Thursday, May 27, 2004
Mitch is Worried
In a recent commercial, Mitch Daniels (candidate for governor of Indiana) tells how he is worried about the State government purchasing goods and services from out-of-state companies. He would prefer that we utilize local businesses - which would keep or even create jobs in the State. It's obvious that purchasing Indiana made goods would help Indiana employees, but I don't think it is that simple.
His example describes how State Universities are purchasing dorm furniture from Massachusetts. Let's think about how this could be changed so that an Indiana company supplies the furniture.
- A public organization, such as a University, has to solicit bids for furniture, and it is likely that price would be the number one factor when choosing a sucessful bidder (assuming specifications are met). Therefore, we can assume that the Indiana company bid a higher price than the Mass. company.
- If Mr. Daniel's administration requires the University to purchase from the Indiana company, the price will be higher. This would increase the cost of the dorm project and affect the University's budget.
- University dormitories are not subsidized by the State. In fact, they are required to be self-supporting. In order to cover the increase in furniture cost, the University would have to:
- Increase the cost of room and board for the students and their parents
- Receive a subsidy from State Economic Development funds - therefore making the dorms something less than self sufficient
Is Mitch willing to do either of these?
- What is the affect on the company? If the Indiana company is given a chance to win the contract with their higher bid, then what incentive does it have to give the State the best price? That would be an inefficient use of public money.
- OK, so maybe we should let the Indiana company win the contract, but have them meet the lowest bid. This would lower the income for the company - hurting the shareholders' value or possibly lowering wages and benefits for the workers. I don't think we want this either.
Perhaps a better way to help would be to use economic development funds to help the Indiana company lower its costs and help it to submit the low bid without falsing maniupulating the process. We expect conservatives to let capitalism operate freely - let's do that here.
The worst part about this message is that My Man is pandering to the citizens of Indiana. Like most of what I have seen from him, he is spouting "common sense" rhetoric without offering any sort of real solutions.