Minnesota Republicans met for their annual state convention on Saturday; attendees were addressed by Gov. Tim Pawlenty. I didn’t attend the convention, but I talked to people who did. Pawlenty is already campaigning for the election, which is 14 months away. He undoubtedly will face Mike Hatch, the state’s attorney general. Hatch is an experienced political bulldog, who has had his eye on the governorship as far back as the mid-1980s when he was the state’s Commerce Commissioner. This political contest will be very interesting to watch.
I had an opportunity to hear Pawlenty address a business group in mid-August in Duluth. Following is a summary of that speech, which also sounded a lot like a campaign speech.
Pawlenty called Minnesota one of the best states in the country, but described challenges in the areas of education, health care and taxes.
“We live in the greatest state in the nation. Pick your measure and I can show you a credible third-party measure that proves it. We lead the nation in just about everything,” Pawlenty said. He offered the following examples:
* Minnesota students lead the nation in ACT test scores.
* Minnesota has the highest rate of high school graduation in the country.
* Minnesota has one of the lowest rates of unemployment in the nation, now 3.7 percent, compared to a national average of 5 percent.
* Minnesota has the highest rate of worker productivity in the nation.
* Minnesota has the highest rate of women in the workforce in the country.
* “Governing” magazine just named Minnesota the third-best governed state in the nation.
* “Entrepreneur” magazine rated Minnesota last fall to be the best place in the nation to be an entrepreneur.
* Minnesota has the healthiest people in the nation.
* Minnesota has the lowest number of uninsured folks in the nation.
* Minnesota has the second-longest living people in the country, behind Hawaii.
* Minnesota has the highest rate of home ownership in the country.
“We have beautiful outdoor amenities such as lakes and prairies, streams and rivers. We have culture, and the arts, and the list goes on and on and on,” Pawlenty said. “We live in a remarkable state. We should be proud of that and grateful for that.”
“But the world is changing very rapidly,” he said. “It is changing at a rate and scope the likes of which we have not seen before, having profound implications on our economy, on the way we do business, on job growth, on investment, on culture, and even on language.”
Pawlenty quoted Peter Drucker, saying: “The things that got us here, will not get us there.” Pawlenty says that in a rapidly changing world, any organization that wants to say relevant, including a state, has to do things in new ways. “There is a call for change,” Pawlenty said, at the same time admitting how uncomfortable change makes most people feel. “But change is exciting and it is challenging,” he reassured.
“One of the main things that is driving all this is globalization, Pawlenty said. Referring to a book written by Minnesota native Thomas Friedman, ‘The World Is Flat,’ Pawlenty said: “The things that used to protect us and separate us from the rest of the world, in terms of geography and time and distance and cost, in communication, in culture and language, have essentially melted away.”
Pawlenty used the example of telecommunications, noting that calling long distance to a place such as Kansas City used to be a big deal, but today we can call India and Europe for almost nothing. Because of advances in shipping, Pawlenty noted that items can be shipped to places as far away as China for $25 to $50 per ton. And whereas it used to take months to get the word out about something, anyone with access to the Internet can communicate with the entire world in seconds.
“The point is, the world is on our doorstep, and we are on their doorstep in a way we have not seen before,” Pawlenty said.
So what does that mean for Minnesotans?
Pawlenty’s answer: “It means Minnesota and America are no longer the world’s cheapest screw turners. If our proposition to the marketplace is we are going to take a repetitive, fungible, labor-intensive, low-skill task, and we are going to do that more economically than the Chinese or the Mexicans, or some other place like that, we are not going to do so well…We are not the world’s cheapest screw turners.
“So what are we going to be? We better be the smartest. We better be really good at invention and innovation. We better be really good at attracting research and development. We better be really good at productivity enhancement and applications that are going to give us efficiency advantages. We better make sure we have infrastructure like broadband, and traditional infrastructure like roads that give us an efficiency component as we try to move goods and services and people around. We better make sure we have our share of innovators, and designers, and dreamers, and entrepreneurs, and risk-takers, who are going to give us that next increment of growth. That speaks to a lot of things.
“It speaks to the fact that we better have a focused and effective educational system. On average, we are the best in Minnesota, but I think we can make it even better. We have an average that is really good but we have some districts and some students who aren’t doing too well. For example, you go to the urban school districts now and even though we spend a good chunk of money there, if you are a disadvantaged student or a student of color, the statistical probability of you graduating from high school is less than 50 percent. One generation ago, if you grew up in South Saint Paul where I grew up, if you missed the educational wrung, there was a big safety net. I don’t mean social services safety net; I mean you could go get a strong-back job. You could go to the meat-packing plants or related industry, and cut meat, throw freight, load and unload trucks, drive a fork lift, you could do stuff like that. And you could make a decent wage with benefits, and support you and your family. Those jobs are gone. Or at least gone at that wage and benefit level. So the safety net of the strong-back job has shrunk and now you have to have a strong mind skill or education that applies to the economy of the future. We are not ready for that in this country.
“It doesn’t always have to be college, but if you don’t have a relevant skill or education post-high school that applies to the economy of tomorrow, today, you are in big trouble. You are marginalized in a hurry. We are not preparing enough of our students for that reality. On a good day, in a good school district, we have about 30 percent of our kids in rigorous, relevant path roads, like international baccalaureate, advanced placement, post secondary enrolment options; but that means 70 percent aren’t. That is not nearly enough for the economy of the future. Minnesota does well compared to the rest of the nation, but that is not our comparison anymore. We have to bring more rigorous and relevant educational opportunities to our high schools.”
Pawlenty said one of the big problems with the state’s public education system is the pay system for teachers. “I want them to get paid in a modern and professional manner. The way they get paid now is based solely on seniority and college credits. That is not the worst system, but it is not a modern and professional system. So we are offering financial incentives for school districts and unions to voluntarily move toward a performance pay system, aligning those resources with things that are more relevant to student performance.”
Pawlenty then turned his attention to the cost of health care. “Eighty-five percent of all health care money goes into five chronic conditions: cancer, diabetes, obesity, end of life issues, and heart disease,” Pawlenty said. “So if you have one of those five chronic conditions, we know the likelihood of your healthcare outcome varies wildly depending on what provider you go to. The provider you select could affect your outcome by 5 to 40 percent in those chronic conditions. And guess what, so does the price. But the good news is there is a correlation between quality and price, and it’s a good correlation. The most efficient providers often tend to be high quality. They do it all day, every day, and they are really good at what they do. Consumers don’t know that. Even purchasers of health care don’t know that. We buy health care stupidly. Most people don’t have any idea what kind of quality they are buying in their health care.
“If you start to empower consumers and purchasers with this kind of information, they make pretty good decisions, and utilization and cost and quality start to look a little more reasonable. And you don’t have to sacrifice the health of the folks you are trying to serve.”
Pawlenty noted that health care premiums for state employees did not go up this year, in an environment when health care premiums for government employees around the country increased an average of 9 percent and premiums for private sector employees increased even more than that. He said Minnesota was able to hold the line on its costs by giving employees the tools to buy smarter.
Pawlenty closed on the subject of taxes. “Some people say, just raise taxes, we can government our way to prosperity,” Pawlenty said. “That’s not true. I am in discussions every week with businesses that talk about expanding or growing in Minnesota or somewhere else. And, taxes, regulation and insurance matter. That doesn’t mean it is the only thing, but it is a thing. And we are on the high end of that stuff.
“I get accused of being unreasonable for trying to keep a lid on it. We are the fourth-highest taxed state in the nation according to the U.S. Census bureau. Our revenues coming into the state are growing without a tax increase at 8 to 10 percent in the upcoming budget cycle. Most Minnesotans would say you should be able to fund your priorities and do it pretty well with that kind of bump in revenue. We are in a highly-taxed state; we should live within our means, live within that kind of growth.”
These are themes Minnesotans will hear repeated numerous times in the upcoming year, particularly as we head into the 2006 election.
tMichaelB is the web site for Tom Bengtson, who writes about business, religion, family and politics.
Monday, September 12, 2005
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