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Sunday, February 12, 2006
BOTTOM LINE: Charles Lawton
Maine's future rides on healthy culture of entrepreneurs
Copyright © 2006 Blethen Maine Newspapers Inc. | ||
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Government is terrible at picking winners; but losers are great at picking governments. In last week's column, I noted that Maine needed to find a new growth engine if we are to keep our employment growth from falling farther and farther behind the national average. That observation brought a flood of questions and suggestions. One reader wondered why I hadn't listed agriculture, suggested cheese, sausages and hard cider as possible engines and said current regulations discourage small agricultural enterprises. Another reader noted what he called "shadow job losses," meaning Maine residents forced to commute to jobs out of state. He asked me to remind the last Maine worker to leave to turn off the lights. Several other people pointed to the film industry as a possible growth engine, but noted that we needed to get in the game and start approving tax incentives to get Hollywood to come. Part of our problem is perception. Much of business and economic thinking is overly mechanistic, based on a 19th-century industrial model. A landowner grows potatoes; a factory owner buys machines to chop them up and hires workers to produce french fries - land, labor and capital, the classic economic paradigm. Workers are highly motivated extensions of the machines, ready to do "an honest day's work for an honest day's pay." The problem is that this paradigm doesn't explain the key variables of the 21st-century economy. Take the example of Disney and Pixar. The Walt Disney company paid over $7 billion for the 2006 version of George Lucas's Industrial Light and Magic Company of "Star Wars" fame. Certainly Disney got hundreds of millions of dollars in cameras and computers and animation software, but all that hardware and software represented a mere fraction of the $7.4 billion price tag. Pixar's assets, the stuff that Disney (the factory owner) was buying, was not physical capital embodied in machinery, but intellectual, emotional and imaginative capital embodied in the people who worked there. It was buying, in short, human capital. Indeed, the biggest risk in the deal was that Pixar's employees would walk out in protest of Disney's allegedly less simpatico corporate culture. A 19th-century capitalist could lock the gates. A 20th-century capitalist could move the plant to China. A 21st-century capitalist has to win the hearts and minds of the workers. Which brings us back to economic development policy, Maine's need for a new growth engine and the process of picking winners and losers. Maine's forests were obvious choices for masts and lumber. Who, in 1850, would have guessed paper? Growing potatoes in the rolling fields along the Aroostook River was a natural. Who would have guessed a $100 million plant to produce french fries? Maine's century-and-a-half run of using hard-working people to assemble stuff and ship it around the world is coming to an end. The future is unclear. . . and very scary. What we need most is not a crystal ball to pick the next hot item, but a sense of entrepreneurial optimism. Not a stubborn insistence that one course of action will be successful, that it just has to be successful, but a sense that we have to try lots of things, many of which are likely to flop, in order to find those few things that will be successful. We need a few things that will prove to be our growth engine of the future. In that regard, economic development policy is not so much a question of identifying the winning sector and throwing money into it but of fostering the spirit of entrepreneurship. Will it be biomass energy plants, wind power, composite boat building, biotech cures for cancer, organic potatoes, blueberry skin crème? I don't know. But whatever it is, I do know that it will come from people who can transform an idea into a successful enterprise. Finding, attracting and developing human capital is the central challenge of Maine's economy as it moves into the 21st century. Charles Lawton, a York resident, is a Ph.D. economist with extensive experience in education, government and business. He is former director of the Economic Development Division of the Maine State Planning Office and works as senior economist for Planning Decisions, a public policy research firm in South Portland. He can be reached at:
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