As we enter election season, political parties will again ready their claims about what’s up and what’s down in the economy and why that should cause voters to fill in Bubble A or Bubble B (or, in certain markets, Bubble C).
Those, of course, are arguments dressed as descriptions, based on a whole bunch of funky assumptions.
On Monday, the magazine Governing ranked Maine 28th in a list of state economic performance based on a variety of variables. Forbes has regularly, and notably, ranked Maine dead last, which has gotten the lion’s share of the attention.
At their best, those efforts to rank and categorize are attempts to understand, contextualize and investigate what’s happening where. But there’s no one number to sum up how the economy is working for everyone.
GDP last year in Maine was up 0.4 percent. Up! But manufacturing was way down. Per capita income was up, too, with more total income spread across a relatively stagnant population. It doesn’t mean everyone’s pockets got fatter.
I’ve covered those rankings in the past, seeking to explain what a particular ranking was based on and asking economic development officials what they make of them. The answer: not much, beyond headlines they generate (which happen to be great for attribution in political advertisements).
To prepare you for the season ahead, I’ve compiled a quick news consumers guide to those rather plentiful economy rankings.
1. No single ranking reflects both Ogunquit and Presque Isle: Mainers have a lot that they share, but not broad economic trends. Economic development experts have pointed that out to me in past interviews, saying they prefer more regional analyses or review by labor markets or around specific cities. To say a statewide ranking tells you much about how any one area is faring… well, you can’t get there from here.
2. Political talk typically simplifies the state’s economy. State government spending accounted for about 9.6 percent of all of Maine’s GDP in 2014, at more than $4.8 billion. That’s a big chunk of money, but it doesn’t guide the state’s economy. Meanwhile, state policy has the potential to help or hinder specific industries or businesses, but tying broad economic outcomes to state policy is often an exercise in futility. Tying state policy to an overall business ranking is even harder.
3. When state policy directly aims to help business, it’s hard to say how well it worked. A 2014 report about the state’s economic development programs sums it up: “The benefits of investments are highlighted and frequently cited by business owners, policy makers and politicians, yet less is known about how the benefits of these investments compare either directly or indirectly to the costs of incentives awarded to attract the investment.”
4. Not everyone agrees on what makes a model economy. A presentation by Alan Hall, a Utah venture capitalist and founder of the economic development nonprofit Grow Utah, contrasted that state’s first-place Forbes ranking with Maine. But economic development officials here were not all in agreement about just how lessons from Utah might translate in Maine. From that May 2014 story:
“One word defines Utah, and that is homogeneity; and I’m not talking about demographics but economic geography,” said audience member Brad Jackson, executive director of the Kennebec Regional Development Authority and Oakland business park FirstPark. “The difficult thing with [creating] one plan in Maine is that we have distinct interests.”
In response to Jackson’s question, moderator Andrea Cianchette Maker, MEREDA’s lobbyist and a Pierce Atwood attorney, polled the audience whether Maine should develop one statewide economic development strategy. About half the audience raised hands; the other half favored creating regional development plans.
5. Variables matter. Business rankings can combine a number of different variables that don’t necessarily say something broader about the economy. There’s a reason the Bureau of Labor Statistics, the Bureau of Economic Analysis or other primary sources produce the information they do: to answer specific questions about the economy. Those most often have their own room for error. A business index should make the case for why it equals more than the sum of its parts and why the relative ranking of states or other areas is valid.