Bunny money

The $300,000 payroll of a cluster of truck stops, an official in a small Northern Maine community said the other day, grows threefold as it circulates through the local economy. Elsewhere, but nearby, a downtown revitalization project is sold on the promise that every dollar spent will become seven. Just down the road, critics of a school break for an agricultural harvest are comforted with the knowledge that a $161 million crop is really worth $800 million.

What are they using for money up there — especially amorous rabbits?

The economic principle being described here is what practitioners of the dismal science call the multiplier effect. These specific applications are what in layman’s terms might be called bald-faced exaggeration.

In fact, says economist Charles Colgan of the University of Southern Maine Muskie Institute, any claim of multiplier effect above two should be viewed with a wary eye. “It’s a function of the size and type of the industry and the population of the region. A large, value-added industry in an urban area has a larger effect. There’s no chance of a factor of three from small retail, like gas stations, in small towns — 1.1, maybe 1.2 at best.”

Jurgen Bauer is a Georgia-based economist who runs an economics-for-dummies Web site called “Dr. Econ.” He puts it this way: A large stone tossed into a pond makes a big splash and generates ripples from shore to shore. Pebbles go kerplunk.

The Maine pulp and paper industry claims a multiplier effect of about 1.7. Considering that the industry turns a natural resource into a value-added product that imports large sums of cash from outside the region, and that it buys from locals enormous amounts of supplies and ancillary services, pulp and paper probably is being modest.

Then there are just plain misapplications, with no malice intended. Not too long ago, a study pertaining to the Bangor region reported that every health-care job produced 1.58 retail and service jobs, which produce 1.35 health care jobs which produce … . At that rate, the Bangor region will have a workforce of approximately 2.3 trillion by the turn of the century.

The point here isn’t merely that statistics can be misleading. Everyone knows that. What’s important is that Maine has wrestled with economic development for decades and gets pinned almost every time.

Minor projects are oversold, disappointment results and major projects — say, modern highways for underserved regions or substantial investment in research and development — get shelved. Maine can continue to toss pebbles and expect a miraculous splash or it can start lifting the heavy stones. Or it could just start using rabbits as legal tender.