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By Charles Lawton Sunday, March 11, 2007

Like students after a mid-term break, we have been subjected recently to a spate of report cards.

The Corporation for Enterprise Development issued its latest development report card. The Tax Foundation released its list of tax burdens. The Milken Institute released its "new economy" rating, and the Maine Economic Growth Council presented its 2007 "Measures of Growth" report.

On the one hand, like school report cards and medical check-ups, these reports are useful in that they call our attention to broad measures of progress and help renew our determination to "work harder and do better." On the other hand, they tend to combine -- and therefore confuse -- inputs and outcomes, items that we can control with others we cannot.

In this respect, they're like our physician rating us on whether we quit smoking, lost weight and got cancer. The first two are clearly behaviors we can change (and whose actions do not guarantee positive outcomes), while the second is an outcome resulting from a huge confluence of events, only some of which we can control.

This is, in the "Measures of Growth" report, analogous to the difference between research and development spending and personal income. The first we clearly control. Each year, the Legislature does or does not pass an R&D bond; we do or do not make the personal commitment to practice the behavior that virtually all evidence shows will increase our odds of economic health and vitality.

Personal income, on the other hand, we cannot directly control. It is the overall result of millions of decisions, many beyond our control. All of our virtuous investments won't prevent a spike in mortgage defaults that, combined with a stock market sell-off and fears of a prolonged war in Iraq, produces a recession that drives personal income down.

My point is not to say, "Don't make the broad measures," but rather to say, "Let's separate effort from outcome." It's good to have high aspirations and to make regular references to long-term goals. But constant association of little changes we can control with big results we cannot may lead us to become discouraged or uninterested.

The most significant conclusion of the Brookings Report with respect to state economic development policy was that we "failed to adequately sustain (our) development ideas, which has undercut the effectiveness of a proliferation of under- or unfunded initiatives."

In effect, our economic development policy has suffered from attention deficit disorder; we've bounced around from idea to idea (most of them quite worthwhile) but haven't truly focused on any one with sufficient attention to make long-term progress. To the extent that our targets are broad, scattered and not entirely within our control, we reinforce this scattering of attention.

It would be useful, therefore, to separate the various "measures of growth" into two categories -- those, like R&D investment, road maintenance and repair, tax burden and various costs of doing business, that we can affect directly each legislative session -- from those, like personal income, educational attainment and housing costs, that are outcomes, goals we hope to attain by our virtuous attention to the first set of variables.

Having made that distinction, we should keep the first set constantly before our policy makers, like notes on the refrigerator. "Did you go for a walk today?" "Do you really need that piece of pie?"

Economic health is like physical health -- it comes only from long-term commitment to a relatively simple set of goals that are clearly understood and consistently pursued. The central value of economic ratings is to keep us on this virtuous path. If they are like fad diet books -- stimulating a rush in one direction for a few months followed by distraction and disappointment -- then they are useless, serving only to reinforce our already well-documented attention deficit.

If, on the other hand, they serve to keep our eyes on what we can control and help us keep coming back to those few key measures of our progress, then they are serving a valuable purpose.