Michaud, LePage, or Cutler: Will the winner matter for the state’s economy?

IT’S campaign season, and of course, there’s a three-way race for the Blaine House.  As noted by the AP in early September, and as indicated by the debates, ads, and so forth, the state’s economy is a focus of the race.  While each candidate rolls out their policies and makes their pitch on how they will help the state’s economy, there’s one question that should be asked:

Does it matter who occupies the Blaine House?

The reason this question should be asked is that there has been much discussion currently and in the not so distant past about the impact that state governors can have on a state’s economy.  For instance, published this morning in Wisconsin’s Capital Times:

But the only problem is that governors don’t have nearly as much control over their state economies as they – or the voting public – like to believe.

“I don’t want to make it sound like governors are irrelevant, but in terms of the macro economy there wasn’t anything a governor could have done to bail their state out when the national economy was imploding,” says Charles Ballard, a political economist at Michigan State University who has been following the governors races in both Wisconsin and Michigan.

It’s an opinion shared by many economists and business people, who say state governors may have some impact at the margins but are limited in how much they can really do.

“The state economy is really highly dependent on the national economy and there is nothing any governor or other elected official can really do about that,” says Steve Deller, a professor of Agricultural and Applied Economics at the University of Wisconsin-Madison.

Consider the ongoing wage decline in Wisconsin which no governor — Republican or Democrat — has been able to reverse over the past 40 years.

Similarly, from VTDigger.org regarding Vermont’s election:

Here’s the little secret that state office-holders and office-seekers would rather nobody know, lest they seem only as important as they really are, which is less important than they would like to seem.

That’s because – here comes another secret—there ain’t no state economy.

That dollar bill you have in your wallet, the one that buys you 100 cents’ worth of goods or services in Burlington, Bennington or Brattleboro, buys you the same 100 cents’ worth in Buffalo, Birmingham and Boise. The economy is national. When it comes to the economy, what the president does matters. What the Congress does (or doesn’t do) matters. What the Federal Reserve Board does perhaps matters even more.

In 2011, writing for the Boston Globe, economist Ed Glaeser, asked “how much impact does a governor really have?”.  His answer:

The economist Justin Wolfers has found that voters reward governors for lucky economic breaks, like oil price increases in energy states.  We should guard against our tendency to give either governors or presidents too much credit.

As Kevin McGee noted last month in the USA Today, the economic levels that governors can pull are limited relative to the President and Congress:

After all, presidents can run deficits to stimulate the economy, but governors have balanced budget requirements that mostly tie their hands. And most of what governors claim to do – attracting jobs from elsewhere or increasing jobs through grants or loans – can either be easily offset by other governors stealing jobs from here, or else mostly just subsidizes jobs that would have happened anyway. All the evidence suggests that governors have no real ability to spur job growth.

Others have made similar observations about how national trends often supersede state level policies (see here, here, and here).

This is not to suggest that governors are irrelevant in general, or regarding the economy specifically, but as the VTDigger article accurately notes:

Governors do a whole lot of really important stuff.  They appoint judges.  They help determine how a state educates its kids, cleans up (or doesn’t) its lakes and rivers, maintains (or doesn’t) its roads and bridges, enforces its laws, and more

But when it comes to what the folks in academia call the macroeconomic impact of state policy . . . well, there just isn’t much.

So, as to the larger state economy, will the winner of the three-way race matter?

John Haskell

About John Haskell

John graduated from the University of Southern Maine with a degree in Political Science, and from the University of Maine School of Law. He has worked in both the public and private sectors, and currently, works with a small business services company in the Mid-Coast area.