Saturday, April 19, 2014
A curious thing has happened in America over the last 60 or 70 years. We developed this crazy idea that the president was responsible for whether the economy rose or fell, just as their ability to influence the economy was diminishing.
Politics and the economy work in overlapping universes but aren’t nearly as connected as many people think. The economy constantly moves through a series of up and down cycles and longer waves, but those cycles rarely correspond with the political calendar. If a president is lucky enough to come into office during one of the economy’s upswings, people want to carve his likeness onto Mount Rushmore. Otherwise, it’s off to the gallows.
The truth is, a president’s power to affect the economy has declined as the economy has become more complex and more decisions are made elsewhere. Over the last few decades, presidents have lost even more influence as rigid ideological disagreements about the role that government should play in the economy have rendered government unable to act on larger issues, no matter how critical or compelling.
Politicians on the right believe that government is the enemy of progress and that its purpose should be limited to maintaining national security and public safety and providing adequate roads and passable schools. Otherwise, government should get out of the way and let the “job producers” do their work.
To the right, government is hopelessly inefficient, inept, corrupt and bloated. Some of that is true, of course, especially the part about government being inefficient. That isn’t because government employees don’t know how to make government work better; it’s mostly because they’re too often not allowed to. Meanwhile, taxpayers endure endless nightmares such the computerization of the state Department of Health and Human Services or the glitch-athon of the Obamacare rollout.
On the left, government is not only the engine of growth, it actually is the economy. In that view, the best way to help people is to increase government spending whenever possible, expand programs and promote “stimulus” spending. After that, most of what the left talks about are ways to make the economy fairer.
They’re right, of course, about the need to create equal opportunity and hold back the tendency of unregulated capitalism to consolidate power and devour everything in its path. The left, however, is more or less speechless about how to grow the private-sector economy,.
Put those competing philosophies into a divided government and the result is both sides talking past one another and permanent gridlock.
Government certainly has a role in the economy, but it’s a limited one. When government lowers interest rates for mortgages, more houses get built. If it hands out tax breaks for certain activities such as coal or renewable energy, investments follow. If it provides great schools and more access to affordable higher education, more kids climb the ladder to higher incomes.
Government, however, cannot be the employer of last resort without eventually bankrupting us. It has no ability to run the economy without eventually running it into the ground. And it cannot replace the energy and innovation that comes from people whose hopes and dreams and drive lead them to create businesses, new jobs and new products.
While presidents may have limited influence over the economy, governors can have an impact, in part because they’re working at a smaller scale. In Maine, for instance, our differences are child’s play compared to Washington’s, and we still find ways to work together for the greater good. But our ability to move forward is dependent upon a governor who is an effective leader and advocate.
The power that governors have doesn’t so much arise from the state’s constitution as from their personal skills. Effective governors almost always have both strong ideas and enough humility to incorporate the ideas of others. They’re able to listen, and to respect differences. And, in their roles as the state’s chief convener and ambassador, they’re effective at persuading and mobilizing people.
How can a governor affect the Maine economy? Imagine this scenario, repeated hundreds of times in places large and small during a governor’s term: Maine is one of five states in line for a major company to move here. Thousands of jobs are at stake. The governors of those five states have been asked to come to the corporation’s headquarters to make their case to the CEO and the board of directors. The persuasive power, skill and effectiveness of the person we send into that room can make all the difference for Maine.Alan Caron is a partner in the Caron and Egan Consulting Group, which advises businesses and organizations on strategies for growth, and the president of Envision Maine, a nonprofit organization working to promote Maine’s next economy. He can be reached at email@example.com.