The Universal Notebook: The myth of economic development

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Back when first elected, one of the first things Gov. Paul LePage did was have an “Open for Business” sign placed on the Maine Turnpike.

“Open for Business” was the mantra of Republican governors everywhere. Gov. Scott Walker similarly declared Wisconsin “Open for Business.” But the supposedly pro-business policies of LePage and Walker haven’t borne much fruit.

According to a new report from the federal Bureau of Economic Analysis, the Maine economy is stagnant; it ranks 47th in the nation and last in New England in terms of economic growth. Wisconsin is 32nd.

Maine has always struggled to keep up, but Walker truly turned the Wisconsin economy around with his “pro-business” policies of cutting government spending, opposing unions and reducing taxes on the rich and corporations (as LePage is so determined to do in Maine). He took a state that had an economy performing at 40 percent above the national average and sent it into a nose dive such that its economy was soon performing at 40 percent below the national average.

LePage likes to tout himself as a businessman, but most of the things he has done in office have failed to stimulate or actively discouraged economic development.

His insistence, for example, that Maine renege on approval of the Statoil offshore wind project cost Maine $120 million directly and may have cost it the $2.5 billion the Norwegian company then invested in the United Kingdom. This same personal meddling with the regulatory system has now turned the supposedly nonpartisan Public Utility Commission into a trio of Republican utility hacks for hire.

Not only did LePage fail to foresee the death and demolition of the Verso paper mill in Bucksport, his supposed business savvy did not prevent Maine from wasting $16 million in taxpayer dollars in a failed and foolish attempt to save the Great Northern paper mill in Millinocket.

And LePage’s refusal to issue state bonds passed by voters has also had a negative effect on business, such that contractors last week held a news conference begging for the bonds to be released so they can get to work.

Paul LePage is not good for business in Maine, period.

But as much as I’d like to blame LePage for everything that is wrong in Maine, the truth is that economic development is a myth. The function of government is to create the system of laws and regulations that define a market, not to create jobs.

Many cities and towns in Maine have their own economic development officials, merchant associations and chambers of commerce. The state has them as well, and there are regional development authorities and agencies. Yet most of the job creation in Maine seems to occur outside the purview of the business recruiters and cheerleaders.

Freeport did not become a retail outlet boom-town for any other reason than that L.L. Bean is there. The western half of South Portland turned into Edge City simply because the Maine Mall chose to locate in the wastelands just outside Portland. MBNA was the megastar of the call center explosion in Maine, but the only reason MBNA came to Maine was that the CEO summered in Camden. As soon as he was gone, so was MBNA.

One of the other big business losses in Maine was Burt’s Bees moving from Guilford to North Carolina back in 1993. Founder Roxanne Quimby actually contacted the Maine Department of Commerce for help relocating in Maine, but she was told to call back in two months because the business recruitment office was on maternity leave.

“If they had offered us half the deal North Carolina did,” Quimby has said, “we would have taken it.”

For cities, towns, counties and states to compete for new businesses is counterproductive. It’s a race to the bottom. Why turn Maine into Louisiana, a polluted paradise that truly is open for business?

As Mark Funkhouser, former mayor of Kansas City and editor of Governing, wrote in a 2013 article on ending the economic development wars, “For several decades we have been conducting an economic-policy experiment in state and local governments, and now it’s time to stop the testing because the results are clear: The dominant paradigm, incentive-fueled competition among these governments, does not create economic prosperity.”

Funkhouser proposed “a national law that prohibits corporations from extracting bribes from state and local governments and bans governments from donating tax dollars to private entities.”

That’s unlikely to happen, but it’s time we began to realize that all the tax breaks, deregulation and government spending cuts in the world are not going to create economic prosperity.

Government has no business being in business.

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Freelance journalist Edgar Allen Beem lives in Brunswick. The Universal Notebook is his personal, weekly look at the world around him.