Tuesday, September 5, 2006

Political Credit for Maine's Economy

Here's something you don't see in the papers everyday: basic economic concepts expressed clearly. The Bangor Daily News has a piece today about the fact that, tho politicians like to take credit when the economy is booming, they have rarely contributed anything to it.

Here's something you see even less often: a politician who tells it like it is.

"Angus King got all kinds of credit because he was governor in a time when the national economy boomed and the state economy boomed," University of Southern Maine economics professor Michael Hillard said. "Anybody could have been governor, and the economy would still have boomed."

Former Gov. King agrees. In an interview just before he left office, King said he was lucky to have been governor with a booming national economy that resulted in large state surpluses.

"Our economy operates on decisions made in the private sector," he said. "For most of the time that I have been governor I have been lucky those decisions have led to a strong economy."

Oh, how the current administration makes us long for the days when Maine had a King in office!

The fact is that almost anything the government does will tend to stifle the economy, even if the intent is to support it. This is because the government will try and shore up one sector that has garnered a lot of attention, to the detriment of other burgeoning sectors that will have to fight on an uneven playing field for precious resources from lenders and investors.

Colby College economics professor Michael Donihue said state and local governments focus on what they can do to create incentives to attract new companies. But, he said, the reality is those in the business sector do not spend a lot of time looking at government incentives, nor do they weigh heavily in decisions to locate or expand.

"There is probably not a lot the administration or the Legislature can do to attract new people," he said, "but they certainly can get in the way and create disincentives."