First prosperity paper from 1995

First prosperity paper from 1995

This is my original prosperity paper from 1995Prosperity in Maine: Myths, Principles, and Proposals
an essay by Greg Gerritt 2/14,/95
INTRODUCTION
It seems like every few years the State of Maine trots out
another commission to develop a plan to revitalize the Maine economy.
So year in and year out these commissions (the latest is the Economic
Growth. Council) do their study and write their reports with a focus
on whatever is the hot fad in economic development thinking that
year. This year the focus is on setting benchmarks. My focus is on
the things these panels ignore or miss.
I think the record of trotting out commission after
commission is indicative of the lack of success these panels have
had. I am probably a little too bold, and I may even be totally
wrong, but I think our inability to turn around the Maine economy
based on the work of these panels is because these panels have
focused on the wrong things. This is not to say that much of what
these panels have come up with is not useful or necessary. We
definitely need to upgrade our communication networks, improve our
transportation infrastructure, create High Productivity work
organizations, promote aquaculture, assist small and micro
businesses, improve our schools, and upgrade technical education. We
probably should also refocus our tax system so that it promotes
entrepreneurial activity better.
But even when we do all of these things the improvement in
Maine’s economy will be marginal unless we do a number of other
things, many of which require us to dramatically change the way we
approach economic development Any plan that really provides a roadmap
for creating widespread prosperity in Maine must start from two basic
premises. The first premise is that only when the least sl~illed
members of Maine’s workforce achieve prosperity will prosperity be
widespread in Maine. The second premise is that any activity that
damages the ecosystems of Maine will make it that much harder to
achieve prosperity.
I am aware that many of the traditional practitioners of
economics hold another view, and actually consider a focus on these
two premises to be speed bumps on the road to prosperity. But I will
ask the reader to consider the track record of the traditional
practitioners and at least consider the possibility t-bat we may have
to explore a new perspective if we are to find the pathway to
prosperity.
In the first section of this paper I will examine some of the myths
that underlie the traditional plans for developing Maine’s economy.
It is unfortunate that these myths have so colored our thinking about
the economy because they have been used to erect a system in which
doing the right thing will not only require hard work, but also some
serious upstream swimming. Therefore I am going to do some serious
debunking of the cherished icons of Economic Growth, the Business
Climate, the Free Market, Free Trade, a world of unlimited resources
and markets, the dangers of environmental regulation, and Trickle
Down Economics.
Following the debunking of the framework of traditional
economic development plans I will discuss a general framework for
economic prosperity. I will propose alternatives to the framework of
Growth, Trickle Down, Free Trade, and ecosystem depletion that if
adopted at least hold out the possibility of setting Maine on the
road to prosperity. I suspect that my framework has many holes in it,
some large enough to drive a truck through. No matter, Rome was not
built in a day and I doubt that any one person can present a
framework for 21st Century economics that will answer all of the
questions or foresee all of the possibilities.
The third section will contain specific proposals for Maine.
I will only include proposals that would not be found in traditional
documents on seeking prosperity in Maine. I will ask the reader to
remember that these proposals are intended to supplement and
complement the traditional proposals as well as be an alternative to
them.
No economy exists in a vacuum and neither do proposals about
how to fix an economy. The politics of our day leads me to the
conclusion that much ofwhat I present here will be ignored in the
short term. The political will to upset the traditional framework and
implement my proposals is not yet here. My hope is that in presenting
my framework and proposals I will help move the debate forward and
possibly spied up the arrival of a day when all of Maine’s citizens
can share in a true prosperity.
LET THE DEBUNKING BEGIN
In honor of Maine’s Economic Growth Council the first myth to
be debunked is the myth that Economic Growth is the desired outcome.
This is actually the easiest myth to debunk, but it may be the most
politically entrenched.
The first thing that I would ask the reader to do is to
imagine a situation in which we experience Economic Growth but the
consequences for

Maine are anything but desired. If you can do this, then you realize
that we are actually seeking Prosperity, not Economic Growth, and
that Prosperity should be our focus. To make my point I will toss in
a few examples. How about we build more and bigger fishing boats and
catch more and more fish. We then have economic growth until the fish
population crashes and thousands of people and hundreds of boats are
idled until the fish population rebuilds itself. Or how about a new
widget factory that employs 500 people and 10 children in the
neighborhood get cancer from its toxic emissions. or we experience
Economic Growth but all of the gains in income go to 2% of the while
other people lose their jobs.
I like to think that our real goal is Prosperity and that if
we only focus on a rising Gross National Product or Gross State
Product we just may get a rising GSP with some very grotesque
results. A focus on Prosperity means that we are focusing on the
results in our communities, and therefore we are likely to find that
it results in real progress and a better distribution of resources.
Economics developed as a discipline at a time when there were
many fewer people than there are today and at a time when much of the
world was only marginally attached to the European trading system.
Therefore Economics developed assuming that there would always be new
markets and new resources to feed into the system. I do not think
that either the practioners of Economics or the people involved in
policy debates have ever been able to make the adjustment to a world
in which the resource base is limited and nearly every person on the
planet is either a part of the global trading network or too poor to
participate in it. This belief in unlimited markets and resources,
combined with the need to keep shareholders happy with ever
increasing sales and profits is what fuels our belief in Economic
Growth. It might be thought that information about the crashing of
the North Atlantic Fishery, the deforestation of the Amazon, the
global glut of manufacturing capacity, and the ever increasing
numbers of people living in absolute-poverty would have caused some
of the advocates of Growth to rethink their views, but it has not.
Such is the power of the myth.
Before closing this section on Economic Growth I would like
to point out that an ever increasing segment of our economic growth
is actually spending to fix the problems created by our overexpanded
economy. We are spending more and more to treat the cancers caused by
pollution, safely dispose of the garbage of the throwaway society,
deal with the effects of soil erosion and
deforestation, and decontaminate polluted sites. All of these
activities are added to the GNP, but does this really mean that we
are doing well? It is going to take a new accounting system before we
really see what is going on.
One of the favorite sayings of Maine’s business people and
politicians is that we have to improve Maine’s Business Climate, and
that unless we improve the Business Climate Maine’s economy will
stagnate. While Economic Growth fixation leads us into dangerous
waters and burdens the economy with the costs of fixing the mess, the
Business Climate just plain has no real effect on an economy. Or
rather, telling everyone that the Business Climate is bad may scare
off some business investment, but the overall effect of a Business
Climate on an economy is negligible.
A Business Climate is suppossedly derived from a measure of taxation
rates, governmental support for business, the nature of the bureaucracy and
the strength of environmental laws. Ocassionally the Infrastructure and
Educational capabilities of a locale are also factored in. From this, one
would assume that each of the 50 states and all of the nations of the world
could be rated, at least roughly, for their Business Climate. And then, if
the Business Climate really meant anything, places with a “good” Business
Climates would be    in good shape while other places would be experiencing
serious economic decay.
But in the real world it does not seem to work this way. When
there is a recession in the United States, there is a recession all
over the country. There will be pockets of prosperity due to
participation in specific industries, but when a recession hits it is
general and states with “good” Business Climates are hurt as much as
those with “bad” Business Climates.
The international situation is the same. Think about France.
It is suppossed to have a horrible Business Climate. Japan is
suppossed to be among the most business friendly places on the
planet. Yet in 1993 they were both suffering from a recession and in
1994 both were coming out of the recession. Obviously there is
something much more important than the Business Climate at work here.
To reinforce the point that the Business Climate effect is
negligible I am going to cite two people who have studied. different
aspects of the ,Business Climate. The first quote is from Bruce
Kirchoff and is taken from an article entitled “Entrepreneurial
Economics” which was included in the book The Portable MBA in
Entrepreneurship (W.D. Bygraves ed.). “Location is not an impediment
to entrepreneurial success. You can start your firm in any location
regardless of tax rates, living conditions, or
I
other touted advantages. One state is as good as another, although
few state and local departments of economic development will agree
with that statement.’,
For another take on the effects of the Business Climate on
the economy, and a focus on the environmental aspects of the Business
Climate, I would like to cite a paper by Stephen Meyer of MIT
entitled “Environmentalism and Economic Prosperity” Dr. Meyer looked
at a number of measures of economic success and compared those
results with the strength of environmental laws for all 50 states.
Meyer’s conclusions are rather startling, and I think should move
advocates of the Business Climate Effect to at least pause and
reflect. “States with stronger environmental laws consistently
outperform the weaker environmental states on all economic measures.”
Dr. Meyer concludes his paper by stating “Those who live and work in
states that have vigorously pursued environmental quality and are now
contemplating rolling back environmental standards to jump start
their economies should reconsider. There is no reason to expect that
loosening environmental standards will have any effect on the pace of
state economic growth.”
I will discuss governmental handouts to business in the
section on Free Markets though I could just as well discuss it here.
I will conclude my discussion of the business climate by stating that
of course it makes sense to have a fair tax system, a helpful
bureacracy, and straightforward environmental laws with a minimum of
red tape. We all expect our government to deal with us fairly. But to
say that Maine’s near permanent economic slump is the result of
taxing the wealthy and protecting the environment is
counterproductive. I think those people probably need to tend to
their knitting and focus on doing things properly rather than
complaining.
There is no such thing as a Free Market. Free Trade is just
another tool by which powerful nations exploit poor countries and
their people. I, and most of the readers of this paper strongly
support a relatively free marketplace. I believe that market
competition brings about the development of new and better products,
good service, and competative prices. But the government does have a
role to play. Who else would protect consumers from unsafe products
or unscrupulous business practices? The government has a role to play
in workplace safety, setting up the legal framework for contracts,
and protecting the public from toxic substances. The goal is not a
totally free market, but a relatively free one.
The government also has a role to play in promoting business
development. I could have included this discussion in the section on
the Business Climate,
but I prefer to include it t-in the discussion of markets because so
often people feel the role of the government is to provide capital
and incentives for business expansions, something-that is actually a
part of the marketplace. If the role of the government is to help
businesses expand, then it is a public policy decision and should be
made openly in the political arena. My feeling on this issue is that
governments should support Research and Development, provide
information, help in finding export markets, and provide education
and training for the workforce. Governmental capital for business
expansion should be restricted to the smallest of business, those
that are too small to be eligible for money from private capital
sources. I also do not believe that governments should provide other
capital resources such as land for businesses or tax breaks
specifically tailored to particular businesses. While this type of
competition between governments for business relocations and
expansions seems to be the rage these days, it is counterproductive
and often interferes with a goverment’s ability to do those things
that are properly the role of governments such as upgrade the
transportation infrastructure or improve schools, those things upon
which long term prosperity depends.
I will admit to being appalled by the business people who
constantly bemoan governmental interference in the marketplace and
who wax ecstatic over the Free Market System but are the first in
line with their hands out for governmental loans to their business. I
am also appalled by politicians who complain about welfare subsidies
for the poor and then support welfare type subsidies for large
businesses.
One of the other things to think about    when governments subsidize
businesses is that when the subsidy runs out the business either comes back
for another subsidy or flies to another location that offers a bigger
subsidy. Often this can leave a governmental body with large debts and no
way to pay them back. It is time for some straight talk about the role
of the government in the economy and the real nature of our mixed economy.
Until we get some straight talk we are going to continue to have trouble
straightening out the economy.
4    Free Trade is the international version of the Free Market, and is
honored by just about as much straight talk. Let the record be clear.
Free Trade is only favored by the governments of Industrial nations that are
the home of large corporations who are having a hard time breaking into
particular lucrative markets and by governments that have been bribed.
The workers of the world do not benefit from Free Trade. The farmers
of the world do not benefit from Free Trade. The Poor nations of the
world are
threatened by Free Trade. The ecosystems of the world are threatened
by Free Trade. Consumers may benefit from Free Trade in their role as
consumers, but in their roles as producers Free Trade does not
benefit them.
International trade is important, useful, and growing. It
will continue to play an important role in the global economy, though
less of one than its advocates really think. But trade must be fair.
It must be conducted in such a way so as to let local communities
preserve their productive capacity and their ecological health or it
is counterproductive.
On the international scene the United States is the biggest
advocate of Free trade. But the USA has never practiced free trade.
It has always maintained some form of protection for domestic
manufacturers. It has subsidized exports. And we have used trade as a
tool of foreign policy and industrial policy. Of course no other
country has ever practiced Free Trade either. And for some pretty
good reasons.
No nation on the planet has ever been able to make the
transition from an agricultural economy to an industrial economy
without protecting local manufacturing with tariffs, import
restrictions, and export subsidies. Japan is the classic example of a
country with an Industrial Policy. The New Industrial Countries of
Asia are supossed to be examples of what Free Trade can do for an
economy, but all of these countries have practiced protectionism and
export subsidization. So has every industrialized nation in Europe.
Maybe these countries could have developed their manufacturing base
under a Free Trade regime, but their governments did not believe it,
and neither do I.
These days the primary purpose of the push for Free Trade
seems to be the desire to open up poor countries to further
exploitation by large corporations. The way this seems to work is
that countries are encouraged to borrow money from the World Bank or
New York based financial institutions so that they can import
manufactured products from the industrial giants of the corporate
world. In order to pay back the debt these countries are then very
strongly encouraged to rearrange their economies from a focus on
production for local needs to export oriented production. The result
of this reorientation is usually a speed up in the exportation of raw
materials and agricultural commodities. As the price of these
commodities on the world market sinks the poor countries are forced
to export more and more of their resources to pay the debt. The
winners in this struggle are the large
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corporations that control the commodity markets, while the losers are
the poor people of the world who have an even harder time finding
food at affordable prices and the ecosystems of the planet which are
stressed more and more to meet the demands of the global marketplace.
Every country on the short end of this cycle has undergone massive
social upheaval.
Another result of Free Trade is the constant lowering of
workers’ wages and environmental standards around the world as
corporations use jobs as a carrot to play nations against each other
in the same way they play states against each other in the USA. These
days the rules seem to allow money to travel around the world nearly
unimpeded in search of the best deal. I have always wondered why
money is freer than people. If money can move around the world in
search of the best situation why can’t people follow the money and
jobs just as freely? But that is another essay.
The only type of trading system that will really help people
move towards prosperity is one that allows local governments to
maintain environmental and safety standards, protect the long term
health of the local resource base, and encourage farming that serves
the local population first. The recent NAFTA and GATT treaties are
likely to increase the rate of ecosystem depletion, increase the
exploitation of the poor,  and further split the world into haves and
have nots. The results of Free Trade for Maine are likely to be
unfavorable due to resource depletion, the loss of jobs to low wage
places, and downward pressure on wages for the jobs that stay in
Maine. The benefits to us as consumers will not match the losses we
face as
producers.
The last of the Great Myths upholding the inequities of the
global and American economies that I will discuss here is Trickle
Down. Supossedly if the wealthy do well they will spend and invest
enough money so that the rest of us will be able to do well. One
would hope that the economic realities of the 1980’s would have
destroyed this myth, but it does not appear to have been the case.
Tax law changes in the 1980’s put more money in the hands of the
wealthy, but the results seem to have been more unemployment and a
loss of spending power for the middle class.
To me a belief in the goodness of Trickle Down Economics is
like believing that when they pee on your leg and it runs into your
boot, your feet will not get wet or smelly. I think it is more and
more obvious that the only way to build an economy is from the bottom
up. When the bottom dwellers in the economy feel prosperous, you can
be sure that everyone else

is doing well. In Maine neither the inhabitants of the lowest rungs
of the economic ladder nor the middle class feel secure, but the
wealthy are doing well. If we want prosperity it is time for a change.
SOME OF THE PRINCIPLES OF PROSPERITY
Now that I have hopefully helped the reader to understand
that the ideological framework of the American economy is a house of
cards, it is time to start laying out a new framework, one which
will help us build a prosperous Maine. I do not have all of the
answers, and the framework I am laying out is in a permanent state of
construction, but I think I can lay out some general principles that
will help Maine move in the right direction.
The issue of making the transition from the present economy
to the next economy is a tricky one. Thinking about the transition is
the hardest part of thinking about the next economy. I can not
explain how to get there from here, and even if I could, it is not
likely that what I write will be how it actually works. I know that
most of what I have put in this paper will work, but I also know that
the political will to try my suggestions does not yet exist.
Sometimes you just have to jump off the cliff and hope the flying
lessons have been learned.
Beyond the two general principles of prosperity, that
prosperity is built through the prosperity of the least advantaged
workers, and that all economic activity must support a healthy
ecosystem, there are several other factors that must be taken into
account if prosperity is to be built. Some of these, like the need
for a good educational system and a well maintained infrastructure
are on every list and do not need to be expounded upon here.
Something that seems to be forgotten in most economic plans
is that Maine’s prosperity depends upon the prosperity of rural
Maine. And the best way to create this prosperity is to promote the
interlocal trade of the products of rural Maine throughout the
Northeast and Eastern Canada.
Most of my ideas about this topic have been inspired by the writings of
Jane Jacobs, specifically her books The Wealth of Cities and Cities and the
Wealth of Nations. I think Jacobs would disagree with my
interpretation of her work, but her work has given me insight into
the problems faced by rural economies and helped me to develop what I
believe are at least partial solutions to these problems.
In Jacobs view, cities are the source of all wealth and
innovation. The function of rural communities is to serve as the
source of raw materials for
‘the cities. In Jacobs’ view, rural economies are dependent upon
cities for innovations and manufactured goods. Even when a rural area
is doing well economically, it is strictly as a commodity producer, a
tourist destination, or as a producer of manufactured products that
were designed elsewhere. if we passively accept this view, then all
we can do in Maine is cut wood and fish until the woods and fish are
gone. Then we can watch our communities stagnate and die. Part of
what makes this view so problematic is that no biologically renewable
resource can be maintained if it is harvested to meet the demands of
the global economy. Just think about the projections of how long the
resource base would last if we started shipping wood chips out of the
proposed Sears Island port facility.
Jacobs says that the key to prosperity is substituting
locally made products for goods that are presently imported and then
figuring out how to export those products to similar sized markets.
If the reader will remember the discussion of Free Trade, this is
what countries are doing when they create barriers to imports and
subsidize exports.
Rural Maine needs to apply this strategy but it will not be
easy due to our inability to restrict interstate commerce and the
rise of national marketing chains. We must also go beyond Jacobs
definitions because these days we import a number of rurally produced
goods, and we are more likely to revitalize our economy, and improve
the health of our ecology if we develop substitutes for these rural
products. This is not to say that we should not look for improvements
in our manufacturing base, but we are more likely to see rapid
results and large 19 gains in employment if we focus on food and
energy as well as ending the export of raw logs so that they can be
processed here.
One of the reasons that national marketing chains are such an
obstacle to the redevelopment of local economies is that due to their
buying patterns the only suppliers that can serve these chains are
large ones. New businesses, or businesses focusing on producing
products for local and nearby markets can not deal with these chains
due to their limited capacity. These businesses need locally owned
stores in order to sell their products.
It is interesting that community economic development efforts
often focus
on downtowns and the preservation        of locally owned
retail businesses and
then have a separate    track that focuses on local producers. I think our
efforts will be more    fruitful if we start to think about these in integrated
fashion and start to    think about where the goods in the stores come from as
Id
well as who owns the stores.
Community economic development efforts in Maine have often
had a rather limited effect in Maine. Beyond the lack of an
integrated strategy combining production and retailing, I believe
that this is because communities usually leave these efforts to
specialists and committees rather than really making these efforts
community based. Sometimes I think that only if communities feel
completely empowered can community economic development efforts be
really successful.
This same lack of empowerment is a factor when large
corporations try to develop large projects that communities feel are
inappropriate for their neighborhoods. When this happens there is an
incredible waste of energy and resources as communities gear up to
fight the mega project. A project may meet all of the legal
requirements, but that does not necessarily make it appropriate for a
particular neighborhood. I think a simple democratic process or some
type of democratically based community standard would free up a lot
of energy that could then be used for positive development activities
and empowering the community.
It is interesting that the only truly democratic development
processes in Maine have come about because of citizen initiated
referendums. The RTAC process has proven itself to be a useful
process. The siting process for a low level radioactive waste dump
was so empowering because the communities had the right to make the
decision about whether or not to accept the dump through a vote. It
forced the bureaucracy to deal with the communities in a very
different way than is normally the case. If such a process was a
normal part of the development process it would unleash a tremendous
amount of energy for positive purposes in Maine.
Before going on to specific recommendations for the Maine
economy I want to bring up one more thing, a new way of measuring
what the economy is doing and looking at what is going on in our
communities.
Though the_
the concept has been around for several years, it was Paul
Hawken’s book        that brought to the public consciousness the
concept of Full Cost Accounting. This concept has arisen because so much of
the activity of our economy does not get written into the account books of
our private businesses. Businesses have been able to place some of their
costs on the backs of the taxpayers and the natural world. This is called
the externalization of costs.
An example of the externalization of costs that has the State
of Maine buzzing in 1995 is the auto emissions testing program. My
interpretation of this issue is that we are asking average citizens
to pay for cleaning up the air instead of requiring Detroit build
clean cars or switching the USA to a clean energy system. I guess it
is easier to maintain a dirty transportation when the cost of clean
air can be shifted to the taxpayers who do not have the resources to
clean it up, while the profits remain in the pockets of the auto
manufacturers and the oil companies.
It is interesting to speculate about what our economy would
look like if the unintended consequences, the externalities, had to
be included in the prices of the goods we buy and in the balance
sheets of the corporations that are creating those externalities. We
are always hearing about the need to do cost-benefit analyses of
environmental regulations, well how about some costbenefit analyses
using Full Cost Accounting. I think it would give us some rather
interesting insights into whether or not projects are good for our
communities.
Figuring out the medical costs of air pollution induced lung
disease is a relatively straight forward example, but Full Cost
Accounting will force us to examine, and put prices on, the
unintended consequences of all economic activity in our society.
Consider the example of the inland fisheries of Maine. For a variety
of reasons it is recommended that people severely limit their intake
of Maine caught fish. If we looked at the real costs of the pollution
we would see the medical costs of dealing with toxic fish related
illnesses, the costs of cleaning up our lakes and rivers, the lost
value of fish meals, the loss of tourism revenue, and the loss of
fishing gear sales. Right now the taxpayers are picking up these
costs, but if these costs were borne by the people who bought the
chlorine bleached paper, herbicided forest products, and coal fired
electricity that is responsible for the problems in our lakes and
rivers, I thin],, we would see chlorine free paper, better forest
practices, and solar electricity.
Or consider an even more complicated example. A new, non
polluting manufacturing process is introduced. As is normal with
these new processes, the new process can produce more goods with a
much smaller workforce It is also much more profitable. On the plus
side we have a cleaner environment and no toxic disposal costs. But
in a small Maine town the loss of these jobs is nearly irreplaceable
so unemployment increases, property values go down, there is less
money for schools, and after school recreation programs are
ended.
I think everyone would like to see cleaner production so our
question is, how do we move towards clean production and efficient
manufacturing without destroying a community. And how do we integrate
the relationship between public and private costs and benefits. Full
Cost Accounting will at least let us figure out the numbers even if
it means that people still have to make the decisions.
Full Cost Accounting is one of the tools that will help us
get over our obsession with growth. It will give us the tools to
measure what is going on in our communities. Presently no country or
locality on the planet has developed a workable Full Cost Accounting
system. I have seen development indexes that are a step in the right
direction, and Maine has instituted some fees to pay for the disposal
costs of hard to dispose of products that are paid when the products
are originally purchased. Recently I heard about discussions to scrap
the way we pay for toxic waste cleanups, which is by suing the
polluters after the fact, and instituting hefty fees on the
production of toxic materials and products produced with toxic
processes. This will both make it easier to clean up the mess, and
provide economic incentives for the use of non toxic processes and
products.
And that is the real beauty of Full Cost Accounting. It does
not just figure up the costs after the fact, it makes doing things
right the first time the smart thing to do. It could make organic
agriculture in Maine competative at the supermarket with
traditionally grown California crops because the California crops
would include the cost of pesticide damage to the environment and the
cost of cleaning up the air pollution caused by shipping goods 3000
miles in the grocery store price. For manufacturers, Full Cost
Accounting focuses them on doing something that they should be doing
anyway, which is reinventing their business on a regular basis.
Maine may not quite be ready for Full Cost Accounting, but it
is moving in that direction. Even the report of the Economic Growth
Council contains a mention of it. When the state of Maine finally
does develop and implement Full Cost Accounting it is going to give
our economy a big shot in the arm.
A FEW PROPOSALS FOR THE STATE OF MAINE
So far in this paper I have attempted to undermine the
entrenched myths that underlie the American economy and to present an
alternative set of principles upon which to base our future
prosperity. What follows is a short
1
3
restating of the my principles of prosperity for Maine and then a few
specific proposals, based on these principles, for actions that I think will
improve the economic performance of Maine. This is not intended to be a
complete list of actions for Maine. It is intended as a supplement and
complement to the more traditional lists. I do believe that without actions
based on these proposals implementing the proposals in a more traditional
list    will not be able to really turn Maine’s economy around and head it
towards a widespread prosperity. I expect that some of my proposals will
be controversial, but a real debate about Maine’s future can only take place
if the entire range of options are placed on the table.
Greg Gerritt’s principle for prosperity in Maine are:
1. Anything that damages the ecosystem hurts the economy.
la.    Healing the ecosystem helps the economy.
2. The prosperity of a community is dependent upon the prosperity of its
least skilled workers.
3. Focus on prosperity, not growth.
4. Maine’s prosperity is dependent upon the prosperity of its rural
communities.
5. The redevelopment of production for local needs, the creation of
substitutes for imported products, and the revitalization of interlocal
trade are critical for the Maine economy.
6. Communities need. to be more involved and empowered in the development
process. The development process should be open, accessible, and
democratic. All stakeholders need to be involved from the beginning.
7. Full Cost Accounting is one of the key tools that will allow Maine
communities to understand what is really going on. The
shifting of costs
to the taxpayers and to natural systems is a tremendous drain on the
economy. Once we have implemented a system that prevents the shifting
of costs the marketplace will allow us to make the right choices for
our communities.
Starting with the most controversial, and the proposal that has the
least chance of being implemented even though it is the one that.
would do the most good/my specific proposals for Maine include: 1. In
most poor countries of the Western Hemisphere the first thing the
peasants ask for is land, or what we call Land Reform. Without land
the poor can not provide for their families. The land ownership
pattern in Maine is
I
similar to that in El Salvador. In El Salvador 14 Families own 70% of
the land. In Maine 15 to 20 large corporations and family trusts own
50% of the land. A redistribution of this land and proper management
by on site ownership could end unemployment in rural Maine. 2.
Reexamine the technology used in harvesting biologically renewable
resources. Large trawlers with sophisticated fish finding
technologies have proven they can devastate the North Atlantic
Fisheries. Feller bunchers have proven they can simultaneously reduce
employment in the woods and speed up the stripping of the of the
woods. Pesticides have decreased the need for labor and marginally
increased the yields in the potato and blueberry industries, but the
economic position of the farmers is still very scary and pesticide
residues are showing up in wells all over Northern and Eastern Maine.
Stewart Smith of the University of Maine has demonstrated that
rotational grazing will increase milk yields as much as Bovine Growth
Hormone, and the added profit ends up in the farmers’ pockets, not in
Monsantols.
We know that markets are highly competetive, and that labor saving
devices are essential in most fields, but I believe that in the
harvesting of biologically renewable resources more labor intensive
practices are economically competetive, and when our high
unemployment rates in rural Maine and the destruction of the resource
base due to technological upgrading is factored in, I think there is
a very strong case to be made for reducing the use of imported
technological fixes in these fields. This is a case in which Full
Cost Accounting would provide us with the real scoop, and an
exploration of the external costs of technological “progress” in
these fields would lead us back to a more human oriented production
that would be better for the health of the resource and our
communities. “A. Give the fish a rest, and when the stocks are
recovered, use smaller boats and ban fish finding gear. Smaller boats
are less capital intensive and therefore require fewer fish to pay
them off as well as providing more employment per fish caught. 2B.
Reduce the wood harvest in Maine by 50% Stop using wood to make
paper. Recycle and grow other crops to make paper. Do not export
unfinished wood products. Do the manufacturing here. Put the forests
on longer growing rotations and harvest the forest for the most
valuable types of products and products that can only be made from
trees. Ban clearcutting and destructive technologies in the forests
like pesticides. Stop the practice of paying piece rates and use
people in the woods working safely.
/S–
2C.    Maine should focus its agriculture on organic production and on
production for consumption in Maine. Organic producers rely on people
power and their own skills so that rather than relying on imported chemicals
that        reduce farm profits, the profits stay in the local
community. Maine
could provide much of its own food supply which would keep money circulating
in the community and could create alot of jobs in the process.
3. If restoring the health of the ecosystem is the first part of creating
a healthy economy, and if productive employment opportunities for the least
skilled workers is second part of the equation, in the future prosperity
will        be found where we devise ways to create productive
jobs for the least
skilled workers in the dual roles of harvesting and healing the ecosystem.
Of course it is desirable that all people get a good
education as children and then go on to get advanced training, but
the reality is that a large number of Maine kids do not do well in
school or even graduate, and if we do not find productive work for
people who have not thrived in an academic atmosphere they will be a
drain on our economy.
In the past people with limited educations were still able to
find gainful employment that would support a family. The loss of
these types of jobs is one of the key factors contributing to social
breakdown in the USA. The prime example is that previously young men
with pregnant girlfriends could find jobs that would support
families. Now that our economy produces few of these jobs the
incentive to be responsible is greatly diminished. Our expanding
prison population is also a result of the loss of job opportunities
for people who, because school was just one more stress in an already
stressful life, are not able to move into the “modern” economy. We
have to create jobs for this population or the costs of dealing with
these dislocations, including pregnant teenagers, violence, and the
perpetuation of cycles of poverty will overwhelm our economy. Full
Cost Accounting would be a useful tool in analyzing this problem and
might show us that creating jobs for low skill workers might have
costs in one segment of the economy that are more than made up for by
reducing the costs in other parts of our
economy.
My thought is that as we return to ecologically sound harvest
and management practices in farming, fishing, and forestry we will
find that we want to step back down the ladder of technology and
employ people instead of chemicals and machines.
I would like to make two points about this idea here. First
of all we must lose our sexist attitudes if this program is going to
work. Women are as capable as men of doing the work in these fields,
and the rhythms of this work can be quite compatible with raising
children, as has been demonstrated by women all over the world for
thousands of years.
The second point is that for many of the young people coming
out of school without the skills necessary for working in other parts
of the economy
,,,work in the natural resource industries will be just a
transitional job, though an important one. Often people who were not
ready for school as children find that after they reach adulthood, or
have been in a rut for a few years, they are ready to go back to
school and learn new skills. Therefore we must be really ready with a
lifetime learning program, and the costs of the programs must be low
enough so as to be truly accessible.
I think land reform would also provide a powerful incentive
for people to be successful in this program. Maybe part of the price
of the land would be in demonstrating that a person has the skills to
be a responsible and productive steward of the land. The beauty of
this program is that it solves some of our social ills, heals the
ecology, and builds the productive capacity of Maine and the Maine
workforce all at the same time, while reducing capital outflows from
Maine. 4. Building upon our shift from a capital intensive, resource
depleting use of our natural resources towards ecosystem healing
practices Maine could develop a working lands tourism. All economic
plans for the State of Maine count on tourism to create jobs, but
tourism employment seems to be rather flat. I think we need to
develop a new type of tourism to complement Maine’s traditional base
of the coast, the wilderness experience, and the ski resorts. If we
adopt a plan to step down off of the technology ladder in our
management of natural resources we will find that as well as
preserving the qualities of our fishing communities that draw
tourists we are creating interior landscapes that are among the most
beautiful on Earth, the human scaled farming/forestry landscape.
Think of the Amish or European farming landscapes. Tourists do not
only go to these places for the quaintness, they go because the
landscape is beautiful. Very few people would want to go as tourists
to an industrial sized clearcut, but a well manicured woodlot is
gorgeous as well as productive, and if the technology was right,
watching the harvest would also be a tourist attraction. Something
else to keep in mind is that as well as attracting tourists, the
working landscapes
1 –
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would also be producing the food to feed the tourists and many of the crafts
they would be taking home as souvenirs. This is definitely a long term
proposal. it will take us 20 to 30 years to develop the landscape after we
alter our resource utilization-patterns.
5. Develop entrepreneurship programs for low-income people. Peer Group
lending and similar programs could assist in the growth and creation of
hundreds of businesses in Maine each year, and the cost of these programs is
remarkably low. They also have proven track records of success    A
partnership
between the State, financial institutions, and local non profit groups could
get Peer Group Lending programs off the ground in a matter of months, and for
less than $1,000,000 there could be an operating Peer Group Program in every
county in Maine. Within a year the effects on the economies of local
communities would be noticeable.
6. It is time for a real energy and transportation policy that focuses on
the needs of Mainers and also focuses on keeping energy dollars in Maine.
We need alternatives to the automobile because of the pollution involved,
and because low income people can not always afford a car. Our roads need to
be alternative friendly and we need mass transit. The develop’    of
electric and hydrogen powered personal transportation and the infrastructure
to support them would be money well spent, and could be one of the linchpins
of our import substitution strategy. When $.90 of every dollar we spend on
fossil fuels go out of the state anything we do to keep the money home has to
help our economy.
It is also time to get real about energy efficient housing,
especially small and solar powered housing for low income people. We
also need to focus on solar and wind generated electrical generation.
If we look at all of the costs of our electrical system we will see
that it makes sense to switch. We also need to reconsider the entire
system of monopoly based central generation of electricity. 7. We
need to dramatically reduce the amount of garbage we produce. The
cost of garbage disposal and the cost of cleaning up polluted sites
is a major drain on our economy. We must avoid the cost of producing
and disposing of packaging. In Germany all cars are already required
to be designed for recycling, and we could do that here as well as
expanding that type of program to all other types of goods. Beyond
reduce, reuse, and recycle we must rethink our entire retail system
and institute lifecycle oriented systems for any products that will
end up in the garbage. A well designed
l
e
system for dealing with garbage will also be an incentive for future
oriented businesses to locate in Maine. 8. The next step beyond
dealing with garbage is to develop our manufacturing economy based on
Zero Pollution and Industrial Ecology. The beauty of Zero Pollution
manufacturing is that it not only reduces the externalities of
manufacturing, but that it also moves manufacturers to rethink and
reinvent their manufacturing processes. Often businesses that
institute closed loop systems find that they are then even more
efficient and profitable and find that things that used to be
expensive disposal headaches are now the raw materials for new
products. Another aspect of Zero Pollution is that it dramatically
simplifies environmental regulations No longer do we need expensive
testing programs to measure compliance. No longer is there any doubt
if a business is complying with the law. No longer do we have miles
of red tape or hoops to jump through.
Garrett Tibbs, in the Winter 1992 Whole Earth Review
introduced me to the idea of Industrial Ecology in his article with
that name. In Maine it will probably take some state involvement to
set up the inventory of materials that are available as the by
products of manufacturing processes and to match them with new homes.
And when we find a material that is available, but that no current
businesses are ready to use, it shows us a new business possibility.
Manufacturers must think of themselves as part of the ecosystem and
must function as if completely enmeshed in an ecosystem if the
ecosystem is to survive and support us. Garrett Tibbs is putting us
on the right track and it is time for Maine to get on track. 9.
Institute community empowering economic development planning
processes. Make it easier for communities to develop themselves and
to say NO to inappropriate projects. Good things happen when all of
the Stakeholders feel empowered. Focus development planning on the
integration between producing for local consumption and the other
small towns of our region and providing outlets for the sale of
locally produced products. Communities should also focus on what
people in the community are already doing. Encourage like minded
people to create networks around new types of industries. 10. Create
a single payer health care system based on ability to pay. In the
modern world no one should be without health care coverage, though
many people can not afford it at present. Only if every one is
covered can we really focus on the prevention based health care
system that will eventually reduce our health care costs. The fact is
that people remain on welfare in
order to have health insurance and that many people do not change
jobs or start businesses because they can not afford to be without
health care coverage. Maine would unleash-an incredible amount of
entrepreneurial energy if people no longer had to worry about if they
will be able to find health care coverage for their families.
In conclusion, the framework and proposals presented in this paper are
intended to stimulate discussion. I think I have provided a few tools
for analyzing traditional economic development plans, and in
combination with
the best parts of those plans laid out some of the pathway to the
prosperity that all of us in Maine are seeking.

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