There’s much more to the story of resistance to change

How many people does it take to screw in a light bulb?

One hundred six. One to actually replace the light bulb. Six to work in the political action committee to fight for the rights of the nine people adversely affected by the light bulb change. Ten to serve in the Special Ad Hoc Committee on the Merits of the Replacing the Bulb…

I wrote a column last month (BDN, Dec. 11) arguing that resistance to change is the biggest obstacle to faster prosperity growth in Maine (and in every other state). It is tempting to blame this resistance to economic change on “the special interests.” Special interests are the most visible part of the story about resistance to change.

There is more to this story, however, and if we stop the blame at this superficial level, then there is little that we can do to try to lessen resistance to change. Legislation can be enacted to try to reduce the influence of special interests, but this rarely has much impact because it does not address the underlying causes. Stamping out the influence of special interests is like trying to stamp out a bubble under a large carpet – the bubble just moves to a slightly different place, and special interests find a slightly different avenue to express their concerns.

Moreover, most pressure from special interests in resisting economic change is not due to sinister motives or narrow-mindedness. Resistance to change generally comes from economic immobility, that is, the lack of economic alternatives. It is economic immobility that creates costs from economic change. If workers and other economic resources had perfect economic mobility, then there would be no costs associated with economic change (i.e., no dislocation) and, as a result, there would be essentially no resistance to it. If only the world worked this way. Unfortunately, some degree of economic immobility is inevitable.

There is, however, a very effective way to reduce economic immobility, and hence reduce resistance to change: more education. Those with more education generally have significantly more economic options. Workers with relatively more general skills in problem-solving and communication have greater economic mobility. Although this point is pretty obvious, its importance is probably not well known.

Consider the latest unemployment figures in Maine. The unemployment rate for those with college degrees is 1.7 percent. For those with some college but without a degree, the unemployment rate is 2.9 percent. For high school graduates without any college it is 3.8 percent. And those without a high school diploma have an unemployment rate of 6.1 percent. College graduates are less than half as likely to be unemployed as high school graduates, and less than a third as likely to be unemployed as high school dropouts.

On average, those with more education experience significantly shorter spells of unemployment when they lose their jobs, and they are much less likely to become unemployed when they lose their jobs (in addition to losing their jobs less frequently). The evidence is very clear; investments in education greatly increase economic mobility. Consequently, investments in education grease the wheels of economic change and quicken the pace of prosperity growth.

The greater economic mobility that comes with more education is an important reason why societies with greater educational attainment have experienced faster economic growth. Academic research has found a strong link between the rate of economic change (as measured by the rates of job destruction and job creation) and growth in productivity and income. A complicated analysis is not necessary, however, to observe the link between education and prosperity. The United States has both the highest average educational attainment and the highest output per worker in the world. The three states with the highest per-capita incomes (Connecticut, Massachusetts, New Jersey) rank second, first, and fourth in terms of most educated workforces. Maine, in contrast, ranks 36th in income per person, 36th in percentage of the workforce with at least some college, and 32nd in percentage with at least a bachelor’s degree.

There is one important problem with more education being the solution to our lagging prosperity growth. Education is an investment with a long-term payoff. It takes decades to realize the full benefits of increased investments in education. Moreover, formal education is not a practical way to help many of those facing job dislocation now. The problem, however, is that the standard alternative – attempting to save declining industries – is not a practical way to help those facing displacement either.

Attempting to save declining industries is a losing choice for this state (and every other state). Economic change will occur. The issue is not if, it is when. We can choose to resist change by pouring resources down ever-expanding holes. But this only slows the pace of change (puts off the inevitable) and, consequently, slows the pace of prosperity growth. A far less costly choice is to help those hurt by displacement directly. We can also choose to embrace change by investing in that which does not become obsolete; that is, in people with general skills in problem-solving and communication.

Philip Trostel is an associate professor of economics and public policy in the Department of Economics and the Margaret Chase Smith Center for Public Policy at the University of Maine.