Over the years, in my day job, I have done scores of economic impact studies – what my colleague Charlie Colgan used to call “big-number studies.”
From proposed closures of Loring Air Force Base and the Portsmouth Naval Shipyard, to the potato, blueberry, dairy, tourism and biotechnology industries, to research institutions and colleges and universities, I have attempted to describe and quantify the networks of commercial relationships between specific enterprises or industries and the larger Maine economy. I have attempted to put numbers to the stories of employee and vendor supply-chain spending that is gained or lost with the opening or closing of any of these entities.
This column is not intended to tout any current or former client, but to address the inadequacy of purely commercial relationships in explaining the economic impact of a given industry. During the just-completed legislative session, our elected officials decided to commit funds to help biomass electricity generators – not so much for the electricity but to help preserve the broader “forest” industry.
In a similar fashion, they approved – or at least advanced to the voters – a bond issue to support research and development. What jobs will this research create beyond those of the scientists conducting it and those in the specific vendors supplying the materials the research labs need? What businesses will it create? Who knows?
This is where economic impact moves beyond the loggers who supply a paper mill and the chemical companies that supply a research lab. It’s where public support for the public good moves beyond empirical evidence of payrolls made and vendors paid to faith in the long-term benefits of human curiosity and ingenuity. This is where the story of economic impact moves from big numbers to big dreams.
I recently had the good fortune to have an extended conversation with a nurse employed by the Eastern Maine Medical Center Cancer Care Center. He spoke passionately about his bimonthly meetings with researchers from The Jackson Laboratory – not from Bar Harbor, but from The Jackson Laboratory Center for Genomic Medicine in Connecticut.
He spoke of the joy both he and his research colleagues felt when they saw the diminished pain and extended lives of patients for whom targeted, individualized medicine worked. Invariably, he said, the researchers told him that the big-data-analytics, hunting-for-the-needle-in-a-haystack nature of their work took on more meaning and became more urgent when they saw – firsthand – its human consequences.
This same “big dream” story applies to the decisions facing our Senate and congressional representatives in Washington, particularly in regard to funding for the National Institutes of Health, where research has similarly unpredictable outcomes but enormous fiscal consequences. Consider the fact that in Maine in 2014, public medical spending amounted to over $5.4 billion – more than $2.9 billion for Medicare and over $2.4 billion for Medicaid and other public health benefits.
These amounts are growing rapidly and, at the state level, have become an increasingly contentious element of the biennial budget battles in Augusta.
Over the past decade, this public health care spending in Maine has increased by 54 percent. During the same period, wage and salary income has increased at less than half that rate (25 percent). In 2014, public spending on health care as a share of Maine’s total wage and salary income stood at 21 percent, far above the national average of 14.9 percent. By this metric, Maine ranked sixth in the nation – behind only West Virginia, Mississippi, Arkansas, Kentucky and New Mexico.
In short, whatever their impact on improving Maine health outcomes may prove to be, it is clear that state R&D-funded technology research projects and federal NIH-funded research projects have the potential to save both state and federal taxpayers tens, even hundreds, of millions of dollars in the long term.
And these savings, whatever they may prove to be, are virtually impossible to predict with any degree of accuracy. But they are nonetheless far bigger and far more important than whatever big number can be derived from the purely commercial economic relationships that flow from research and development activities.
Charles Lawton is chief economist for Planning Decisions, Inc. He can be contacted at:
Send questions/comments to the editors.
