Planning Decisions, Inc.

THE BOTTOM LINE FROM CHUCK LAWTON

Policy Simulation Game: The Long-term Short-term Paradox in Augusta

Published Sunday April 13, 2008

It is more than slightly ironic that all of the budget decisions in Augusta are made in the short term and all of the reasons supporting them can be known only in the long term.

Human Capital and Public Policy

Published Sunday April 6, 2008

One of the most fundamental insights of economics is the concept of investment—spending more money today for the purpose of gaining even more tomorrow. The concept is readily understood for machinery—we spend more today for solar panels or windmills with the expectation of paying less for electricity over the life of the machinery. And enough less to more than offset the higher immediate cost of replacing our old generators with the newer, less oil dependent versions. Whether these investments ultimately pay off depends on the future prices of oil, natural gas and coal. In short, investment is a bet that a new way of doing something will, over some future time span, prove superior to the current way.

Oil Tank Farms, Creativity and Growth

Published Sunday March 30, 2008

The Maine Center for Creativity kicked off its signature event this week—an international competition to solicit designs for painting the Sprague oil tanks in South Portland. Sprague’s operational manager, the state’s tourism director, South Portland’s city manager and Portland’s mayor all gushed rhapsodic about creating a beautiful landmark at one of our region’s most visible gateways. Over the years, millions of auto and air travelers will remember their entry into Maine by whatever strikingly different appearance the soon to be repainted oil tanks assume. Talk of an unforgettable, “world-class” destination attraction filled the room. My head was spinning with visions of the Colossus of Rhodes, the Sydney Opera House, the Guggenheim Museum in Bilbao, Spain.

Margin Calls Are Coming for Everyone

Published Sunday March 23, 2008

If nothing else, the last several weeks have given both ends of the income spectrum a harsh lesson in the dangers of playing with other people’s money. Billionaire currency speculators on Wall Street and special needs children in Wilton have both been getting margin calls.

Where Have All the Migrants Gone?

Published Sunday March 16, 2008

One of the central themes of The Brookings Report was the apparent discrepancy in Maine between fact and attitude. While our population was growing as a result of people from away “voting with their feet” by moving to Maine, we were “stuck: surprisingly pessimistic about [our] future.” We didn’t seem to appreciate the advantages we enjoyed.

Tax Burden and the Private Sector

Published Sunday March 9, 2008

I’ve been thinking, over the past several weeks, about the relationship between state and local tax burden and economic growth. Proponents of cutting taxes argue that a high tax burden—measured as taxes and fees collected as a share of personal income—leads to slower economic growth, meaning growth in jobs and income. But examination of the data for the fifty states over the past two decades showed that such a simple relationship doesn’t hold true. This is in part because of the immense complexity of the economic development process—there are so many factors involved that it is virtually impossible to isolate the impact of one alone—and in part because a substantial portion of the tax burden is in fact income, most importantly Medicaid and retirement payments.

Tax Burden and Earnings

Published Sunday March 2, 2008

Last week I puzzled over the apparent absence of any clear relationship between state and local public expenditure and the rate of per capita income growth across the states. To push the issue further, let’s look at another measure of economic prosperity—earnings per worker. Here the relationship to the public expenditure burden is a bit clearer.

The Tax Burden-Income Growth Puzzle

Published Sunday February 24, 2008

Churchill’s famous observation about his struggle to understand Britain’s wartime ally, might equally well apply to the effort to understand the relationship between tax burden, or, more precisely, the burden of public expenditure, and economic growth. A reader recently asked, “Why in the hoopla that always accompanies announcements of Maine’s high tax burden does no one comment that the states with the highest income growth also seem to be the states with the highest tax burden?”

Maine and Recessions

Published Sunday February 17, 2008

With all the talk about recession—Will we have one? Are we already in one? How long will it last?—it is useful to look back at the last two to see how they affected Maine.

Definitions of Tourism and Tourism Impact

Published Sunday February 10, 2008

It isn’t often that arcane disputes about the nature of economic measurement and the dangers of double counting make their way from the ivory towers of academe to page one headlines and lead editorials in the daily press. But the recent brouhaha over the methods used by the state to calculate the impact of tourism has turned out to be the exception that proves the rule.