Vermont Tiger

All Right

Vermont gets the nod from a business looking to relocate from Pennsylvania and to expand.  Other states were in the competition and one – Michigan – came up with more financial inducements. 

Good news.  Let's go for more.

Regulatory Regime

"If our state, which has a reputation of being a green state, here and around the country, puts Karl out of business, that would be a horrific outcome."
    Herald

Vermont still produces garbage and there is an entrepreneur in the state who has found a way to make a profit from it.

So the bureaucrats want to shut him down and fine him.  Well, of course they do.

IBM In New York

A while back, Jack Harding – who was traveling at the time – sent an e-mail saying this was coming and linking to an article in a technical journal.  We had trouble with the link and, so, did not post the item on this site.

The point is – this story may be news to the Freeps but nobody should be surprised.  IBM doesn't do things impulsively.  The CEO of the company doesn't get up some morning and say, "What the hell, let's expand in New York."  Or, "You know, I never liked maple syrup, anyway.  I think I'll stick it to those rubes in Vermont."  These things happen because of forces and trends that have been building over long periods of time and policy decisions that were made months and, even, years ago.   This means that decisions being made, or avoided, in Montpelier today will come back to bear fruit – or bite us in the backside – in the future.

So ... what are we hearing about the economic future of the state?  What plans and initiatives for taking Vermont where it needs to go are being put forward for debate?  Who has an idea for what we will do to replace the economic activity generated by our small sliver of the IBM pie when it goes away – as it inevitably will?

So far, the most imaginative idea from the gubinatorial campaign has been one put forward by Anthony Pollina.  He wants the state to start issuing its own credit cards.  If you use one to buy some item, the state collects the fees that now go to the big bad banks and puts the money into energy or agricultural programs.

It is a terrible idea.  But, hey, so far it is the only idea anyone has come up with.

In the old days, there was a poster around IBM work spaces that displayed the single word – "THINK."  Vermont needs to start thinking seriously about its future which, given the present drift, is looking increasingly bleak.

The Culture Of "Can't Do"

The Rutland Herald recently published an editorial lamenting Vermont's lassitude in dealing with its manifest and urgent problems.  The editorial singled out the looming winter heating crisis and the lack of action where there is obvious opportunity:

Most recently, as Vermonters scramble to find ways to heat their homes this winter, we're not seeing much action on that front, either, short of this weekend's tax holiday. Pellet stoves are flying out of showrooms and there's an entrepreneurial opportunity staring the state in the face: We have trees and winters. We don't have a pellet plant. Those are in upstate New York, in Maine, New Hampshire, Massachusetts and Quebec, but not here. Starting to see a pattern?

Parasites?

My ancestors, and just about every other American, came here because of a promise of economic opportunity and political and religious freedom.  When they did that, they benefited the U.S. and imposed a cost on the country they left.  They had been raised by their parents, educated (although not much), and in general had consumed resources in their home European country.  Then, in their prime of life, they came to the U.S. where they worked, earned an income, and helped the economy grow.

The Rutland Herald editorialist who wrote the following would say the United States was a parasite because we stole the best of Europe.  How else to interpret this sentence:

But New Hampshire's system only works because they are a parasite on the surrounding states. 

By giving people an option that they did not have, whether it's freedom, economic opportunity, or the opportunity to buy goods at a lower price, you are not a parasite.  You are making them better, not worse, off.

Tax Consequences

Tax Holiday Brings Out Shoppers
headline, WCAX website

The sales tax holiday is now behind us and it was a success by its own benchmarks -- people came out and spent money to take advantage of lower prices.  What a marvelous, innovative concept. 

With the event still a fresh memory, then, it might be profitable to review the bidding and see if there might be some other lessons to be learned.

First, let's recall that in certain, surly blogospheric quarters, the administration of the tax holiday was subject to some amiable ridicule.  No apologies.  Governments are addicted to complexity.  Bureaucrats ensure their own indispensability by making regulations unfathomably complex so that citizens will need their help to comply.  We might have had a tax holiday but when it comes to creating and enforcing incomprehensible regulation ... governments never take a day off.
 

Cause, Meet Effect

Why does a business like Tubbs leave Vermont for New Hampshire?  Read this letter for one possible explanation.

According to one study , Vermont ranks #37 in workman's comp costs among the states.  (West Virginia is the most expensive and the District of Columbia is the least (?), followed closely by Texas.)  New Hampshire is 18th, costing employers about 1/3 less than what they would pay in Vermont.

Was workman's comp the deal breaker for Tubbs?  Could be.  The cost of doing business is something people consider when making these decisions ... even if Representative Warren Kitzmiller thinks it is exceedingly petty of them to do so.

"WCAX Shows Stagnant Reporting"

Well, that's not exactly the headline WCAX ran. They actually ran a headline yesterday that said "Census Shows Stagnant Vermont Growth." This is, of course, something we already know. However, the lead paragraph suggests there is new information to add to the mix:

"New estimates from the U.S. Census Bureau show that more people are leaving Vermont than moving into the state. There's nothing really new there, but the decline is steeper than earlier estimates."

Humm, new estimates. When I read that I thought I'd go back and update a post I wrote in March that showed the rate of population change and how it's increasing. However, when I looked at the "new estimates from the US Census Bureau" I found the same old estimates I worked from back in March - which were themselves published in December, 2007. Way to stay on top of things, WCAX.

This leaves me wondering why WCAX ran this story to begin with. Calling data published six months ago new is a bit disingenuous unless it was due to incompetence.  If they did intentionally run an old story dressed up like a new one, what purpose would it serve? What agenda would be served by dressing up old data about how people are leaving Vermont? The only clue I can find is the link to PursueVT found at the bottom of the story. Was the story really a press release from the proverbial finger in the dike PursueVT?  Can I read from this that the finger in the dike solution isn't working or is it just the finger pointing out how important its job is?

Producing for Localvores

You know the old joke about the farmer who wins a million dollars in the lottery?  A reporter asks him what he'll do with the money and he replies, "oh, I guess I'll just keep farming til the money's all gone."

Well, from this article, it appears that this is true for new farmers as well.  Notice that in a 2,000 word article, there's no mention of whether or not any of these farmers is earning any real income.  One farmer estimates that

he has already put “north of several million” into the farm.

Assuming an opportunity cost of his money of 10%, he should be netting somewhere "north" of several hundred thousand dollars just to cover those costs.  If not, he's providing a nice subsidy to the consumers of locally produced products.

Same Old, Same Old

“These cuts come when more Vermonters will need state services,” Pollina said. “This is a time to put people to work, not throw people out of work.”
    Freeps

Mr. Pollina has a point.  The time for government to expand services and spend more is when the business cycle is in the down phase.  Fiscal policy, that is, should be counter-cyclical, and in broad terms most economists would agree with this proposition.  (Right, Art?)

But logic is not as pliable as a politician in debate and if you say spend more money and hire more people on the down slope, then you must also insist on restraining spending and holding down on hiring during an expansion.  And this – sadly but, perhaps, inevitably – Vermont did not do.  When times were good we spent like drunken sailors – under the euphemism, "waterfall appropriations" – and hired profligately.   

One suspects that if Mr. Pollina were to be elected governor and during his second or third term the state experienced boom times, he would be faithful to the logic of counter-cyclical fiscal policy and insist on frugality in budgeting and also impose a lid on hiring.  Perhaps even use the opportunity to reform and downsize the bureaucracy. 

Of course he would.