Maine’s economy is beginning to show signs of relative competitiveness. After years of ranking dead last for business friendliness, the pro-growth resurgence of the 2010 elections is starting to bear fruit. The Wall Street Journal published a study last week showing the number of millionaires in each state. In 2013, Maine had the second largest increase in millionaire residents, after North Dakota. These data correlate with other recent positive studies, including a report on GDP growth from the Federal Reserve Bank of Philadelphia. In 3Q 2013, personal income for Mainers grew 1.15%, the highest growth in New England, and 17th in the nation. While Maine still has a long way to go regarding growth and job creation, these positive signs are a testament to what a pro-business attitude and policies can accomplish.
Our economic recovery has been far too slow. The term “secular stagnation” has been thrown around recently as a possible explanation for sluggish growth. Monetary and fiscal policy have failed to stimulate the economy, and some economist are using this term rather than consider if increased regulatory and tax burdens on Americans might be a more accurate explanation. There is reason to be optimistic about our future. We have not even begun to witness the potential growth from the nascent Technological Revolution. However, politicians often fail to understand that attitude makes a significant difference to the business community and entrepreneurs’ willingness to take risk and invest in the emerging technologies: the source of jobs and growth.
There is a major difference, to the business decision making process, between risk and uncertainty. Risk is a normal part of business; it can be measured, modeled, hedged, and businesses are capable of making rational investment decisions knowing risk. Uncertainty is more difficult to measure or model. Uncertainty is everything that cannot even be considered, and is paralyzing to business. It is true that there is always some level of uncertainty, and that uncertainty is typically higher during a recession. However, according to many uncertainty indexes, the last five years in the United States have been some of the most uncertain in history. Businesses do not know what will happen to them in the near future. Given that the recession technically ended in 2009, the discrepancy must therefore be attributed to political uncertainty effecting the business climate.
Political uncertainty results in businesses not knowing how to plan, even for the short term, consequently stunting growth. Our nation has a Congress that has just, for the first time in five years, passed a budget. There have been budget crises, debt crisis, a government shutdown, last minute tax deals, and significant changes to the tax code. The country has flirted with involvement in more foreign wars. We have an executive branch that is skeptical, if not openly hostile toward private enterprise. And there have been large sweeping regulatory overhauls that put punishing new regulations on employers.
Despite all this, Maine is now showing signs of being relatively better because our state government has provided some stability and certainty. Governor LePage, a man with business experience, has pushed a pro-business agenda. Maine businesses know that at least in their home state, their Governor is doing his best to support them. He has lowered tax rates, streamlined regulatory processes, and done his best to curtail state spending. All of these are signals to Maine businesses that give them the confidence they need to invest, grow, and higher more employees.
Maine’s new attitude towards business is a competitive advantage that we should all support. There is still much to be critical about: Maine is not a Right-To-Work state, there are high corporate and income taxes, poor infrastructure, and high energy costs. But a supportive attitude from politicians in Augusta helps minimize uncertainty for business, and gives them latitude to make investment decisions, and take advantage of the vast opportunities available in our 21st century economy.
Matt Bucklin is the president of Quit Tea LLC, and graduate of Colby College.