It’s the economy, stupid

It’s the economy, stupid

How has Dayton become one of America’s fastest dying cities?

By Mark Luedtke

"Flyover" by David Evans Black traces the path of the Wright Brothers' first powered airplane flight. It is displayed between 151 and 187 S. Main St. in Downtown Dayton.

Yet another organization lists Dayton as one of America’s fastest dying cities. Unfortunately, the population numbers don’t lie. 24/7 Wall St. lists Dayton as the fifth fastest dying city because it suffered a 7.21 percent population reduction between 2000 and 2009.
In 2008 the Wall Street Journal compared the economies of Texas and Ohio, providing some insight. The contrast is staggering. From 1997 to 2007, 1,615,000 jobs were created in Texas. Ohio lost 10,400. The Texas population grew by 667,000. Ohio’s declined by 362,000. The Tax Foundation provides a free market analysis of the problem:
“Ohio taxpayers have gone from some of the least taxed in the 1970s to some of the most heavily taxed today, climbing 38 places from 45th highest in 1977 to 7th highest in 2008. Estimated at 10.4 percent of income, Ohio’s state/local tax burden percentage ranks well above the national average of 9.7 percent. Ohio taxpayers pay $4,049 per capita in state and local taxes.”
Dayton was prosperous before the era of big government in Ohio, but when the burden of government increases, businesses, jobs and people move to where taxes are lower. The Journal explains:
“Ohio’s economy has been struggling for years, and most of its wounds are self-inflicted. Ohio now ranks 47th out of 50 in economic competitiveness, according to the American Legislative Exchange Council. Ohio politicians deplore plant closings even as they impose the third highest corporate income tax in the country (10.5%) and the sixth highest personal income tax (8.87%). A common joke is that Ohio lays out the red carpet for companies – when they leave the state. By contrast, Texas has no income tax, a huge competitive advantage.”
But if the burden of government is the problem, taxes are only a symptom. Government spending and regulations are at the root of the burden. Every dollar state and local government spends must be taken from citizens in the form of taxes. As a result, every taxpayer has less money to improve his economic circumstance. Businesses pass on the cost of taxes by raising the prices of the goods/services they provide. Every government regulation is an added cost on business which owners pass on too, making local businesses less competitive. The Journal identifies another burden government imposes on Ohioans:
“Ohio’s most crippling handicap may be that its politicians – and thus its employers – are still in the grip of such industrial unions as the United Auto Workers. Ohio is a ‘closed shop’ state, which means workers can be forced to join a union whether they wish to or not. Many companies – especially foreign-owned – say they will not even consider such locations for new sites.”
“On the other hand, Texas is a “right to work” state and has been adding jobs by the tens of thousands. Nearly 1,000 new plants have been built in Texas since 2005, from the likes of Microsoft, Samsung and Fujitsu. Foreign-owned companies supplied the state with 345,000 jobs.”
According to free market analysis, the burden of government is prompting people to leave for greener pastures, and the solution is clear: reduce the burden of government so business can thrive here again. 24/7 Wall St. remembers how Dayton thrived before big government:
“For its size, Dayton, Ohio was once one of the most productive and creative cities in the U.S. It produced more patents per capita at the turn of the century than any other. The city was home to several former great Fortune 500 companies, including National Cash Register, Mead Paper and Phillips Manufacturing. Through the first half of the 20th century, Dayton had one of the healthiest manufacturing industries. It had more GM autoworkers than any city outside of Michigan during World War II.”
But Mayor Leitzell doesn’t see it that way. In a recent interview with Dayton City Paper, he claimed, “There are perceptions that we are top heavy in staff, but I don’t think we are.” So Leitzell thinks government is small enough. He describes how he’s trying to make government trash collection better. He describes how he’s recruiting businesses to Dayton. The list of spending programs goes on. He never considers that the marketplace could provide better services at lower prices. Leitzell thinks he can tax people into prosperity.
Governor Kasich claims he wants to abolish the income tax, but has no plan to cut spending to do so. The Columbus Dispatch recently quoted  Kasich:
“House Republicans plan to move quickly on a bill allowing Gov. John Kasich to dismantle the Ohio Department of Development and turn it into a new private economic-development organization called JobsOhio.”
This could mean that state government will tax citizens to pay a private contractor. Do they consider allowing people to keep their own money so the marketplace can create economic development?
Late free market champion Milton Friedman claimed It’s a universal law of nature that increasing economic freedom leads to increased prosperity and reducing economic freedom leads to reduced prosperity. Dayton’s experience supports that claim, and voters haven’t changed direction yet.

Reach DCP freelance writer Mark Luedtke at contactus@daytoncitypaper.com.

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