EDITOR’S NOTE: Today’s feature is the fourth in a five-part series on Maine’s economy and the future. It is condensed from the book “Maine’s Next Economy.”

This is an important moment for Maine. Over the next decade, we will define the state’s direction for the next half-century or more. There are two roads ahead for us. On one, we’ll continue to spend much of our energy trying to bring back yesterday’s jobs and lure large companies to Maine.

It is a road that has taken us nowhere for decades.

The other road will take us to a new 21st century Maine economy fueled by our innovators, entrepreneurs and smaller businesses, where we focus on growing jobs here rather than trying to attract them from somewhere else.

That new economy will be more decentralized and less reliant upon a few large employers. And it will be more resilient when confronting the next wave of changes in technology, global commerce or the machinations of Wall Street.

Taking that second road won’t be easy. The idea of Maine being saved by big companies from away is deeply embedded in our politics and our economic thinking and history.

Listen to almost any discussion about growing the economy in Maine and within a minute or two you’ll hear words like “attract,” “entice” or “bring” jobs to Maine. What you won’t hear much are words like “grow,” “generate” or “expand” jobs here.

Well over 100 years ago a wave of mills came to Maine to take advantage of the free power of our rivers and, in some cases, our vast natural resources. Since then, we’ve invested most of our hopes and energy in waiting for that to happen again, or in trying to lure footloose companies to come to Maine, with vague calls to improve “the business climate” or by dangling tax breaks and giveaways.

While there have been a few scattered success stories from this strategy, most haven’t lasted long, leaving empty industrial parks and call centers around the state. Overall it’s been a big investment in time and revenues for a very small return.

Most economic development people, when pressed to point to jobs created here because of tax incentives talk about the Wal-Mart they stole from the next town over, or the McDonald’s that got built, as though those companies don’t exist everywhere, tax breaks or not, and they didn’t just replace jobs that used to be in another local business.

This is no small matter. Maine taxpayers now invest as much as a half-billion dollars a year in tax breaks for jobs. How has it worked? The overwhelming evidence is all around us, and the answer is that it hasn’t worked much at all.

Maine, like many other places desperate for jobs, gives away tax breaks like candy without ever insisting that promised jobs actually materialize. Nobody is asked or allowed to check in later to see what happened and to compare those results with what was promised. That leaves us with almost no idea of which tax breaks are working and which ones are just money down the drain.

Here’s a perfect illustration of how that system works, at its worst. A few years back, we had a big discussion in Maine about giving tax breaks to a new company that was considering building small aircraft in the midcoast area and promising 300 new jobs.

We found ourselves in a bidding war with Minnesota over who would give the company the most tax breaks and loan guarantees. Minnesota “won,” by offering the company $300 million in goodies – at a million dollars a job – but it was a costly victory.

Fast forward to today, and you find that the company has produced no new jobs, was months behind in its loan payments and hadn’t built a single new airplane.

After our “loss,” all the discussion in Maine turned to finger-pointing among politicians about which party was to blame. Barely anyone but the professional economic development people, and the bankers, questioned the company’s qualifications or the market for small aircraft.

All of which is a good argument for getting politicians out of decisions about tax breaks for jobs. Politicians are miserable negotiators, mostly because they’re in too much of a hurry to produce a photo op for their next campaign. As any decent car salesman knows, when someone loves the car too much, they’re going to pay.

Desperation, whether from politicians or a public clamoring for jobs, produces bad decisions and a tendency to believe in what we want to happen, even when it’s too good to be true. Politics, it turns out, is a miserable way to run a bank.

To make matters worse, both politicians and bad bankers don’t like audits. So nearly every effort to measure the results of tax giveaways seems to run up against a stone wall in Augusta. The reason why seems clear enough: they don’t want you to look backwards at the too-good-to-be-true deals they announced with great fanfare. Better to just move onto the next ribbon cutting.

None of this is an argument against the idea of tax breaks for jobs. We should give tax breaks and other assistance to people who actually create decent jobs. But we shouldn’t give them to people who are in the promise-making business, and who aren’t in any way willing to stand behind their promises.

Should we have invested $300 million in tax breaks to create 300 jobs building small airplanes in Maine? Maybe we should be asking ourselves an entirely different question. What would happen if we invested that same $300 million in a thousand of the most promising small businesses and startups in Maine, in exchange for each one of them guaranteeing one decent new job?

That approach would produce 1,000 new jobs, and maybe more. They’d be easy to measure. And they’d all be rooted here in Maine. What we’d find, if we did that, is that investing in ourselves is not only smart economics, it’s the most effective investment we can make.

For more on how all of that can be done, see final installment of this series next week. For copies of the book that this series is extracted from, “Maine’s Next Economy,” go to www.envisionmaine.org.

Alan Caron is a lifelong Mainer, the president of Caron Communications and the founder of Envision Maine. He can be reached at [email protected]

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