1/3/2000

KUFM / KGPR

T. M. Power

Welcome to a new century, and what those who cannot count from 1 to 101 are already calling a new millennium. As long as were are making new century or new millennium resolutions, I would offer some economic resolutions for the new century that primarily involve jettisoning some really bad ideas and policies and starting the public economic dialogue afresh. Here’s my list of the half-dozen economic ideas that have cause the most havoc in the development of good public policy.

Bad Economic Idea #1: Quantitative expansion of the local economy should be our primary objective. More of everything is better than less: people, jobs, dollars, cars, shopping centers, parking spaces, etc. It is hard to believe that business spokespersons and politicians are still mouthing this mantra of growth. During most of the 1990s we had lots of quantitative growth in Montana. It brought us more people willing to work for less; more congestion; and higher housing costs. It is not at all clear that any of this growth has made us better off. What do the economic boosterists offer for an encore?

Bad Economic Idea #2: Well-being is adequately measured by summary statistics such as average income or average pay. During the 90s, as during several previous decades, people migrated away from high-income states towards low-income states such as Montana, most of the Mountain West and most of the South. Yet we are constantly told that people were better off in the states that they left and are worse off in the states to which they moved. Let’s start judging people’s relative well-being by the choices they make rather than by some isolated, mis-measured quantity that regularly predicts the opposite of what we observe. We should be tired by now of people telling us that we are either irrational or stupid for continuing to live here.

Bad Economic Idea #3: It is primarily the money income we each can individually wring from the commercial economy that determines our individual well-being. In fact, we care where we live and where we raise our families. The quality of our communities and public institutions, including schools, matters a lot. The quality of the natural environment that envelops us matters too. What else explains the substantial return migration to Montana and the ongoing resettlement of the Mountain West at the very time that its historical natural resource industries were in decline? Pursuit of higher quality living environments has been a powerful economic force operating to dramatically redistribute population and economic activity for most of the last half of the 20^th century

Bad Economic Idea #4: We are a materialistic people who judge our well-being by the dollars and things we can afford to accumulate. In fact, our sense of well-being is more tied to the meaningful activities in which we engage and the qualities with which we are able to surround ourselves rather than the things we accumulate. It is interesting, productive activities, including good work, by which we define our successes and ourselves. It is the relationships we develop with family, colleagues, neighbors, and friends that give meaning to our lives. Our connections with place, home and community, landscape and nature, orient us, giving us focus and understanding in an otherwise chaotic, hopelessly complex, and dangerous world.

Bad Economic Idea #5: We should trust commercial markets and be suspicious of collective undertakings of all sorts. But the genius of a market economy is not just in the entrepreneurial energy it unleashes; the genius of the market is also in the social institutions and ethical values that create the context in which markets can perform appropriately and productively. Markets are not simply a matter of everyone selfishly doing their own thing. That, by itself, leads to bandit capitalism, organized crime, and the tyranny of violence. It is the collective social efforts of we as a people that have crafted the ethical, cultural, social, and legal institutions that allow markets of function productively. That social effort is never finished.

Bad Economic Idea #6: Local and state governments can guide the economy and steer it in preferred directions. But local and state governments do not have the power or resources or knowledge to any such thing. Modesty is an economic virtue when it comes to economic development policy. But we see little modesty in the candidates for governor. They talk as if they were running for commissar of the Montana economy. Local and state economies are open economies: people, workers, capital, goods and services, resources, etc. can freely move between our cities, between the various states and, increasingly, between nations. They need no one’s permission; no one can manage those flows. In that context, the economic powers of local and state governments are drastically limited. Yet the public prattle in the current political season suggests just the opposite. This is not to say that there are not important things that state and local governments can do to protect and enhance our well-being. But pretending to manage the local economy is not one of them.

Can you imagine a public policy discussion in Montana that abandoned all of these misleading economic ideas? I can’t. There would be long periods of silence, a welcomed relief for us all. But maybe then we would begin to focus on things that really matter to us, rather than on economic abstractions, and on things that local and state governments could actually accomplish rather than on wishful thinking. That along with longer periods of silence would truly be a blessing in the upcoming political season.