Back in the 1980s, then-Democratic Speaker of the House of Representatives Tip O’Neill famously declared: “All politics is local.” This aphorism served as a useful tool for navigating the ideological divide between him and Republican President Reagan, and allowed them to achieve significant advances in, among others, the issues of tax reform and modifications of Social Security.

Today, we face similar challenges in both of those issues as well as others involving health care, international trade and government regulation of economic policy. Today, however, the divide is less between Democrats and Republicans than between globalists and nationalists, and the applicable aphorism that could guide a pragmatic rapprochement between the two sides is: “All economics is local.”

For nationalists, the simple solution to the loss of jobs to international competitors is: “Slap a tariff on the imported product, and keep the jobs here.” The pragmatic response of global producers is: “Build plants in target markets, and import the parts from the most competitive suppliers.” Both Fords and Toyotas become “American” cars and the easily identified “jobs” problem becomes a scattered (and thereby less political) problem of finding the logistical and supply-chain location of a myriad of far smaller and less well-known parts suppliers. In Maine, the phenomenon is manifest in the decline of former well-known legacy paper mills (International Paper, Great Northern Paper) producing advertising flyers and tissue paper sold in the U.S. and the simultaneous strengthening of the local (Westbrook) branch of the international company (Sappi) that uses its invented and patented in Maine “release paper” technology to supply high value design components to global industries ranging from automobiles to shoes and apparel.

A simple-minded nationalist policy to “protect U.S. paper mills” would, in actual application, help some regions of Maine while hurting others. The same effects would apply to virtually every sector of Maine’s economy. We need look no farther than the effects on our largest industry, tourism, of the rising value of the U.S. dollar relative to the Canadian dollar to see the negative consequences of simple, across-the-board solutions applied to complex, interconnected problems.

Equally true is the growing recognition among all Maine businesses that the most serious threat facing our economy is the ever more clearly emerging shortage of workers. Forget about the complex, highly skilled labor force of the future, our first and foremost problem now is simply to replace the workers we have today. According to the most recent projections from the Department of Labor, about 90 percent of the job openings over the next decade will be to fill expected vacancies created by current employees who retire or die. Maine’s overriding economic problem today is talent acquisition.

And therein lies the usefulness of the “all economics is local” aphorism. In the old days, economic development at the local level was largely about real estate – create an industrial park, bring in the utilities and troll for commercial/industrial catches. Today, the central resource is people. Therefore, the key to developing a community is its attractiveness to capable workers. This means creating a range of housing options, quality schools, ease of access to major transportation links, availability of high-speed internet access and a close relationship between businesses and educational enterprises.

And increasingly, these characteristics are within the realm of local policymakers to affect. While many lament the lack of financial support from Augusta and the increasing burden on local property tax payers, municipal leaders in tune with the opportunities for growth in Maine and with their power to make the most of those opportunities have far greater power than they think. Working closely with businesses that are increasingly obsessed with “talent acquisition,” it is increasingly within their power through innovative educational programs, business welcoming regulatory practices and a focus on diversifying zoning and housing policies to make their towns and cities places where the workers Maine’s businesses so desperately need will want to live. While national and state governments are likely to remain mired in the ideological battles of the recent past, cities and towns have the opportunity to appeal to and build on the pragmatic call to action that the election results of 2016 seem to indicate their citizens want.

— Charles Lawton, Ph.D., is a consulting economist. He can be contacted at:

cttlaw3@gmail.com

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