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Indiana under Republican Rule: “Pro-Business” Policy Disappoints outside the Sunbelt

Republicans keen to tout the supposed superiority of their preferred economic model often cite booming Sunbelt states like Texas or Tennessee as evidence that it works. They don’t talk as much about less successful red states like Kansas or West Virginia. A look at solid red Indiana and its poor performance shows the limits of conservative economic policies. Absent favorable external factors like warm weather, the conservative approach has failed to generate demo­graphic and economic success in states like Indiana.

The Hoosier state has had a Republican governor since Mitch Daniels was elected in 2004. It has been a Republican “trifecta” state, with GOP majorities in both houses of the legislature, since 2011. When Daniels was elected, Indiana’s per capita disposable income was only 90.5 percent of the U.S. average. The governor’s top priority was raising the state’s lagging incomes; indeed, Daniels said his administration’s “central objective was to raise the disposable income of Hoosiers.”1 His strategy for achieving this was business-centric, focused on “building the best sandbox for businesses to play in.”

When Indiana became a Republican trifecta state, its average disposable income had actually declined to 89.5 percent of the national level. By 2019 (pre-pandemic),2 it had fallen slightly to only 89.4 per­cent, and during the pandemic it dropped to 88.7 percent in 2020. In short, under Republican leadership the state’s relative incomes started out low and got even lower.

But rather than a purely Republican failure, this underperformance should be seen in the context of regional decline. The entire region that can be called the “Old North,”3 a twenty-three-state area including the Great Plains, the Midwest, and the Northeast, has experienced similar struggles for decades, regardless of the party in power or the policy model pursued. Growth and prosperity appear to be more dependent on external or macro factors than most politicians of either party would like to admit.

This calls for a modified strategy for red states in these areas, one that directly serves the preferences and aspirations of their voters rather than pursuing indirect strategies like chasing after business investment. Red state Republican politicians need to start caring much more about their voters’ priorities than they presently do. This is particularly important today, when most of our major institutions have fallen under the sway of progressive orthodoxy, leaving Republican state governments as one of the few powerful institutions remaining that can stand up for conservative citizens.

The Rise of Indiana Republicans

Mitch Daniels ranks as one of the great conservative leaders of his generation. He is serious, competent, courageous, and politically astute. Coming into office, he inherited a budget deficit that he quickly converted into a surplus of more than $1 billion through relentless cost cutting. Nicknamed “the Blade” for his approach to budget cuts, Dan­iels is the rare Republican who is the real deal as a fiscal conservative. His early fiscal moves paid dividends when the Great Recession hit state revenues across the country. While forced into some service cuts, Daniels’s fiscal management resulted in less pain than in other states. After the recession, Indiana rebuilt its surplus, which remains so high—nearly $4 billion—that the state began issuing tax rebates to citizens. Indiana is one of only about fifteen states with a AAA credit rating from all major agencies.

In addition to budget cuts, Daniels also implemented a major tax reform package that paired a 1 percentage point increase in the state sales tax with a more-than-offsetting property tax reduction and constitutional cap on property taxes, limiting homeowner taxes to only 1 percent of the property value. This was combined with strict limits on local property tax levies and the requirement to hold a referendum for certain construction projects.

Beyond fiscal matters, Daniels carried out a large number of other reforms too numerous to list, including passing a “right to work” law allowing employees to opt out of union membership (as in the South), eliminating a confusing system of timekeeping by adopting Daylight Savings Time statewide, restructuring the state’s economic development agency, and implementing new software and administrative processes at the state Bureau of Motor Vehicles that eliminated infamous lines and poor customer service. While cutting spending generally, he increased funding for transportation, largely through a $3.9 billion windfall from a successful seventy-five-year lease of the state’s toll road to a private consortium.

Daniels became a national darling for his accomplishments in Indiana and had many supporters as he considered a run for president in 2012. He ultimately decided against running and instead became president of Purdue University, where he reprised much of his playbook from state government and earned national attention for freezing tuition.

His successor, Mike Pence, was also a fiscal conservative, one who had often complained about his own party’s spending habits while a member of Congress. Although Daniels had already cut most of the fat in state government, Pence took advantage of the state’s strong fiscal position to cut the state income tax and other taxes by $500 million per year. His other moves included expanding school choice and trying to focus K–12 education on career and technical training oriented toward creating skills for the state’s employer base.

Pence’s tenure as governor is best known, inside and outside the state, for the dispute over a new Religious Freedom Restoration Act (RFRA). Originally seen as a piece of anodyne legislation modeled after the similar federal law, RFRA unexpectedly drew the ire of corporate America, which threatened to shun the state. This was in essence the first of the modern-day corporate boycotts of states over social policy. Indiana was completely unprepared for it and quickly capitulated, amending the bill to remove the portions that had provoked corporate opposition.

Pence was never popular with the Mitch Daniels wing of the Indiana GOP. RFRA and its fallout further turned the metropolitan Republican establishment against him. His acceptance of the nomination for vice president could be seen in part as stemming from his unpopularity in those circles. Pence, however, actually implemented two initiatives di­rectly benefitting the state’s metropolitan regions. One was the creation of the Indiana Biosciences Research Institute, a public-private partnership in downtown Indianapolis. The other was the Regional Cities Initiative that provided tens of millions in funding for capital improvements in the Fort Wayne, South Bend, and Evansville areas.

Pence was succeeded in 2017 by former Mitch Daniels campaign manager Eric Holcomb, who maintained a generally conservative, busi­ness-centric course. Still in office, having won reelection in 2020, he has been careful to avoid the kind of public relations problems Pence encountered with RFRA. Indiana has not featured prominently in the coronavirus debates, for example, as Holcomb tended to follow the lead of other Republican governors, like Ohio’s Mike DeWine, in imposing restrictions at the pandemic’s beginning and likewise following others in lifting them later.

A resident of Indianapolis, Holcomb has favored the interests of the metropolitan establishment. He helped underwrite nonstop flights from Indianapolis to San Francisco and Paris (now canceled by the pandemic), for instance. He also implemented a ten-cent increase in the state’s gasoline tax to keep Indiana’s highway budget well-funded, a rare Hoosier tax increase. Flush with cash from federal coronavirus aid, he’s recapitulating Pence’s Regional Cities Initiative with a $500 million competitive grant program.

Holcomb has been less popular with the Republican base. Shock polls showed the Libertarian candidate winning up to 25 percent of the vote in the 2020 gubernatorial race. Holcomb quickly rescinded his unpopular coronavirus mandates (although he reimposed some restric­tions eight days after winning reelection). Still, Libertarian candidate Donald Rainwater won 11.4 percent of the vote, more than double the previous record for a statewide election.

Indiana’s governor is constitutionally weak, in part because only a simple majority is required to override a veto. Indiana’s General Assembly has continued to promote many conservative moves on its own. It preempted local tenant protection ordinances, for example, and it also eliminated most state protections for wetlands.

While some Tea Party types still complain, nearly the full panoply of conservative policy solutions has been implemented during this period of Republican governance. The state is fiscally austere, with little to no debt, billions in reserves, and a AAA credit rating. It has a favorable tax climate, with the Tax Foundation ranking it ninth in the country for its business-friendly tax environment. Regulations on businesses are also light, and it’s still a right to work state. Indiana has well-funded infra­structure, the one form of spending most conservatives like. It makes heavy use of public-private partnerships, and promotes school choice. Chief Executive magazine ranks Indiana as the fifth-best state in the country for business.

Disappointing Results

Yet the economic and demographic results of this policy set have been meager. Measured since the pre–Great Recession employment peak in 2007, Indiana has only grown its job base by 5.8 percent, trailing the national average of 9.4 percent.

But headline job growth is one of Indiana’s better statistics. As noted above, under Republican leadership, Indiana’s disposable incomes have declined relative to the national average. Since 2000, the state ranks a dismal forty-sixth in median wage growth, and the growth in median earnings has been at only half the rate of the rest of the country. Only 42 percent of workers in the state earn a living wage (adjusted for cost of living) and have employer-provided health insurance.

Some of this poor performance may be due to the composition of the state’s economy. Indiana is heavily dependent on manufacturing, with 17.1 percent of its jobs in the manufacturing sector, by far the largest share of any state. And much of this industry has been squeezed by foreign competition in recent decades. The state is also home to a large and growing low-wage warehousing sector. By contrast, growth in high-wage sectors and in entrepreneurship has lagged. Republicans make excuses for the state’s low incomes by touting its low cost of living. But many places are equally cheap, including booming Sunbelt states like Tennessee.

Some of these grim statistics were revealed in a series of reports commissioned through the Indiana GPS (Growing Prosperity Statewide) Project, which were prepared by the Brookings Institution and American Enterprise Institute at the request of the Central Indiana Corporate Partnership. These reports also showed that Indiana’s productivity in advanced industry sectors is declining relative to other states. In part, this is because Indiana lags in technology investment. Furthermore, Indiana ranks thirty-ninth in its share of jobs in new companies, the major source of job creation, and has more old firms than young ones.

Indiana’s demographics are also weak. During the 2010s, the state’s population grew by only 4.7 percent versus a national average of 7.4 percent. Its population growth rate has been decelerating since 2000. During the 2010s, the state grew at less than half the rate it did during the 1990s, when under Democratic gubernatorial leadership. Most of this drop mirrored the national trend, but Indiana’s growth rate declined more rapidly than the nation’s as a whole. Large portions of the state are either stagnant or declining in population. Over half of the state’s counties—forty-nine out of ninety-two—lost population during the 2010s.

Weak population growth translates into weak labor force growth. The Indiana Business Research Center at Indiana University forecasts that the state’s labor force will rise by only 1.6 percent between 2015 and 2045, with seventy counties expected to see declines in their labor force as early as 2025. This implies that the era of job growth in Indiana is nearing an end, since it is impossible to add jobs without workers to fill them. The state also lags in educational attainment, with only 26.9 percent of the state’s adults holding a college degree, forty-second in the nation.

Additionally, to the extent Indiana is doing well, most of this success is concentrated in the metropolitan Indianapolis region. Metro Indianapolis accounts for 31 percent of the state’s population but saw 74 percent of the state’s population growth in the past decade. It also has a disproportionate and growing share of the state’s educated residents. Its share of the state’s young adults with college degrees grew from 39.7 percent to 44.1 percent from 2000 to 2019. Areas outside of metro Indianapolis are thus performing even more poorly than already weak state-level averages would indicate. But even Indianapolis itself has largely grown by drawing in people from the rest of the state. Almost 90 percent of its net in-migration is from the rest of Indiana, a big difference from Sunbelt boomtowns like Austin, Nashville, and Raleigh, which have a national draw. In effect, Indianapolis has grown by drain­ing the rest of the state.

In the end, Indiana built its sandbox, but not very many people or businesses want to play in it, and the ones who do don’t have much money. The state attracts few new residents on net, and the businesses that are locating there are predominantly low-wage employers taking advantage of the state’s lower-skilled, poorly paid workforce.

Republicans like to talk about running government like a business. If Indiana actually were a business, shareholders would replace the man­agement after such a poor showing.

The Decline of the Old North

But just as it would be a mistake to offer the growth rates of Tennessee, Texas, or Idaho as proof that conservative policies always work, it would also be a mistake to do the opposite and use the struggles of places like Indiana or Kansas as proof that they always fail.

Putting Indiana in a regional context shows the challenges facing any philosophy of governance. With the (likely temporary) exception of North Dakota, driven by the early-2010s oil boom, no state in the Old North has done especially well. And only two major metropolitan regions in this entire area, coastal New York City and Boston, have fully transformed themselves into models of twenty-first-century success (though even they have their problems, of course).

Apart from North Dakota, the fastest growing state by population in the Old North is Minnesota, which grew 7.6 percent, a mere 0.2 points higher than the national average, ranking nineteenth in the country. At the same time, the Old North accounted for seven out of the ten slowest-growing states. Of the twenty-three Old North states, nineteen had net domestic out-migration (that is, more people moving out than moving in, excluding international immigration). This includes Minnesota, which has relied heavily on Somali refugee resettlement to achieve population growth. And just as Indianapolis draws most of its new residents from the state of Indiana, other relatively successful metro areas in this region, like Columbus, Ohio, and Des Moines, Iowa, also overwhelmingly draw from their home state hinterlands.

Because the number of jobs a state can support is largely determined by its labor force, weak demographics translate into weak job growth. This region did do better on jobs than population, however. New York, Massachusetts, and South Dakota joined North Dakota in the top twenty states for job growth from the pre–Great Recession peak in 2007 to 2019. But New York and Massachusetts were anchored by two metro areas that successfully reclaimed their historic “superstar” status. In New York, 82 percent of the total statewide job gains during this period were in the five boroughs of New York City. Indiana’s job growth may have trailed the nation, but it ranked in the top half of the Old North. Some Old North states have done better than Indiana on per capita income, even if partially offset by high costs of living in some of these locations. But as we will see, this is largely a result of historical factors; these are places that were already high-income long ago.

What’s notable about the generally weak performance of these twenty-three states is that they have different demographic origins, settlement histories, geographies, divisions between urban and rural areas, and governance. Vermont may be a purported socialist utopia and New Hampshire the “live free or die” state, without an income or sales tax, but both struggle with the common demographic problems of northern New England. Illinois is as solid blue as Indiana is red, but most of Illinois is a poorer-performing version of Indiana. Its only real economic strength is in Chicago, itself an underperformer still in a long period of relative decline, and a metro area that has consistently failed in its quest to transform itself into a coastal-style superstar city.

In short, economic and demographic weakness is the norm among states in the Old North region. Indiana’s performance is more or less average compared against regional peers.

What common factors explain the trajectory of the Old North and Indiana? One is that they are places with winter. Economist Ed Glaeser documented that since 1960, warmer places have grown faster than colder ones. He showed that from 2000 to 2010, population growth in counties where the January temperature was higher than 43 degrees was over 9 percent on average, while in counties with average January temperatures below 43 degrees, it was under 2 percent. Though the recent growth of colder Idaho and Montana may complicate this picture going forward, it’s clear that warmer winters and population growth have gone hand in hand for some time, favoring the South and West.

There’s not much that states in the Old North can do about their winters. Indiana, in particular, also lacks natural amenities such as mountains or oceans. Much of the northern two-thirds of the state is monotonously flat, with vast expanses of corn and soybean crops.

Glaeser also notes that educational attainment, the share of adults with a college degree, is a driver of population growth. But educational attainment is even more significant in determining per capita income. Specifically, the share of adults with college degrees is a key factor explaining variations in per capita incomes. At the metropolitan level, about two-thirds of per capita income variance can be explained by college degree attainment levels, according to economist Joe Cortright.

But what explains these variations in college degree attainment rates? There are many theories about what will draw the college educated, but growth in the share of people with college degrees is correlated with historic college degree attainment. The higher a region’s college degree attainment in the past, looking as far back as 1940, the higher its growth in the percentage of adults with a college degree is today. In other words, much of today’s variation in educational attainment levels and incomes is a result of factors with roots deep in the past.

Thus Indiana’s poor educational attainment mostly explains its poor showing in per capita income. Unsurprisingly, the state has always been poorly educated. Sociologist E. Digby Baltzell noted a correlation between the presence of antinomian religions like Quakerism among a region’s founding population and poor development of public education. Indiana had a strong nineteenth-century Quaker presence and today still has more Quakers than any other state. Indiana also had a larger contingent of southerners in its founding population than any other midwestern state, which also contributed to the devaluation of education. Indiana historian James Madison noted that in the 1840 census, the state’s literacy rate trailed all northern states and four southern ones. Indiana was the last state in the Midwest to pass a compulsory school attendance law. Given the state’s socioreligious origins and long-standing educational deficiencies, it is unsurprising that it has had persistently low incomes, especially as the American economy shifted toward postindustrial services that reward higher education levels. While Republican leaders in Indiana may not have reversed this trend, they didn’t create it.

Looking around the Old North region, one will see many states that are a lot like Indiana: low population growth, a stagnant labor force, many shrinking counties, weak job growth, and limited success at attracting higher-wage, new economy industries. While many Old North states are better educated and thus have higher incomes than Indiana, this results from factors originating far in the past. These commonalities seem to defy all differences in governance. It’s analogous to the problem of low fertility rates in developed countries: many different regions of the world, encompassing a range of cultures, are faced with a similar problem, but no one has yet found an effective solution to reverse the trend and increase birth rates.

Prioritizing Businesses over Citizens

It is questionable whether many of the fundamental challenges facing Indiana and other states in the Old North could readily be fixed by any state-level policy decisions, given the wide diversity of approaches that have already been tried in the region. States do choose how to respond to such conditions, however, and these choices have a big effect on their residents. Indiana’s Republican leadership, exemplified by Mitch Dan­iels, has chosen to prioritize the preferences of businesses, or at least a subset of them, over those of its citizens. The sentiment is captured in the state’s slogan, “a state that works,” which is emblazoned along with a sprocket logo on the side of the state office building in downtown Indianapolis. In practice, Indiana has pandered to low-wage employers, and sided with businesses over citizens in many policy disputes.

An example of this approach in action is the state’s recent preemption of local tenant protections. Indianapolis Star investigative reporting documented dangerous conditions in many of the city’s rental properties. This included the presence of lead at one hundred times safe levels, nonfunctional heating and plumbing, and electrical problems. In response, the city passed a tenant protection ordinance that required landlords to provide tenants with a notice of their rights and prohibited landlord retaliation against tenants who report violations to the city. This very modest ordinance was too much for the state legislature, which passed a special purpose law to preempt it.

Indiana’s substandard nursing homes underwent a similar experience. The Indianapolis Star also exposed how the state’s nursing home industry had become, in essence, a giant financial fraud. Medicaid reimburses nursing homes owned by county hospitals at a higher rate than other nursing homes. In Indiana, county hospitals exploited this rule by acquiring 90 percent of the state’s nursing homes, then contracting with the previous owners to provide operations. The increased reimbursement rates were diverted away from nursing home operations (Indiana ranks forty-eighth in the country in nursing home staffing levels) and directed to the county hospitals, which used them for building projects and increased executive pay. The state GOP also passed a special purpose law in 2016 to shield county hospitals from having to disclose their salaries, making it hard to know how much executive salaries went up in some cases. The Star documented numerous cases of poor nursing home care leading to amputations and broken bones, as well as to fatal head injuries and violent assaults. This low standard of care carried over into the pandemic. Over 20 percent of Covid-19 patients in Indiana nursing homes died, compared with a 13 percent national rate. The state GOP’s response was to pass a law providing nursing homes with expansive immunity from liability for deaths in their facilities.

Moreover, under Republican leadership, Indiana has eagerly em­brace­d the parasitic casino industry. The state has thirteen casinos and ranks fifth in the nation in gross gaming revenues, just behind Missis­sippi. Casinos are well known for preying on the poor, with between 30 to 60 percent of all casino revenues coming from a small number of gamblers, likely addicts. The state, and the localities where casinos are located, are also addicted to gambling and the tax revenue it brings.

Indiana’s more respectable businesses are often low-paying as well—as attested to by the abovementioned wage and income figures—with poor working conditions and limited prospects for advancement. This includes many low-wage manufacturing and distribution businesses. The trend is highlighted by Governor Holcomb’s push to end supplemental pandemic unemployment benefits of $300 per week in order to pressure recipients to take one of those jobs.

Higher-paying, white-collar, or technology-related businesses have actually been frustrated with the state’s approach to governance. Earlier this year, a group of over sixty Indianapolis businesses signed an open letter urging the state to stop interfering in local affairs.

A Citizen-Centric Strategy

Indiana’s Republican leaders have failed to achieve their own stated goals. The Republican playbook simply did not work there, just as former governor Sam Brownback’s tax cuts in Kansas also failed. But the persistent, widespread failure of Old North states to achieve demographic and economic growth should give would-be reformers pause about the prospects for any policy approach to produce materially better results. Anything Indiana might do differently has almost certain­ly been tried elsewhere in the region.

In light of this seeming dead end, how should red states in the Old North, like Indiana, govern? If they continue to see weak population and job growth regardless of state policy, then what should they do?

In such an environment, Old North red states like Indiana should reorient their philosophy of governance away from a business-centric strategy toward a citizen-centric one. Their focus should be on directly improving the standard of living and quality of life of their existing population. Whether a policy that improves citizens’ quality of life works to attract new residents and businesses or not, it will at least benefit those who already live there. Rather than “a state that works,” Indiana should seek to become “a state for living in.” Obviously, this will involve some level of support for business. But the North Star for policy makers should be the direct impact on current citizens of the state. The question should be: how will this improve our people’s lives?

A start at articulating this new citizen-first philosophy was provided by Representative Jim Banks in his “working-class memo.” Banks represents Indiana’s Third Congressional District in the state’s northeastern Republican heartland. In his memo to House GOP Minority Leader Kevin McCarthy, Banks observed, “We are now the party sup­ported by most working-class voters. . . . The vast majority of the Republican conference doesn’t want to return to a GOP-era that neglects working-class voters. . . . House Republicans need to consciously promote policies that appeal to working-class voters.” Banks’s areas of focus in this memo were related to federal policy, but its themes provide a framing for animating state and local policy as well.

Banks’s definition of the working class is broad, ranging from custodians to small business owners. It certainly includes the average Hoosier resident, who is a noncollege-educated conservative Republican voter. Republicans obviously need an appeal that extends beyond the working class. But the needs and preferences of the working-class Republican voter should be front and center in the state in a way that they are not at present. Indiana’s working-class Republican voters are very unhappy with their party. In 2016, exit polls in the primary revealed that half of GOP voters in the state felt “betrayed” by their party’s leadership. The record showing of the Libertarian Party in the 2020 gubernatorial race shows this sense of betrayal is not limited to the federal level.

This new approach doesn’t mean abandoning all traditional conservative governing principles. Fiscal discipline will always be important. Taxes and regulations should be limited. The marketplace generally should be favored. But there are three principles that should be incorporated into the Republican governing philosophy to reorient states like Indiana toward a pro-citizen approach focused on the needs and preferences of the average constituent. These are: invest in improving citizen well-being, invest in the state’s places, and protect citizens from coercion and abuse by other public or private actors. Of course, these principles should be pragmatically applied to fit within the macro environment and the state’s cultural context.

(1) Invest in the well-being of the state’s people. A state’s wealth is ultimately in its people, but Indiana has long lagged in investing in its citizens. Undoubtedly, the character of the state is less friendly to this sentiment than that of many other states. Indiana has long had a Jacksonian, small-l libertarian cultural streak, and is famously slow to change the status quo. A fear of government overreach surely played a role in Indiana being a laggard mandating school attendance more than a century ago.

But the larger conservative movement has also worked hard to delegitimize the very idea that Republican voters should expect their elected officials to do anything for them personally. Ronald Reagan’s infamous quip about the nine most terrifying words in the English language—“I’m from the government and I’m here to help”—is a classic example of this attitude. While it would perhaps be too cynical to suggest a conscious strategy on this front, the suggestion that government is always the problem, never part of the solution, and that government is inherently dysfunctional, works to preemptively relieve Republican elected officials of any responsibility to govern in their voters’ interests, or even competently. In addition to sowing a general distrust of government, conservatives have also long painted attempts at elevating the welfare of citizens as an inherently leftist form of social engineering deriving from the Progressive Era. In fact, such reform movements have a distinguished pedigree that is as old as Christianity and Western civilization.

Values like thrift and hard work are permanent, but a mentality of pure self-reliance or pulling yourself up by your bootstraps is anachronistic for most people in the twenty-first century. America today is a postbourgeois society in which most citizens are dependent on and largely at the mercy of powerful, impersonal forces and institutions they can neither fully understand nor control. Today’s increasingly monopolistic, tech-driven, and globalized world has badly disadvantaged work­ing-class people and families in Indiana and the United States.

Far too many working-class Hoosiers are no longer able to rise from disadvantaged backgrounds, to an extent which would have been hard to imagine even forty years ago. Today, their lives are marked by the prevalence of single parenthood, the explosion of hard drugs like opioids and meth, the scarcity of working-class jobs offering a real career track, the physical decay of their communities, and other challenges. Indiana’s obesity and smoking rates are well above the national average, while its coronavirus vaccination rate is below it. Conditions like these in the working-class world have been widely documented by scholars as diverse as Charles Murray and Robert Putnam.

While these situations call for humility and prudence, Republicans must see it as part of their job to help their people build a life in the face of these headwinds. The state is fiscally flush, which provides it with the capacity to invest. For example, it could start by providing financial relief to families with a nonrefundable state child tax credit that increases in value for each additional child. This would build on existing family-friendly legislation such as a recent law exempting children’s internship or paid job training income from counting towards a family’s benefits eligibility income cap.

Indiana also needs to improve its public health. The state should finally pass a proposed $2 per pack increase in the cigarette tax, with proceeds dedicated entirely to smoking cessation and anti-opioid efforts. As documented by RAND and other researchers, Indiana’s health care system is very expensive but mediocre in quality. It’s one area where the state’s costs are still too high and need to be brought down. Also, the only policies available on the state’s ACA health insurance marketplace are essentially repurposed Medicaid networks. It is impossible for Hoosiers to buy high-quality health insurance on the ACA exchange, and this urgently needs to be corrected.

The state’s educational system also needs reform. Indiana is increasingly attempting to direct noncollege-track students, who are the majority of the state’s children, toward the short-term labor needs of businesses. According to Ball State economist Michael Hicks, children as young as sixth grade are being tracked to become truck drivers.

Indiana’s K–12 education system should not be an outsourced train­ing department for the state’s low-wage employers. Instead, the focus should be on ensuring children have a foundation of literacy and basic math skills. Career-oriented training should be in skills that will last in a dynamic, rapidly changing environment. Skilled trades like plumbing or welding probably fit the bill. Or, for example, consider the approach of the college-alternative bootcamp Praxis. Praxis teaches participants primarily soft skills like sales and marketing, business writing, customer service, and project management. Unlike rapidly obsolete employer-specific technical skills, many of these have broad applicability in the market, including to entrepreneurship, and will be useful throughout a person’s entire working career. Indiana should look at teaching these sorts of career skills in high school rather than employer-bespoke ones.

The state should also work to ensure that local governments, which have been fiscally pinched under the state’s property tax caps, can provide quality services to their citizens. One example is public trans­portation, where state Republicans rightly granted Indianapolis the ability to raise funds to expand public transportation in a city where 10 percent of households lack a car.

And yes, the state should implement additional regulations that improve working conditions for Indiana citizens. For example, the state has repeatedly declined to pass a pregnancy accommodations bill that would require employers to give pregnant women basic protections such as the ability to go to the bathroom when needed. The current legislation on this is toothless. Allowing pregnant women to go to the bathroom is hardly an onerous antibusiness regulation. It is puzzling why state Republicans would side with employers like warehouses over their own pregnant voters when the owners of those warehouses are mostly large corporations that have fully embraced the “woke” party line and are actively hostile to conservatism. There are surely many other basic, pro-worker rules that could be passed without compromising the state’s business climate.

(2) Invest in the state’s places. Fixing economic or social problems through government action is very difficult. But many physical invest­ments in places are simple matters of engineering. Cleaning up brownfield sites, remediating lead paint and water pipe hazards, repaving streets, upgrading playgrounds, and other projects can easily be done. The only limiting factor is money.

This is one area where Mitch Daniels himself changed his own approach. As governor, he railed against “gold-plated projects” and vetoed local government capital projects he felt were too expensive. As president of Purdue University, however, he has been a master builder, investing in world-class facilities and public spaces he would have undoubtedly castigated as governor—all while freezing tuition, too.

Indiana Republicans are already pivoting in this direction. The new $500 million competitive grant program for local capital improvements is a good move. The state is also setting aside hundreds of millions of dollars to upgrade its own facilities, ranging from the fairground swine barn, to a new state archives building, to state parks. It will be spending $250 million to replace its decrepit interstate rest stops. Whether the state will derive any tangible marketing benefits in attracting out-of-state visitors and firms is an open question. But it’s certain that Indiana’s own residents will appreciate the new facilities.

None of these measures are likely to fundamentally alter the demo­graphic and economic trajectory of Indiana. Any material change in the fortunes of Old North states is likely to come from external macrosocial or macroeconomic factors rather than state government action. But these initiatives will benefit Indiana’s people. A traveler stopping at a brand-new rest stop, a family vacationing at an upgraded state park inn, a pregnant warehouse worker who can go to the bathroom when she needs to, a person without a car who can take a new bus route to a job, a renter whose landlord is forced to fix the furnace, a family of three with a new child tax credit—all are people whose lives could and would be directly improved by state action.

Accepting the significance of macro factors does not mean policymakers must submit to a fatalistic view of the future. Indiana’s leaders should also continue looking for ways to increase growth rates and incomes—and not just in the cities: one way to do this is to attract newcomers to exurban areas and hinterlands that are often overlooked. While Indiana’s major cities will be the economic engines of the state and need to be appropriately supported, the fact is that they are well positioned to do much of their own marketing. The state could instead focus its clout on bolstering rural and small-town areas, touting its authentically historic towns and wide-open spaces as an opportunity to acquire land and a more human way of life in a digital age. Many smaller places in the West are successfully doing this now.

Indiana should also bolster what higher-wage industries and knowledge economy assets it has. Purdue University, in particular, a top-ten engineering school, is the crown jewel in this area. When Mitch Daniels retires, the school should hire someone from MIT, Stanford, or Caltech to build on his legacy and aim to raise its academic stature further. Legacy industries like pharmaceuticals and orthopedics, where Indiana is a national leader, or the emerging ag-tech field and technology start-up cluster in Indianapolis, should be helped where possible. Another possibility is leveraging Purdue’s top-level agricultural expertise to focus on helping scale up the state’s high quality artisanal farmers into major producers without compromising on quality, the humane treatment of animals, and so forth.

(3) Protect citizens from ideological coercion and abuse by public or private actors. Today, most major social institutions have internalized an elite progressive ideology, commonly known as “wokeness,” that has little appeal for the majority of ordinary citizens. This includes the media, colleges, the government bureaucracy, arts and cultural institutions, most foundations, and even corporate America. The institutions that remain conservative or, at the very least, non-woke, such as churches and religious groups, are usually subaltern ones.

State and local governments are some of the few powerful institutions where conservatives retain some control. Thus, a prime emerging responsibility of elected leaders at the state level, especially in red states like Indiana, is to use the power of their offices to protect their communities against ideological coercion or abuse from other institutions. Red states must not only be willing to aggressively challenge any federal government overreach; they must also be willing to resist coercive behavior from the private and nonprofit sectors.

This approach will be very difficult for state-level Republicans to embrace. Being “business-friendly” has historically been core to their identity. But today big business has become a key enforcer of the progressive line in America. In this environment, being business-friendly and embracing a Republican agenda that goes beyond neoliberal economics are incompatible with each other. This is true even after social issues, as traditionally understood, are taken off the table. Look at corporate retaliation and threats against Georgia over its voter integrity law, for example.

This doesn’t mean becoming antibusiness, but rather red states like Indiana do need to start protecting citizens from ideological coercion by big business, and from exploitation by abusive industries. For example, Indiana has joined other states in filing antitrust lawsuits against Big Tech monopolies, and could do more on issues ranging from economic concentration to political censorship. But the bigger issue in Indiana is abusive industries like the aforementioned slumlords and nursing homes. Well-documented issues with these need to be addressed to better protect Hoosier citizens from physically dangerous conditions. And any future expansion of parasitic industries like gambling needs to be categorically rejected.

While Indiana is a very red state, left-wing institutions in blue cities and other blue states can and do still leverage their power against conservate citizens. The state must limit their ability to do so. For example, the public health profession too often acts as an extension of the political Left. While Indiana should spend more on public health, it should also limit the reach of Indiana’s public health officials to only bona fide health matters: the collection of statistics, infectious disease control, smoking cessation, anti-drug efforts, obesity reduction, and the like. All Indiana public health officials should be legally prohibited from engaging in any efforts related to or involving gun rights, racism, climate change, or other such matters that are not legitimately part of the public health domain.

Furthermore, the state should protect free speech on campus by requiring all state universities to adopt the Chicago Principles on Free Expression (as Mitch Daniels has done at Purdue). It should also provide standing for students to sue public universities that fail to pro­tect their rights to free speech, and require universities to provide due process to the accused in their disciplinary processes. Likewise, the state should empower parents to resist the encroachment of leftist ideologies around race and gender into their K–12 classrooms.

The state attorney general should be given jurisdiction over crimi­nal matters where county prosecutors subvert the rule of law (such as when the Indianapolis prosecutor announced he would no longer prosecute marijuana possession) or in areas of statewide concern such as holding opioid producers accountable for crimes they may have committed. And the state should require the attorney general to approve any consent decree entered into by any unit of government in the state in order to prevent Democratic-controlled municipalities from using sue‑and-settle techniques to give leftist nonprofits control over public policy.

This will require a more sophisticated understanding of today’s political dynamics. For example, unhappy with the city’s response to the 2020 riots in downtown Indianapolis, in which two people were killed, the state passed a law enhancing penalties for rioting. But leftist prosecu­tors still do not actually have to prosecute rioters at all. All this law did was to hand those prosecutors another weapon that they can potentially use against conservatives in the future.

In their efforts to increase growth rates and raise incomes, Indiana’s Republicans might consider positioning their state as the best destination for conservatives in the Old North. It’s a structurally red state that, unlike many in the South, is in no danger of going blue. Indiana development agencies spend more effort trying to convince outsiders of their (inauthentic) progressiveness than simply embracing the state’s solid conservatism. If Indiana Republicans did implement conservative voter preferences and aggressively defended their voters’ priorities, that might be a draw in itself.

All this will require vigilance and constant activity by red state gov­ernments. But it also requires a recognition that culture war counter­offensives cannot substitute for citizen-centric investments. Voters should hold politicians accountable with respect to their cultural priori­ties, but that cannot become an excuse for basic incompetence or a failure to invest in the state’s people and communities.

Serving Constituents

The policy specifics will differ in other states, but this overall formula is widely applicable to other places, and can work outside the Old North as well. In fact, large, booming states like Texas and Florida are in an even stronger position to implement conservative voter preferences and stand up for their people against powerful institutions.

Red state Republicans should by all means keep an eye on their budgets, tax environment, and business regulations. But just as important, they should adopt a citizen-first philosophy based on the responsibility to protect their people and deliver tangible benefits to them, not to build sandboxes for warehouses, unscrupulous businesses, and other low-wage employers. Neither woke moralism nor small-government dogma should absolve politicians of the responsibility to deliver tangible benefits to their citizens. Republicans, in particular, must take care of their actual voters.

This article originally appeared in American Affairs Volume V, Number 4 (Winter 2021): 138–55.

1Residents of Indiana are commonly known as “Hoosiers.”

2 Other than total population, all economic and demographic data in this article uses a date of 2019 where possible, to avoid pandemic-related effects.

3 Great Plains: Kansas, Nebraska, North Dakota, South Dakota. Midwest: Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio, West Virginia, Wisconsin. Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont.

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