Scoring legislators, misleading voters

With the election nearing, lobbyists routinely grade the performance of incumbents. Many pro-business lobbies assess legislators’ contributions to the “business climate.”

This phrase has been bandied about so long that we forget its metaphorical status. The conditions under which business thrives cannot be measured in the precise ways we assess barometric pressure. In the proverbial long run, business health and the moral, physical and social health of our communities depend on each other. Simplistic measures of the business climate distract attention from the important, if always

disputable, connections between public health, environmental integrity and business expansion.

The Maine Economic Research Institute, a business-sponsored research organization, recently gave my state representative, Ted Koffman, and my state senator, Dennis Damon, failing grades. I can hardly recognize either as “anti-business.” Some business leaders in Bar Harbor, lifelong Republicans, share my respect for them.

Scorecards are no better than the assumptions on which they are built. MERI’s numbers are based in part on subjective judgments, which the authors do not even share with us, and on a curious selection of bills. Its authors assume that any regulation costly to particular Maine businesses ipso facto creates a bad business climate for the whole state.

Both Koffman and Damon were docked because they supported LD 1309, a law banning the sale of arsenic-treated wood in Maine. The arsenic in pressure-treated wood can leach out into wells and rub off when touched, posing health threats to children and workers. The bill imposes only limited costs on those few lumberyards that still carried this material, and a safer form of pressure-treated wood was already in the marketplace. The bill reduced risks to citizens and liabilities to businesses, especially tourism and outdoor recreation interests that depend on Maine’s reputation for safer water for all. These are bottom-line concerns.

Other business lobbies replicate scorecards like MERI’s. Many assume that lax regulations, cheap, nonunion labor, and low taxes constitute the key to big profits and eventual prosperity for everyone. The case for cheap labor and lax regulations could make some limited claims when Maine’s economy depended primarily on raw commodity exports. (Swedish experience suggests that even commodity intensive economies derive long term benefits from skilled labor, high technology, and sustainable forestry regulations.) As Maine moves toward knowledge-based industry and tourism, the case against fouling our own nest becomes ever stronger.

The most careful recent study of the literature on business location is a monograph by Charles Lawton and Frank O’Hara for the Maine Center for Economic Policy. They recognize that business cares about tax levels, but also point out that these concerns are subordinate to the quality of state and municipal services. There is a positive correlation between investment in highways, safety, education and economic development, but the relationship is not always present. Quality of life counts, but the authors acknowledge just how elusive this concept is.

States have more than one path to economic development. Taxes can fund the education of future workers and citizens, modernize and reduce the social costs associated with transportation, and enable the basic research that markets lack incentive to perform. But high taxes can be squandered in those efforts, and the regulatory structure, no matter how well intentioned, needs regular monitoring and citizen input. Part of our economic health is therefore the health of our state and local political institutions and practices.

In addition, economic growth is not an end in itself but a means to a higher quality of life. Some environmental economists, inspired by Herman Daly, have argued that conventional economic measures like gross domestic product are inadequate. Economies that produce reams of houses, cars, boats and shopping malls can also deliver traffic jams and asthma. These economists argue that leisure, the incidence of crime, and the degree of social and economic equality are also key indicators of quality. Here in Maine, the State Economic Growth Council, representing both labor, business and environmental groups, has established an admirably diverse body of indicators that compare Maine’s ranking along such dimensions and measure progress in each.

A preliminary, though hardly definitive, defense of this perspective comes from demographic data compiled by health care economists. All things being equal, those societies with extreme gaps in wealth and income experience shorter longevities than societies where the gaps are smaller. Greece, the site of the recent Olympics, is by European Union standards relatively poor and inegalitarian. Nonetheless, it is more egalitarian and provides its citizens more free time than the “affluent” United States. Its citizens manage to live on average two years more than U.S. citizens.

No scorecard is ever likely to silence all doubters. The best are the ones who admit they are based on debatable assumptions and put these out for public scrutiny. Nevertheless, for my money I will opt for a business climate that regards social health and citizen longevity as paramount.

John Buell is a political economist who lives in Southwest Harbor. Readers wishing to contact him may e-mail messages to jbuell@acadia.net