conservation in general, and specifically the use of ‘clean’ energy. It might be pointed out that economizing on energy — which differs from strict conservation — needs no subsidy. In a market economy, businesses pay for the energy they use. To get more production from the same volume of energy inputs is rewarded naturally in the form of lower unit costs — i.e., higher profits.”

Separately, The Indiana Policy Review surveyed the roll call votes used for the 2011 ratings. It found 14 other scored “pro-business” positions that were arguable if not risible in the context of the state's economic troubles. They are characterized as either: a) issues “tangential” to the Chamber mission; b) examples of “neo-mercantile” rather than free-market policy; or c) indulgences in “socio-political” posture.

In the foundation's view, none of those Chamber recommendations would improve Indiana’s economic numbers.

Even so, if a legislator voted “wrong” on all of them, plus the ones identified by Dr. Watts, he would score near that mark (70 percent) where the Chamber withholds its endorsement. The mark, lest you imagine the Chamber is pro-business in any bipartisan way, neatly divides Democrats from Republicans in both houses. Also, members of the GOP leadership score so high relative to the rank-and-file it is as if they got an advance look at the answers.

Given all of this, we are left with the realization that there is no lobby for free-market economics at the Indiana Statehouse. There is only the Chamber, which a Statehouse wag refers to as "the research arm of our Tudor parliament." Tim Carney, author of “The Big Ripoff,” puts it another way:  “State and local chambers have become corrupted by the lure of big-dollar corporate welfare schemes.”

That should be a concern for Hoosiers of all income strata and political persuasion. “Most ironically, those who have the most to gain from a more liberalized, competitive marketplace, such as the unemployed and the poor, tend to be economically uniformed and not prone to activism,” Dr. Watts writes.

“Each session, the Chamber faces a temptation to support ad hoc policies that visibly, immediately benefit this or that constituency,” he adds. This can over time weaken a state economy without countervailing leadership from the Statehouse or the governor's office.

The 27th edition of the Chamber's “Legislative Vote Analysis” succumbed to that temptation, weighing the Statehouse calculus toward waste, cronyism and subsidy. You should hope that the 28th edition takes greater care to address what will actually work — that is, free-market principles and a pro-business lobby sticking to its mission.

Craig Ladwig is editor of The Indiana Policy Review. A version of this essay ran in the Indianapolis Business Journal. Contact the author at cladwig@inpolicy.org.

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