Category Archives: General Comments

Notes from Economic Outlook Forum

September 16, 2014

The Millsaps College Else School of Management and Mississippi Public Universities held their annual Economic Outlook Forum this morning to a packed house audience. The event was sponsored by the CFA Society of Mississippi. Here are my bullet point notes from the two presenters.

Douglas P. Handler, Chief U.S. Economist and Head of North America Macroeconomics, IHS Global Insights -

Outlook is tremendously positive.
The common theme throughout is demographics.
It is a time of transition. Firms that get it will do well.
There will be continued economic growth through 2015.
Housing will continue to improve. If you’re a homebuilder you’re going to be thinking apartments.
Fed tightening to take place 3rd quarter, 2015.

Darrin Webb, State Economist for Mississippi and Director of University Research Center’s -

Mississippi economy is growing, but not as much as we would like. Will probably grow less in 2014 than in 2013.
Sources of growth appear more sustainable than last year.
Growth will strengthen with that of nation.
Mississippi GDP forecast growth:
2014 – 1.4%
2015 – 2.2%
2016 – 2.4%
2017 – 2.5%

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Six Leadership Characteristics of Truett Cathy

September 14, 2014

Truett Cathy’s legacy will surely be most recalled as the founder of Chick-fil-A, but I hope his personal and leadership characteristics will not be forgotten either. Those characteristics were summarized in a September 13, 2014 Wall Street Journal column by Muhtar Kent, Chairman and CEO of Coca-Cola who referred to Cathy as “a longtime business partner, and dear friend and a teacher.”

Kent listed the following six characteristics as the the way Cathy approached business, people and community.

1. He believed in himself.
2. He worked hard.
3. He embodied the culture he wanted to build, i.e. he walked the talk.
4. He never stopped innovating.
5. He was generous.
6. He stayed humble.

Thank you Stennis Institute and Mississippi State University

Thank you Stennis Institute and Mississippi State University for the wonderful retirement luncheon and for the opportunity to serve in this capacity for 11 years. Very much appreciated. My wish for y’all is very simple – Go dawgs!
http://www.wcbi.com/wordpress/video-stennis-institute-of-governments-hardwick-steps-down

Political incentives are part of, not separate from, market incentives

August 27, 2014

This morning I ran across this comment in a letter to the editor of the Los Angeles Times: “Objective analyses have shown that so-called business incentives are ineffective. Such subsidies replace market incentives with political ones.”

The subject of economic development incentives continues to get a lot of attention by studies and commentary, and yet the practice goes on and even grows as evidenced by incentive ads by Texas and New York. It seems that, like the letter quoted above, some people think that political incentives are separate and apart from market incentives. Quite the contrary, business decisions, i.e. economic decisions, have always included political factors. When a business is considering investing in a particular state it takes all factors into account. Political factors, being one of them.

Governments influence markets in many ways, from price supports for agricultural products to loans and advice to companies seeking to export to other countries. All of these are political incentives and are part of, not separate from, market incentives.

If you had $18 million to invest in your community, what would you focus on?

There are few things more important to community and economic development than good schools. That’s why I’ve often said that the greatest thing that could happen to my city would be that the public schools were so good that there would be a waiting list for students to get in. Consequently, I’m interested in following projects that attempt to improve schools and communities.

The Kalamazoo Promise is one such project. Basically, it is a community revitalization project begun in 2006 that offers incentives – in this case, scholarships – for families that move into Kalamazoo, Michigan. It is an economic development project that invests in human capital. As of summer 2010, the program had paid out $18 million in tuition for about 2,000 high school graduates to attend Michigan universities. Below are links to webpages that provide more information about the project. So here is the question to you: If you had $18 million to invest in your community, where would you put it?

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The Kalamazoo Promise website.
Why these kids get a free ride to college – NY Times article
Kalamazoo Promise article at Wikipedia
Kalamazoo Promise featured on NBC Nightly News

 

Successful economic developers look thorugh the customer’s eyes

July 7, 2014

“What do I have to do to win your business?”

That’s a common question (or comment) heard from auto dealership lots to office suites. It’s how many salespersons have been trained to open up the customer to begin negotiations. Unfortunately, sometimes it’s a way for the salesperson to show that he or she doesn’t know much about the customer.

Economic developers are many things: Facilitators, information specialists, real estate finance experts, and – yes – salespersons. Good salespersons know that one of the best things to do is to put one’s self in the shoes of the customer, so to speak, because sometimes even the customer doesn’t know what it takes to win his or her business.

The July/August issue of Inc. magazine contains an article entitled, “The Come-Hither Tax Breaks.” It discusses how companies should be prepared “… to be wooed and persuaded by states looking for a long-term relationship with your technology company.” It is recommended reading for economic developers who want to understand just a little more about how companies view state tax breaks and to see the deal though the customer’s eyes.

Raising the Minimum Wage in Mississippi: An Econometric Model

March 31, 2014

An Economic Brief from the University Research Center at the Mississippi Institutions of Higher Learning entitled “Raising the minimum wage in Mississippi: An econometric model” is well worth reading.

Here’s the Executive Summary:

Recently, President Obama called for an increase in the Federal minimum wage. Congress had also responded by introducing the Fair Minimum Wage Act of 2013 (S. 460). That legislation if enacted will increase the minimum wage in three steps, from $7.25 to $10.10 per hour. The rate will then be indexed to inflate on each year thereafter. In addition, the legislation will increase the required cash wage for tipped workers in annual 85 cent increases, from today’s $2.13 per hour until the tip credit reaches 70 percent of the regular minimum wage. Several other US Senate and House bills including S. 1737, H.R. 1010 and 3746, have also been introduced to increase the minimum wage. None have been enacted to date. The President also issued an Executive Order raising the minimum wage for Federal Contractors to $10.10. Using the Regional Economic Models, Inc. Mississippi model PI+ V1.5.3, it is estimated that initially 1,766 jobs will be lost in the fi rst year, rising to 9,139 by 2028 then beginning a slow increase in jobs over the next 30 years, absent any other economic change in the economy.