In the End, Only Time Will Tell

Greene County has faced a number of financial challenges since the profitable coal industry left this area. While reading some local history the other day, it was quite evident that this community was very prosperous in its day. http://gcdailyworld.com/blogs/chriswathe...

Today, our community's financial challenges appear to cause other social issues, such as blighted properties, as they are no doubt additional ramifications of these financial struggles. http://gcdailyworld.com/blogs/chriswathen/entry/15015/ Adding to it, buyers from around-the-state and out-of-state can afford to buy properties at tax and sheriff sales and let them waste away because real estate is so cheap by comparison to the rest of the nation. http://gcdailyworld.com/blogs/chriswathe...

Along these same lines, much of our community's pride is lost and morale lowered each day as properties become more blighted and people struggle to find adequate pay outside of our community by commuting long distances. Many travel an hour or more to Monroe and Vigo Counties, while others even travel as far as Indianapolis.
http://gcdailyworld.com/blogs/chriswathen/entry/13170/ This forces them to be away from loved ones even more each day. It also adds to an already long workday. With the short amount of time they have left, we feast on cheap fast food and give our kids gifts in lieu of our time, causing childhood obesity and behavior issues because of the lack of attention. Of course, when resources are scarce, the bickering amongst family members will no doubt increase. High foreclosure rates assure families are affected too. http://gcdailyworld.com/blogs/chriswathen/entry/15378/
Alternatively, some of our talented workers are forced into lower wage "under-employment" to stay close to home, but it's certainly not the best use of our resources.

In short, although it may be oversimplifying things, our financial issues in this county could arguably be the source of many of our other problems.

Looking back historically, Americans have been fiercely independent and proud. In our country's beginnings, almost everyone was self-employed, as a farmer, merchant, baker, blacksmith, undertaker, doctor, or craftsman. Each person determined his or her own fate and prosperity, working harder to be more successful. Long-distance transportation and communication were poor, so everyone bought locally because that's the only choice they had.

Of course, the Industrial Revolution came along and taught our ancestors that they should move to the city and work in factories. They became dependent on the factory owners for all they had. Miners became so deeply indebted to the company stores that they would never see the light of day. Long-distance transportation and communication improved, as well as technology, even though it may all be seen as crude today.

During World War II when salaries and wages were capped via government regulation, the idea of employer-provided benefits, such as health insurance, became popularized. Ultimately, along with defined benefit pensions, this caused additional dependence on the employers of these workers. Again, transportation, communication, and technology improved.

Today, many people blame the global marketplace for American job loss, which offers much lower wages, little or no environmental constraints and/or liability lawsuits. A cheap wage is one thing, but being able to bury toxic by-products with a backhoe out back is even better for profitability. No big lawsuits are filed when things go awry either, such as products found to be faulty http://gcdailyworld.com/blogs/chriswathen/entry/16100/, harsh chemicals are spilled, a mine collapses, or someone loses a limb in a machine. In America, we lawyer up after such an event, while in other countries they just say, "Send your brother to work tomorrow to take your place."

Blame globalization, but to a much, much greater degree improvements in transportation, communication, and technology have all caused more American job loss than any off-shoring has. Technology, logistics, and advanced production processes have increased productivity and quality to a point where very few workers are needed to produce and deliver significantly more goods and services relative to years past.

Loss of good old-fashioned customer service has lowered the amount of employees needed, too, as no one seems to expect any help at the big box stores anymore. Looking for something they don't have? Tough. Need your groceries bagged? Do it yourself. Like help out to the car with your purchase? Bring a friend.

Like it or not, our way of doing business has changed. Our local economy is different now, and our attitudes should be too.

We have certainly entered into a new age: The Information and Knowledge Age. Geographic distance doesn't seem to matter as before. The adage of "work smarter, not harder" definitely applies. Ironically, the ever-expanding internet fosters many new opportunities, while also eliminating many others. It's creative destruction.

We no longer buy locally either. Big box stores, franchises, and the internet make sure of that. All have the end of their vacuum hoses into smaller communities; you can hear the suction of money out of our community and into the various places where these corporate headquarters of the world reside. How will our community's collective bucket of wealth ever fill up -- let alone overflow -- if we allow more to be siphoned out than we put in it? http://gcdailyworld.com/blogs/chriswathe...

While many residents may not want to be self-employed, business organizations today -- and going forward -- will likely be much smaller and made up of possibly only a few employees with strong entrepreneurial attitudes. In a word: nimble. After all, they have to be to survive in this changed world.

Not to be misunderstood, being an employee is not inherently bad or to be avoided, but acceptance that times have changed is a must. Interestingly, history appears to be repeating itself, as we all return to being in charge of our own destinies again just like the pioneering people of this country.

Employers will not be the closely-hovering parents of years gone by, providing for our every need from cradle to grave. That point is apparent even from the changes in retirement plans: the "defined benefit" plans or yesterday have become the "defined contribution" plan of today. This has shifted risk from the company to the employee because it was up to the company to put enough money back to make good on their promises of retirement, but now the burden in squarely on the employee -- save the corporate match up to a certain percentage, if offered.

With that said, we can continue to lament our plight, or we can do something about it.
The route taken thus far has been, for lack of better words, chasing large smoke stacks. This could also be called "whale hunting," as we could feast for long time after landing just one huge fish, but we all starve in the meantime without a catch too. So far, as you already know, no big catch. The only thing keeping up our large girths is all of the fast food.

The thought-process has not been completely absurd, though, because it has been aimed at putting that initial spark into the economy, hoping it will ignite. Without more decent, well-paying jobs, who will be able to support the small businesses we've all been asked to support? We need the spark that will light the fire, but it hasn't been found yet. What will it eventually be? Without it, small stores and shops struggle and cannot add to the local economy, including much-needed jobs. It's a catch-22 situation.

How will we stand out from the thousands of small communities across the nation claiming to be "good places to live and raise a family"? Embracing and successfully marketing our unique assets will surely be one of the keys, it seems. The geography, natural resources, and low costs of living and doing business may be some of these assets, but collectively identifying others will be very valuable. That is, if it is even the correct path to take. Maybe simply casting more and more nets will eventually land that big catch we need to get things rolling.

Perhaps, embracing rural life instead of smoke stacks is a better route because "success" and "rural" are not necessarily mutually-exclusive words.

http://gcdailyworld.com/blogs/chriswathen/entry/14889/ It also respects and maintains our way-of-life, which seems to be a more honest approach.

In the end, only time will tell.

Poisoned Again

Buying simple, cheap, and colorful flip-flops to wear on the beach or around the house seems harmless enough, but that wasn't the case when reportedly seven million plastic, Chinese-made sandals were sold at Wal-Marts throughout the nation. These flip-flops know as Sand 'N Sun Sandals produced harsh, yet still unidentified, chemical reactions that caused chemical burns on victims' feet.

Stories and photos of these burns abound on the internet. Many of the photos are so graphic that I decided it would be better to post a link to some rather than post the actual photos, so those with weak stomachs could keep their lunch. If you want to see some first and second degree burns produced from these sandals, though, here's a link to a photographer's website, who is one of the first victims:

http://www.lamanaphotography.com/walmart...

You'll recall a post about consumer safety regarding Chinese-made goods in mid-November. ( http://magiccoalcity.blogspot.com/2007/11/made-toxic-in-china.html ) Unfortunately, these sandals are yet another chapter to this book. How many more chapters there will be is still unknown, but it could be several. In fact, several may not be known for years when long-term effects of some products come to light.

To help in situations like this, the INside Edge Newsletter is reporting today that "State Senator Vi Simpson (D-Ellettsville) has filed legislation that is meant to help protect Hoosiers from potentially harmful products. The measure would prohibit stores from selling products unless the package has a label that displays the country of origin where the product was manufactured, grown or processed. Labels would also have to list any toxic materials present in the product."
It will be interesting to find out exactly what was in these sandals to cause chemical burns. It will also be interesting to find out if -- and in what form -- the proposed legislation will be passed.

Sometimes Topics Stay Around Awhile

I was going through a box of old greeting cards, letters, newspapers, and various keepsakes this evening, and I found it interesting that the headline from 1995 was talk of a County Manager position in Greene County... and we're still talking today. Interesting.

It Finally Nailed Al Capone

Despite all of the police efforts during the 1920's & 30's, they never could get a conviction on Al "Scarface" Capone, the notorious Chicago-land gangster. None of the accusations of bootlegging, murder, and related crimes would ever stick. Finally, though, an unlikely charge landed him in the slammer: tax evasion.

In Capone's time during Prohibition, bootlegging produced the illegal drug of choice: alcohol. He and his business associates made millions satisfying America's thirst for it, and he even enjoyed celebrity-like status because of it. (He wasn't really a furniture salesman, as his business card read.)

In today's society, alcohol is legal again (albeit with plenty of taxes charged), and drug activity has changed. Instead of alcohol, drug activity includes marijuana, prescription drugs (without the prescription), and various cooked up chemical concoctions made in labs that we occasionally read in the newspaper have blown up, among others.

Like Capone, though, these home-based pharmaceutical companies would owe income taxes to federal, state, and local governments. Sales tax appears amusingly yet fully applicable too. After all, it is a product, and they sell it in the state -- although maybe out-of-state, over-the-internet sales would be exempted as other products sold are.

There's even a rate chart in Indiana outlining the "Controlled Substance Excise Tax" too. It seems to be in place specifically for illegal activity, as the statute states:

"The controlled substance excise tax is imposed on controlled substances that are:

(1) delivered;

(2) possessed; or

(3) manufactured;

in Indiana in violation of IC 35-48-4 or 21 U.S.C. 841 through 21 U.S.C. 852."

It then goes on to exempt certain law-abiding people, such as pharmacies and humane societies. (Hey, they have to control some pretty mean animals at times.)

If you're curious, the excise tax rates are as follows: for Schedule I, II, & III drugs, it is $40 / gram; Schedule IV ad V drugs are a little cheaper at $20 and $10 per gram, respectively; and marijuana is taxed at $3.50 per gram. I'm not making this up at all.

Of course, it's a safe bet that few -- if any -- voluntarily claim these taxes. It is crazy that we, as a State, even have a schedule like this, but I guess despite dodging would-be assassinations and numerous criminal charges, taxes finally nailed Capone.

As the old adage goes, "There's nothing for certain in life except death and taxes."
So, if a drug deal goes bad, don't shoot everyone involved… just mail them a Form 1099.

Corn Expected Above $5.00!

Thus far, this blog has been about economic development, small business, and personal finance, but I realized I've been leaving out a key industry in our community: farming.

With that said, I'd like to share some of what I've been reading lately from Purdue University's Agricultural Department. The Agriculture Department regularly writes on many aspects of farming, including expectations and forecasts for grain, livestock, land prices and rent. As a banker, I've attended some seminars on agricultural lending and crop outlooks at the Purdue campus, and I've always found them to be very high quality presentations.

One article caught my eye a few days ago because it really seems to affect us all. Dr. Chris Hurt of Purdue University wrote, "There is a huge amount of new ethanol capacity coming on line in the next 6 to 12 months. That sharp increase in corn demand along with a smaller 2008 crop due to reduced acreage means there won't be enough corn for the ethanol industry to run at capacity from 2008 crop supplies."

Foreign demand will raise corn prices as well. Professor Hurt wrote, "Corn export commitments to date are running 31 percent ahead of last year while USDA's forecast is only 16 percent higher."

In this price outlook, he writes that corn prices will go above $5.00 per bushel, and he concludes this will make it tough for the livestock industry.

As consumers, we have seen food prices increase recently, and it seems they will continue to increase based on these predictions. Of course, farmers have already seen an increase in input prices across the board. (In fact, fertilizer companies have been good stock picks over the past year. For example: Mosaic Co. ticker - MOS)