MIDDLING MAINE

Maine, national survey groups never seem to tire of pointing out, is the worst place on the planet to do business. Unlike virtually any other state, Maine’s combustible combination of high taxes, nanny-state government and unfriendly climate are said to scorch any company that comes too close. Now a new study on competitiveness gives a much calmer appraisal of Maine’s condition and, as a result, presents useful suggestions for improvement.

Maine, says the 2001 State Competitiveness Index by the Beacon Hill Institute of Suffolk University in Massachusetts, ranks a middling 19th overall among states. Nothing to celebrate, certainly, especially considering that its neighbors (Massachusetts was 2nd; New Hampshire, 7th) did considerably better. But a more reasonable ranking than the absolute bottom given, for instance, Maine’s unemployment and high-school graduation rates.

The Beacon Hill study (www.beaconhill.org) may get less attention than many of the simpler variety, which tend to ask how much a CEO would pay in taxes and which state has the biggest bait to lure business. The index has nine categories: government and fiscal policy, security and legal institutions, infrastructure, human resources, technology, finance, openness, domestic competition and environmental policy. And these categories themselves contain sub-groups that are not always obvious. For instance, infrastructure includes roads, but it also measures housing rental costs, computer use, commuter times and the cost of air travel. The openness index is a measure of world trade; it rewards industry clusters and takes points away for a high level of local-only competition.

All of New England did poorly on the environmental-policy index, which may be surprising considering the amount of time the region spends working on it. But the subgroups included in the index frowned on the price of electricity (if high, it discourages business investment) and applauded examples of environmental standards that encouraged the creation of firms to provide pollution-control equipment. It also rated the apparently contradictory measures of the release of toxic materials (negative because it makes a state unattractive) and stringent pollution regulations (negative because they can be costly to business).

The subgroups illustrate the sorts of tradeoffs business leaders and policy makers confront regularly. They suggest specific areas – certainly including a lower tax burden – for Maine to work on. For instance, Maine ranked 50th for the number of advanced degrees earned in science and engineering. The University of Maine already has begun work on this problem, but lawmakers could use the results of the index to give the issue a much higher profile and devote more time and money to attracting students to these fields.

Another part of the index that did not directly include Maine also affects this state. The authors, Jonathan Haughton and Vaydm Slobodyanyuk, also conducted a survey of 451 business leaders, asking them to predict how some of the states would fare on the index standards. The result showed that the business community tended to overrate the south (this second study included Virginia, which finished 14th overall, North Carolina, 28th, and Texas, 33rd) and under-rate the north (Massachusetts, 2nd, Connecticut, 8th, and Vermont, 5th.) No doubt researchers at the University of North Carolina are busy devising a study that demonstrates regional biases in competitiveness indexes.

Overall, the index shows what most people may already believe – that state policymakers do some things well and some poorly, and that many of the decisions balance one goal against another. The value of the index is that, without resorting to doomsday hype, it points out the “poorly” part and offers a path to improve.