THE BOTTOM LINE FROM CHUCK LAWTON
The Benefits of a Dynamic Labor Market
Published Sunday June 15, 2008
Ask just about anyone what the goal of economic development is and the answer you’re likely to get is, “Jobs, good jobs, high paying, secure jobs, jobs in stable companies that provide benefits.”
Maine and the Credit Crunch
Published Sunday June 8, 2008
The greatest problem arising from the continuing saga of the credit crunch is not the amount of money that has been lost on mortgage loans that should never have been made, although that certainly is a significant problem. It is, rather, the fact that no one seems to know how much money is actually involved … or when the revelations of new losses will stop coming. It’s one thing for a bank to know that a given borrower has fallen behind on his obligations. It’s quite another for the entire financial system not to know which loans are good or bad or even who owns them. In an environment of such uncertainty, lenders tighten their grips on the purse strings, and all credit worthy borrowers suffer. This, of course, dampens the prospects for accelerating economic growth.
Islands & Regional Economics
Published Sunday June 1, 2008
Nabisco’s decision to cease production of Crown Pilot crackers—for many Mainers an iconic product, emblematic of the unique qualities of our state—prods us to reflect on the challenge of maintaining regional character within a larger competitive world. The study of economic regions is largely an elaboration of the distinction between base industries and local industries. Base industries draw on some regional advantage to bring money from away into the region—think paper mills in Jay, silicon chips in South Portland and hotels, restaurants and shops along our beaches. These businesses make up Maine’s economic base. They provide the foundation of jobs and income that enable local businesses to build on top of that base—here think grocery stores, clothing shops, doctor’s offices, banks, movie theatres and all the other businesses we rely on for our daily lives. While internet shopping has hurt some of these businesses, they do not, by and large, have to worry about global competition. Serving a primarily local market, they depend, in effect, on someone else’s competitiveness.
Traditional Industries Are Not Dead Industries
Published Sunday May 25, 2008
Several weeks ago, I wrote that the drastic decline in employment suffered by Maine’s “traditional” goods producing industries over the past two decades constitutes an “era changing” shift in our state’s economy. I noted the loss of nearly 30,000 jobs in paper, lumber and wood products, farming, fishing and food production, textiles, leather and apparel coupled with our failure to offset those losses with gains in other manufacturing sectors as evidence of a major change from our long history of progressive industrial transformation.
Growth of the Service Sector
Published Sunday May 18, 2008
Last week I cited the enormous net loss of jobs in Maine’s “goods producing” sector as reason to say that we are entering a new economic era.
Wait a minute, you say. We don’t have to make stuff to have economic growth. We can also sell stuff somebody else makes and provide services. Trade and services are legitimate sources of economic activity. And besides, those are activities that can’t (we hope) be outsourced to China, at least not as easily as golf tees.
Why Should We Invest?
Published Sunday May 11, 2008
Looking back over the past two decades in the Maine economy, two dominant trends emerge—slow growth and structural change.
Between 1990 and 2006, total employment in Maine—full and part time, from all sources—grew at an average annual rate of 1.1 percent. The equivalent growth for the U.S. as a whole was 1.6 percent, nearly 50 percent faster. Over the same period, the average earnings per worker in Maine increased at an average annual rate of 2.9 percent, 20 percent more slowly than the national average rate of 3.7 percent. At least in part because of these relatively slower rates of growth of employment and average earnings, Maine’s population grew only one third as fast as the nation as a whole—averaging an increase of only 0.4 percent per year compared to the national average of 1.1 percent.
Maine’s Potential for Energy Savings
Published Sunday May 4, 2008
The Muskie School at USM and the Margaret Chase Smith Center at the University of Maine recently released a joint report on the gains Maine could enjoy from greater energy efficiency—Energy Efficiency, Business Competitiveness and Untapped Economic Potential in Maine, prepared for the Governor’s Energy Summit, April 3, 2008. The report’s most striking finding is not that we can gain from increasing energy efficiency (that applies to everyone, after all), but rather that ours is such an energy intensive economy. Maine ranks 24th among the 50 states plus Washington, D.C. in terms of energy used per dollar of Gross State Product and 20th in terms of energy used per resident.
Treating Public Spending as an Investment
Published Sunday April 27, 2008
So what, exactly, does it mean to treat public spending as an investment? Rob Grunewald and Art Rolnick, two economists from the Federal Reserve Bank of Minneapolis, give us an example by describing the results of a study of 123 children from low-income families in Ypsilanti, Michigan. Back in the 1960’s, the children were randomly divided into two groups. One attended a special preschool program involving daily sessions with trained teachers and weekly home visits. The second, or control, group. had no pre-school program. Both groups were tracked through age 40. The results were remarkable.
Investment and the State Budget
Published Sunday April 20, 2008
Is the glass half empty or half full? Most of the talk about taxes and the state budget revolves around the concept of “burden.” What percentage of income or earnings does the state “take” and how does that affect people’s behavior? Do they not invest in Maine, not come to Maine, or leave Maine because of this “burden?” State taxes and spending in this context are seen as entirely negative.
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.