Kentucky jumped in a ranking by Forbes magazine of best states in which to do business, from 31st last year to 25th. We're in a state where ranking 25th out of 50 is an accomplishment, so that's good news.
The devil, or angel, is always in the details, though, so rather than applaud and go away, it's worth taking a closer look at how Forbes compiled its list and what that reveals about Kentucky. It is often useful to see how we appear to an outside viewer, no matter how fleeting the glance.
Of the six categories used in the calculations, the most heavily weighted was business costs, where Kentucky got its highest ranking, 12th, thanks in large part to cheap labor. Conversely, Kentucky's worst rank, 45th, was in the category of labor supply, which rests heavily on college and high school attainment. Kentucky's other serious downer was quality of life, where we ranked 32nd. Among the factors in that category are poverty, the number of "top-ranked" four-year colleges and health, which was dragged down by our high smoking and obesity rates.
Kentucky ranked 30th in regulatory environment, a measurement of the quality and quantity of government. Among the factors considered there were taxes, tax incentives, the state's bond ratings and transportation infrastructure.
These survey results, even though only a snapshot at best, tell us a couple of things.
One, Kentucky's problems are deeply interrelated. Poverty is an indicator for poor health and low educational performance and all three discourage business from setting up shop in a place which, of course, contributes to poverty. It's hard to move up when deeply intertwined factors weigh us down.
Two, despite a lot of fulminating to the contrary, government plays a deep and significant role in the state's economic future. Directly, through education, infrastructure, smoking policies, bond ratings and tax incentives. Government's role in health care is huge, through Medicare, Medicaid, KCHIP and other programs, even if the care may be provided by private practitioners. Through smoking bans governments affect tobacco use; many government decisions beyond parks and recreation affect how active people are and, so, the obesity rate.
In difficult times, like now, the calls grow to shrink government and lower taxes to encourage economic growth. But this survey, and many others like it, don't make the case for a smaller government role; they are persuasive about the economic benefits of widespread access to a high level of education, of measures that improve the odds that people can lead healthy lives and get quality health care when they need it, and of smart infrastructure investments as well as sound financial management at the state level.
Too often, "good for business" is code for lax regulation and no or low taxes. But, if we hold to that limited definition it's a sure thing Kentucky, despite its enormous natural and human resources, will always be left to celebrate finishing no better than the middle of the pack.