Vermont’s Feeble Job Creation Philosophy

by John McClaughry

John McClaughry

In his January inaugural address, new Governor Peter Shumlin repeatedly pledged to “put Vermonters back to work, one job at a time.”

On February 3 Gov. Shumlin unveiled his long awaited jobs bill, and hailed it as “by far one of the most comprehensive jobs bills that reflects our commitment to grow jobs in Vermont one job at a time.” He did not explain just what “one job at a time” is supposed to mean.

A few days later Commerce and Community Development Secretary Lawrence Miller explained to legislators that the Shumlin jobs plan “is about focusing our efforts, being strategic with our thoughts and working together across agencies and across the private sector [and] with our educational institutions to get things done.”

The Shumlin philosophy here seems to be that jobs are created by a collection of shrewd, focused, well-coordinated government actions. There’s not much to be said for government agencies that work at cross purposes to each other, but it’s not at all apparent that Vermont’s job shortfall is a result of a sluggish, confused, uncoordinated government failing to create them.

The jobs bill evinces a belief by the governor that the “creative economy” – artists, sculptors, poets, etc. – has the potential to create new jobs. Thus it proposes to spend $100,000 to hire a new “creative economy specialist” to do something to stimulate the “creative economy.” This will end the years of government neglect and set the “creative economy” ablaze with new job-producing activity.

The governor also believes that employers lack sufficient incentive to hire new employees. His jobs bill promises to pay selected employers up to $500 when they create a new, full time position, and fill it with someone who has been drawing unemployment benefits for five months or more.

Note that the employer can’t collect the $500 by just rehiring the worker who was laid off a month ago. In any case, the total pot of money to be made available for paying employers to hire unemployed workers is only $25,000. That’s enough to incentivize employers to hire some 50 workers a year. Of course it will require the government to spend more than $25,000 to police the lucky employers to make sure they meet all the program requirements for pocketing the $500, but that’s apparently included elsewhere in the budget.

Another example: beginning in 2016, the proposed science, technology, engineering and math (STEM) program will distribute $1,500 a year to Vermont college graduates working in those fields in Vermont for five or more years.

Contrast the Shumlin philosophy of “government as the wellspring of correctly managed and channeled economic progress, one job at a time” with the philosophy of probably the nation’s most economically successful governor, Republican Mitch Daniels of Indiana.

In a recent speech Gov. Daniels explained that “we believe that government works for the benefit of private life, and not the other way around.Every day we work to lower the costs and barriers to free men and women creating wealth for each other.When business leaders ask me what they can do for Indiana, I always reply: ‘Go make money. That’s the first act of corporate citizenship. If you do that, you’ll have to hire someone else, and you’ll have enough profit to help one of those nonprofits we’re so proud of.'”

Gov. Shumlin appears to believe that economic progress comes from government wisely picking favorites, showering them with subsidies and credits, forcing consumers to buy their products at above-market prices, hiring functionaries to stimulate, coordinate and enforce, and managing government to carry out these many tasks smoothly and efficiently.

Gov. Daniels believes quite the opposite. He recognizes the role of government in preserving public order, financing infrastructure, and underwriting – but not necessarily providing – the education essential for a prosperous economy and citizen self-government.

But beyond that, Gov. Daniels says, “We believe it is wrong ever to take a dollar from a free citizen without a very necessary public purpose, because each such taking diminishes the freedom to spend that dollar as the owner would prefer.”

That limited government, pro-freedom governing philosophy has put low-tax Indiana in the top rank of the nation’s states, economically and fiscally. The Shumlin jobs bill will give the Hoosiers little worry about losing their high ranking to a far more, high-tax, overregulated, low-growth nanny state like “progressive” Vermont.

John McClaughry is vice president of the Ethan Allen Institute.