9.12.2011

Paper Mills don't present a sustainable solution for Maine


The Portland Press Herald recently published an Op-Ed lauding Gov. LePage's decision to have the state take over a leaky landfill in Millinocket. The move has opened the door for a NH based company to buy and reopen the mills, salvaging at least 200 jobs.

I'm elated for the hundreds of people up north that will benefit, but I don't share the Press Herald's enthusiasm about the deal. They highlight the seemingly daunting alternative:
The mills would have only drawn interest from firms that wanted to dismantle them and send the papermaking machines to India or China. The jobs would have gone with them, and neither would have ever come back.
However, the state's decision amounts to no more than a last ditched effort to save a dying industry. While the machinery and the jobs that go with them won't leave us this year, they'll end up in India or China (or Africa) eventually anyways.

(And you know what will come back? Cheaper paper, and further decreased costs of living.)

At least that has been the trend for nearly one hundred years. Historically, Maine's assets of semi-skilled labor, hydropower and abundant natural resources allowed us to produce many goods at lower costs than elsewhere. It was easy in the 19th century to be competitive in simple goods like textiles and paper and primary goods like timber and potatoes. But the outsourcing of jobs began in the 1920's as textile and apparel industries began to move to southern states (PDF), and has continued to this day as we lose simple wood products like paper to China. It's a reality that must be taken into consideration as we try to attract jobs to our state and as we continue to lose ground in other industries, like lobster fishing.

Instead of wasting time and effort (and tax dollars) trying to save out dated industries, we need to be ahead of the curve.

The sustainable solution is to foster industries where we can remain competitive in an ever increasingly globalized economy. To justify our high standards of living, we have to produce goods and conduct services that are of significantly higher value because we simply cannot compete with the lower labor costs offered by developing countries.

It's not sufficient to demand action from our state to attract jobs. We have to take measures to attract the right ones. To do so we look to industries where we as Mainers and Americans have a comparative advantage. Specifically:
  • Niche-based food processing (eg: Stonewall Kitchen in York)
  • Biotechnology in medicine/agriculture(eg: Idexx Laboratories in Westbrook)
  • Financial Services (eg: Bank of America in Belfast)
  • Information technology and telecommunications (eg: Carbonite in Lewiston)
And to a lesser degree in Maine specifically:
  • Heavy and high tech manufacturing
Our nation is at the cutting edge of these sectors. They hold our greatest chance for enriching the Maine economy. Not only do the industries themselves represent the best direction for long term development, but the very exercise of demonstrating our flexibility to adapt to shifting markets will prove useful as the global economy grows larger and more susceptible to drastic changes.

To understand how to attract these exciting industries, we should look to the ones that are already here for inspiration. In his campaign for City Council, Joshua Shea published a Facebook note on the subject
When Carbonite made the announcement earlier this year that they were going to open a data center in Lewiston and create 250 jobs in the next couple of years, the company cited the post-secondary educational opportunities, specifically the number of students coming out of our local colleges with degrees that have the skills necessary.
The importance of human capital formation cannot be overstated, and the public sector is perfectly suited for that role. If Maine is to be competitive, its workforce must be among the most capable. To be "capable" in a global economy requires labor to have the capacity for intersectoral transition. For that reason, I'm skeptical of the recent trends allowing high school students to acquire diplomas through pigeonholing vocational schooling. In other words, I would encourage education programs that teach students the ability to adopt new skills quickly, as opposed to focusing on one set of skills.

Even Adam Smith foresaw the need for a public education. The specialization required of employees by the divisions of labor in a capitalist economy has a negative impact on one's capacity to be retrained or function in a constantly evolving labor market.

I also question LePage's efforts earlier this year to dismantle Maine's environmental laws. His plan is founded on the goal of attracting back the dying industries, like paper mills, which have significantly costly and negative environmental externalities. However, his employment stimulation efforts miss the target because the industries we need to attract don't actually have much of an environmental foot print. They don't require swathes of wooded land, or need rivers to dump their immense quantities of waste into. On the contrary, a clean and vibrant environment would in fact attract or help retain the highly skilled labor which can afford time to enjoy our lakes by kayak, or ride through wooded trails on snow mobiles.

A healthy environment is also critical for another industry Maine already relies upon, but could heavily expand in. Tourism.

We've had nearly a hundred years of warnings that our simple goods industries, and raw product extraction don't stand a chance at keeping us employed and prosperous. Year after year mills close and farms shut down. They're leaving. It's about time Maine politicians looked to the future.

Besides, I'd find it more impressive and would be more proud of our state and nation as a society if we were producing these, instead of these.

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