Maine news, sports, weather | Kennebec Journal, Augusta, Maine

GORDON L. WEIL: Politicians make empty promises when they say they can create jobs

This is the week following Labor Day, so it is not surprising that the national focus is on jobs.

With many people either out of work or worried about keeping their jobs, political candidates are out-promising one another about job creation.

Candidates believe that the best platform is to promise that he or she knows how to create jobs, implying that those now in office don’t do it as well.

The bad news is that candidates are making empty promises. What they promise may get them elected, but when they fail to fulfill those promises, people will only grow more disillusioned with government.

The reasons for unemployment and a weak economy are involved with the basic structure of the economy. Most measures offered by the candidates are either too weak or entirely miss the point, or both.

We are impatient, believing that recovery from past recessions came more quickly, while the current recovery is dragging. But our memory is bad. In the 2001 recession, it took 48 months for jobs to return to pre-slowdown levels, and, at its worst, the loss of jobs was less than half of what we are now experiencing. We are now 33 months into this recession.

The economy is recovering, but quite slowly. The recovery seems to hit a plateau every other month.

Recovery depends on major changes in spending, savings and debt. When the country emerges from the recession, the American economy will look much different from when the decline began at the end of 2007.

Government spending could make recovery move faster. But a new stimulus would be costly and would increase the already big federal deficit. Ending the tax cuts that apply to the top 1 percent of Americans would help, but probably would be insufficient. This situation poses tough decisions for Washington.

The recession is a national problem, and recovery accompanied by reduced unemployment will happen on a national scale. That’s why the political promises of state candidates amount to little and can be misleading.

Short of an economic miracle, no single state will be able to stage a significant recovery, distinct from the rest of country. Occasionally, miracles do happen. North Dakota has the lowest unemployment, partly because oil has been found there. No politician did that.

So when candidates in Maine (or any other state) promise new job-creating agencies or subsidies, they really are talking about increasing jobs in their state at the expense of some other states.

Compare Maine with its likeliest competitor. In July, Maine unemployment stood at 8.1 percent, while the rate in neighboring New Hampshire was 5.8 percent. (The national rate was 9.6 percent.)

What’s the difference between them? Is it because of how state government is organized or subsidies to new or expanding businesses?

Maine’s income tax rate is 8.5 percent and its sales tax rate is 5 percent. New Hampshire has no income tax or sales tax. That’s the most significant difference, and, undoubtedly, the absence of these taxes has been a major attraction for business in the Granite State.

The New Hampshire Department of Economic Development website criticizes other states that raise taxes to promote business development. New businesses will finally run out of tax breaks, it says, and become contributors to the taxes that pay for other new business.

New Hampshire, with high ratings for attracting business, uses its own distinct approach, probably one that Maine would not copy.

With slightly more population than Maine, New Hampshire has 2,231 beds for the homeless compared with 4,750 in Maine. Even if many of these beds are not provided with tax dollars, the numbers tell a story.

Maine provides more assistance to less-fortunate people than does New Hampshire. And more state funding goes to education in Maine than in New Hampshire, where property taxes are high.

The point is not that Maine should cut its taxes to compete. The state should set its priorities and accept the consequences.

The economic reality is that we are all in this together, and that no state will be able to turn its economy around until the country itself begins to experience solid growth.

For voters, there are three lessons.

First, we should not readily believe political promises about job creation.

Second, we should not expect government to come up with quick solutions to unemployment.

Third, we should recognize that we are partly the cause of the problem when we pile on too much personal debt or demand government provide more services with no tax increase.



Gordon L. Weil, a weekly columnist for this newspaper, is an author, publisher, consultant and former international organization, U.S. and Maine government official. 

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