By Derek R. Smith, Daily Reporter
dsmith@greenfieldreporter.com
GREENFIELD - Each recession the United States has faced has been different, yet there are always similarities such as fear by investors, said economist Morton Marcus, who visited Greenfield Tuesday to speak with business leaders.
Marcus is a syndicated columnist who is retired after more than 30 years at the Kelley School of Business at Indiana University. He's known for his expertise in economics, population, personal income and Midwest manufacturing output.
"You're really not dependent so much on Hancock County's economy, but the metropolitan area," Marcus said, after citing the high percentage of local commuters to other counties. "The Indy metropolitan area has not taken that much of a serious hit at all."
Estimates show that Hancock County has had a decline of about 1,300 people employed compared to last year, Marcus said.
Part of the fear about the recession comes from people not knowing their history, he said, adding that every recession since World War II has been preceded by a spike in petroleum prices.
"The lack of understanding of what has happened in the past has created a great deal of anxiety," Marcus said, speaking in the lower level at Hancock Regional Hospital. "If you don't know what has happened before, then you can't see how we're going to come out of this."
In the case of the stock market, fear can cause an investor to sell. When many people become fearful, it can have a snowball effect on prices - dragging down the entire market, he said.
Marcus is a big believer in the federal stimulus plan because it's designed to have both immediate and future benefits in terms of employment and infrastructure. He gave an example of a project to improve a bridge that would employ workers and have a broader effect on the local economy, as well as the long-term benefit of the completed bridge.
"This is a fantastically good stimulus program," he said. "I wish I had thought it up."
Marcus hears a lot of talk about giving the money back to the consumers. The problem with that is we'd spend the money on what's best for us today, not on what is in the best long-term interest of the country, he said.
"It should be used for the people's interest whether or not they perceive that interest," he said.
One person asked Marcus whether he thinks some companies are too big to be allowed by the government to fail. He replied that some companies like Citibank are indeed too big to fail.
The plan that General Motors submitted to the federal government describes changes in inputs but doesn't say anything about what they'll produce, Marcus said. He argues that the government should have insisted that GM produce cars that cause less pollution, are more efficient and cost less.
Asked about his recent column on the state's lack of wage growth, Marcus said the problem isn't the state's labor force, but that many companies are risk-averse and fail to innovate. He gave an example of a company that hadn't explored expansion into other markets because it defined itself strictly as an auto supplier.
"Indiana's problem is the management of companies," he said. "We have too many people who are not good at running a company."
Part of the problem is that Indiana is losing in the competition to build products that people really want, he said, adding that "talented people aren't moving here."
Marcus cited Indiana's struggles as a longer-term trend last week in a telephone interview.
"What the people in Indiana don't seem to appreciate is that this is an economy that's been in decline over the past 30 years, relative to the nation," he said. "Indiana can't seem to hook on to the future. As a result, the nation just seems to keep drifting away from us."