Economist Argues with Ohio Governor
About the "Real" Problem Facing the State

Ohio has a major state budget problem to fix and the Governor and the Legislature do not agree on how to fix it. Is that the real issue that we should be most concerned about at this moment? One Ohio University economist doesn't think so. Richard Vedder says the real problem is the state's loss of economic competitiveness over the past three decades. Who's right? Actually, both are right.

Governor Taft and the Ohio Legislature need to reach a compromise on how to plug the holes in the state budget. At the same time, they really need to address the state's economic competitiveness, as Vedder suggests, although I am not convinced that Vedder has the right solution in mind. Go here to read Vedder's article.

What do I suggest? For one, let's take a longer term and broader view of our economic competitiveness. Ohio has a $381 billion economy, which makes it the 21st largest economy worldwide. We rank between the Korean economy at $422 billion and the Netherlands economy at $380 billion. With this insight in mind, maybe state officials should be asking themselves where do we want Ohio to rank in the global economic hierarchy ten years from now?

Economic development thinking in Ohio and around the rest of the world is too narrow and too short-term. We "tinker' around the edges of the economy. Why not ask some "power" questions like these:

- How does state and local government spending in Ohio impact the growth of the state's economy? For that matter, how does this spending impact the growth of Ohio's major regional economies. After all, as Wilbur Thompson, one of the grand-daddies of urban economics said some years ago: "state economies are really confederations of local or regional economies."

- If we want the state's economy to growth by x percent over the next decade, how can we use our state and local government spending to help achieve that growth goal?

The truth is I think we are afraid to ask these types of questions because they may lead us to economic development ideas, policies and strategies that are vastly different than our current tinkering. To all who will listen, let's try some "power-thinking."