An Open Letter to the Board of Trustees of Purdue University

by Mike Kimel

An Open Letter to the Board of Trustees of Purdue University

Dear Board of Trustees of Purdue University,

If I may, I’d like to bring some facts about your President, Mitch Daniels, to your awareness. Now, it may be odd for me to do so, as I am not actually affiliated in any way with Purdue University. I have never been a student or employee of the institution, nor have I so much as ever been to West Lafayette. But I do know a bit about data, and there was a time I was looking at facts and figures pertaining to Mr. Daniels.

Thus, I was interested when I read Mr. Daniels bio on your website. It certainly is quite impressive. He was a business executive and head of a think tank. To quote the bio directly,

[H]e also served as Chief of Staff to Senator Richard Lugar, Senior Advisor to President Ronald Reagan and Director of the Office of Management and Budget under President George W. Bush.

And for the past eight years, of course, he was governor or Indiana. As I said, all very impressive.

However, I have read earlier versions of his bio before, and they all suffer from the same issue, namely a gloss over actual accomplishments. Simply reading his bio tells you nothing of why or how he managed to rise so high and hold so many high profile positions. Some people manage through extreme competence. Others are born with the right connections, or are great self-promoters. Some are even, for lack of a better term, charlatans.

Now as I said, I’m a data guy. So I tend to read bios a bit differently than other people might. I notice that we have to go four paragraphs down to find anything measurable. Here’s how that paragraph reads:

Daniels’ first legislative success created the public-private Indiana Economic Development Corporation to replace a failing state bureaucracy in the mission of attracting new jobs. In its first four years of existence, the agency broke all previous records for new jobs in the state and was associated with more than $18 billion of new investment. In 2008, Site Selection Magazine and CNBC both named Indiana as the Most Improved State for Business in the country. In 2012, Indiana became the 23rd Right-to-Work state. Indiana is now near the top of every national ranking of business attractiveness and is the top job-creating state in the nation.

Other sources also tell us of Mr. Daniels’ interest in employment. Reading this article from the Indianapolis Star from a week or so before Daniels took office as governor, one is reminded that:

a) Daniels even pitched putting the state on daylight savings as “a jobs issue”

b) Daniels asked the legislature to make creating the public-private Indiana Economic Development Corporation their first order of business in 2005 so that, as the article noted, his people could “quickly begin their jobs of seeking to boost Indiana’s job market.”

So it is natural to see how how whole job-push did, right? Yes, there are blurbs like “associated with more than $18 billion of new investment” or “Most Improved State for Business.” But those aren’t results. Results are whether jobs are actually created or not. And here’s a guy who had the keys to the car, so to speak. The ideas that got implemented were his. The team that implemented those ideas was his. The buck stopped with him. So if this was his main focus, the one of which he is most proud, the accomplishment he lists first, it is worth looking at how the job market actually did under Mr. Daniels.

Now I know what you’re thinking – that isn’t fair. The job market tanked nationally while Mr. Daniels was in office, and even his excellent job creating skills weren’t enough to mitigate the macroeconomic headwinds. But we can deal with that – we can compare, say, how the unemployment rate changed during Mr. Daniel’s administration to how the unemployment rate changed in the neighboring states over the exact same time period.

One nice source of that information is the Federal Reserve Economic Database (FRED) maintained by the St. Louis Fed. It has data on the unemployment rate for Indiana here. One can use FRED’s graphic capability to index that unemployment rate to the week before Daniels took office as a baseline, and then to add in the unemployment rates of neighboring states, also indexed to the week before Daniels took office. The graph below runs until Daniels’ last week in office, so it should be a fair representation of how Indiana performed relative to its closest peers on Daniels’ most important priority during the time period when he had more influence on that measure than anyone else:

Graph 1.

Basically, the performance of the job market in Indiana was best in the first half of his term, but underperformed every single neighboring state by the end. Put another way, the longer his policies were in effect, the worse they did. Of course, we live in a society where almost nobody checks these things, though the data is easily accessible and generating the graph above takes only a few minutes. Perhaps Mr. Daniels himself doesn’t have the native curiosity to check how his policies actually did on what he claims was his most important issue. Maybe he knows but he doesn’t care. Maybe he believes what he believes, facts be damned. I don’t know enough about him to hazard a guess. In any case, Mr. Daniels has felt quite free to continue touting what happened to Indiana job seekers as a success, and he’s had plenty of other people willing to make that claim for him too.

I could go on, and look at other claimed accomplishments during his term as governor, but this is already getting long and I still have a lot to cover. Suffice it to say that I fear Indiana may soon learn a lesson ordinary Argentines learned after a similar bout of privatization – for a while things look very good, but having an executive who papers over the difference between recurring revenues and non-recurring revenues is extremely harmful.

As I noted before, I’ve dealt with data pertaining to Mitch Daniels in the past. I could write volumes on Mr. Daniels, but I think it best to point you to something I wrote about Mr. Daniels some time ago – if you read what his office put out while he was head of the Federal Government’s Office of Management and Budget back in 2002, owned a working pencil, and possessed the patience to do a bit of arithmetic accessible to the typical sixth grader, you would have been flabbergasted by the gall. I laid out the numbers here, but the claim from Daniels’ OMB was basically this: were it not for the recession, the country’s GDP would have risen by double digits in FY 2002 due to the Bush tax cuts. That sort of claim isn’t just politics, and it isn’t even buffoonery. It is quite simply outlandish nonsense.

And yet, Daniels parlayed that into becoming governor of Indiana. And that wasn’t the worst of it. There were also predictions that the surplus would grow so much that by now, the national debt would be all but paid off. And there was the transformation of a surplus into a deficit. Sure, those last two weren’t all him – he was after all enacting his boss’ wishes – but the insane retroactive prediction of a double digit growth rate was on him.

Which is to say, this was an instance where Mr. Daniels took an absolute and dismal failure, a disaster in fact, and used it as a stepping stone on his career path. Just like the governor of Indiana spot, which, as we see above, was used as stepping stone to a nice sinecure worthy of an emeritus statesman at Purdue. Which brings us back to another point I raised earlier – given his public sector performance, can we really assume that Daniels was successful in his private sector career? Or is it more likely he kept failing upward, spinning every past mess left behind into a reason to move into the next, higher position?

It is an important question if you care at all about Purdue University. Mr. Daniels, I am sure, is very good at raising money and bringing political clout to bear, which certainly are useful functions for a university president. And I don’t see anything on your website indicating he intends to apply himself to the betterment of the university. But what if he does?