A reader asked me what I thought of the Star Tribune's editorial, "What's slowing down the state economy?"
The Strib enumerated several expert opinions on potential causes for the state's rising unemployment rate. The national housing slump; slower population growth; it's merely cyclical. It also questioned how much influence government has in the matter, but said state economic development policy and tax policies of Gov. Pawlenty clearly hadn't made a difference.
Since the state's best economists are puzzled by this, I won't presume to answer this as an economist. My perspective is largely as someone who came to Minnesota for an education, stayed for the culture, worked for a global corporation, grew a business and raised a family.
The Minnesota I found had a proud history of innovation — in retailing, flour milling, progressive politics, computers, medical treatment and cultural institutions, to name a few examples.
Innovation drives job creation more than anything else, and innovation is a difficult animal to grow in captivity. It comes from a combination of talent, dissatisfaction and optimism. While money certainly helps once innovation has a start, it very rarely drives the people who create new jobs through their innovative effort.
Over the last decade, Minnesota has begun to starve its talent and lose some of its optimism. The no-new-taxes attitude doesn't just affect government services and hamstring education. It sets a tone in the culture that is anti-knowledge, anti-creativity and anti-risk.
It says, focus on the basics, look to the past, and take care of yourself first. Those aren't necessarily bad things, unless they make up an entire world view that determines how a society will deal with a very dynamic present and uncertain future.
My reader's comments express some of this notion:
I of course have an opinion. I think that all of the state government spending cuts severely hampered the state's economic growth. People working for the state were laid off, and many, many projects were curtailed. I think it spiraled. The state disinvested in its citizens by cutting positions and outlays for projects which would have employed many others. In addition the Governor kept a message of "we need to cut back" going, which is psychologically stifling.
The direct impact of government cutbacks may have been modest. Government policy probably has only moderate influence on economic growth through direct economic development, jobs programs and business incentives — and more indirectly through investment in research, education and infrastructure.
But in setting the terms for the discussion about how we prepare for the future, it has a great deal of power the economists won't find in their numbers.