May 29, 2006
Pessimism | It's rampant in Maine's business community. But is the economy as bad as the perception, and can all the negativity become self-fulfilling?
By Chris Churchill
For Verne Kennedy, the questions were routine. The Florida-based researcher has conducted hundreds of economic studies in about 30 states, including several in Maine. But a survey he undertook last year of 502 Maine business leaders produced a result that was anything but expected: A whopping 94% said the state's business climate was worse than the climate in other states or even Canada.
Kennedy says that eye-popping level of dissatisfaction is about double what he typically finds. "Business leaders in Maine were more pessimistic than in any state I have ever surveyed," he says. "By nature, business leaders believe the grass is greener somewhere else. Still, taking that into account, Maine was off the charts."
The survey, conducted for the Maine Economic Research Institute, reflects what many in Maine, especially newcomers, say they have noticed: a relentless negativity about the state's economy, its business climate and, worse yet, its prospects for the future. Much of Maine, it seems, does not believe its economic tomorrow will be better than its economic present ˆ a belief some worry can become self-fulfilling. Many seem convinced the economy here is as bad as it gets, that the state is wilting as others thrive. Some Mainers almost seem pleased to rank low in economic surveys, satisfied their suspicions have been confirmed.
No doubt, there is good reason for such pessimism. Some parts of the state, especially rural areas distant from York and Cumberland counties, have witnessed a decades-long, well-documented economic decline, especially in Maine's iconic industries. You know the story: Mills have closed; job growth is stagnant; fisheries have dwindled. And many business leaders seem convinced state government is indifferent to their troubles. "It's hard to remember a time when there's been economic optimism in Maine," says Charles Colgan, a former state economist. "Some of the reason people feel pessimistic i the sense that the economy really isn't going anywhere, and the statistics reflect that."
But Colgan and others suggest Maine's doom-and-gloom attitude has overtaken reality, meaning the mood is now more dour than conditions warrant. For all its struggles, after all, Maine has poverty, crime and unemployment rates that are below the national average. Its personal income growth in recent years has outpaced the national average. This is still the state that promises ˆ and mostly delivers ˆ life as the way it should be, the place harried megalopolis dwellers look enviously toward.
That was the case for William Knowles, former CEO of National Westminster Bank in New York. He retired to Harpswell with his wife more than a decade ago and finds Maine to be everything he hoped it would be. But Knowles reports he's been surprised by the "endless grousing" over the Maine economy, a pessimism he finds troubling and potentially dangerous. "I think it can feed on itself," he says.
Are demographics destiny?
If Maine is more pessimistic than other places, demographics help explain why. The state's population is remarkable in two aspects, and neither helps build internal optimism, says Peter Francese, director of demographic forecasts for the New England Economic Partnership.
First, Maine is the whitest state in the nation, according to census data. The state attracts few immigrants from south of the border ˆ or immigrants at all. Economists say the U.S. historically has been energized by a constant influx of buoyant newcomers. "There are many states, not just Maine, that would benefit enormously from increased immigration," says Francese, who also is the New Hampshire-based founder of American Demographics magazine. "[Immigrants] bring optimism. They bring youth. They bring a work ethic. And they bring the American Dream."
Census data also says Maine has the nation's oldest population ˆ and it's getting older quickly. The median age here is 40.6, a full two-years older than in 2000. Though the result is in part due to the state's low birth rate, Maine largely lacks the segment of the population that is most creative and entrepreneurial. "Young people are always more optimistic than old people," Francese says.
Maine isn't alone. The population across New England is significantly older than the national average, and a wariness about the economic future may be a regional trait. New England was once the nation's economic powerhouse, a business and banking capital that saw its prowess slip away first to New York, then to the so-called Sunbelt. "New England was the first region to industrialize and was therefore the first region to de-industrialize," says Joseph Conforti, a New England and American Studies professor at the University of Southern Maine. "That was perceived as decline, and it's a perception that has persisted."
Today, the centers of economic growth are far from New England. The South, Southwest and West are the locales with high economic confidence and vigor. Arizona alone gained 125,000 jobs in 2005, an increase of 5.3% over the previous year, while job growth last year in Maine was flat. From a distance, at least, the Sunbelt seems a cheerful place where jobs are plentiful and weather doesn't depress. "Whenever I go to the Southwest, my spirits are lifted by the light and the vistas," Conforti says. "New England is a dark place, in terms of the play of light and shortness of days. There is something that's unique to New England as a natural place that has an effect on New Englanders' outlook."
But wait a minute: Isn't the Southwest running short on water? Shouldn't that curb fiscal cheerfulness? And for all the booming found in warmer states, many face stubborn social and economic problems not challenging Maine to the same degree. The poverty rate in Maine, averaged over 2002-2004, was 12.2%, slightly below the national average. Rates were significantly higher in most of the Sunbelt. In New Mexico, for example, the three-year average was 17.5%.
During the same period, just over 10% of Mainers lacked health insurance, one of the nation's best rankings. In booming Texas, by contrast, about 25% of the population lacked coverage. The violent crime rate in Texas is six times higher than in Maine; in Florida, it's seven times higher.
There are ecological reasons for depression in booming regions too, beyond the above-mentioned shortage of water. In sunny Florida, for example, a recent study by The Center for Environmental and Urban Solutions at Florida Atlantic University laid out four likely scenarios for south Florida's near future, three of which were negative ˆ including one that saw potential for the state to become a "devastated wasteland" because of rapid and poorly planned growth. Maine has environmental problems, to be sure, but predictions it will soon be a wasteland are thankfully rare.
So why are we so pessimistic? Some believe Maine's self-image suffers because it constantly compares itself to wealthier and more urban neighbors. Newspapers often report on studies saying Mainers are New England's poorest, fattest and least-educated residents. All apparently true, but Maine does better in each of those categories than the national average.
Grumbling Mainers love nothing more than to compare the state to New Hampshire, which is tops in the nation in median household income and has the country's lowest poverty rates. It's common to link that success with the Granite State's reputation as a low-tax and business-friendly haven. Those factors no doubt play a role, but New Hampshire's success has as much to do with its location as anything else, says Francese, a resident of Exeter, N.H. He says his state essentially has grown by becoming a suburbanized part of the Boston area, and exurbs, as the towns on the metropolitan fringe are often called, are centers of wealth, growth and opportunity.
Indeed, economists note many rural areas nationally are struggling. New Hampshire's Coos County, in the state's far north, suffers the same economic problems as rural Maine (the county lost 12.3% of its population during the 1990s, for example). And the segment of Maine closest to Boston ˆ Cumberland and York counties ˆ are by most economic measures doing fine.
Mainers, however, tend to generalize, overlooking regional differences. "We look at the whole state and say the state's doing terribly," says Dave Wihry, a University of Maine economist. "But if you break it down into counties, there are some that are doing reasonably well and some that are doing terribly. You have to keep that distinction in mind."
Like many business owners in the north of the state, Robert Graves Jr., owner of the Graves Supermarket in Presque Isle, doesn't think the Maine economy looks strong from his Aroostook County vantage point. "I don't know anybody who feels we're on a strong economic upturn," he says. "We certainly don't feel that."
The pessimism effect
So what's the big deal if Mainers are particularly pessimistic? Optimism is good for business ˆ that's the conclusion of much economic research, which says those who feel good about the financial future are more likely to invest and spend money. "Optimism is posited to be at the root of many economic phenomena," write Duke University professors David Robinson and Manju Puri in their research paper, "Optimism and Economic Choice." Noting that optimistic people even work harder and retire later, the pair conclude that optimism is a critical part of economic decision-making and plays an important role in successful financial outcomes.
Pessimism, however, can have the opposite economic effect. Those who are gloomy about the economy seem less likely to invest and spend money. That disinvestment in turn can cause more pessimism. Which could lead to less investment and moreˆ well, you get the picture. "A downward spiral," is how UMaine economist Adrienne Kearney describes it. "Expectations drive everything."
Whether pessimism about Maine's economy is having an effect is unclear and difficult to measure. But some notice a troubling economic passivity. "For a state that has such a reputation for people who are entrepreneurial and clever when it comes to fixing problems," says David Vasdauskas, owner of Brunswick-based Victory Branding. "It surprises me that there isn't more of a can-do attitude about fixing the state economy."
P.D. Merrill, owner of Merrill Industries in Portland, agrees: "We don't have a clear mass commitment to a particular direction," he says. "As a result, you get everybody fighting amongst themselves and a lot of good people getting frustrated and throwing up their hands."
Meanwhile, Republican pollster Christian Potholm, a Bowdoin College professor, says his surveys suggest Mainers no longer vote based on economic issues, because they believe state leaders like the governor cannot improve the state economy in the face of global forces.
That view is contrary to the opinion of the Maine Economic Research Institute, a conservative group that claims state economic woes are largely the result of bad policy ˆ particularly high taxes. MERI is frequently accused of pushing an overly gloomy view of the state's situation, but Edward McLaughlin, the group's president, says stressing the negative is a way to affect change. "We have a tendency to look at things that are wrong," he concedes. "But you can't just be a cheerleader. If the fundamentals aren't right, you have to address that."
McLaughlin and others argue that the dangers of unrealistic optimism match the risks of pessimism. Would Maine be better off if it were an economic Don Quixote, convinced everything is rosy and slight gains are momentous achievements? Bowdoin College psychology professor Barbara Held, author of Stop Smiling Start Kvetching, a book that argues against the "tyranny of the positive attitude," believes there's value in pessimism and realistic assessment. Held says mulling what is wrong allows pragmatic planning.
"People have a right to call it like it is, and realism should be supported," she says. "I'm not against optimism. I think if you're an optimist, that's fine. But you don't need optimism to change things."
Still, some areas of Maine have emphasized the value of positive thinking ˆ with results. The cities of Lewiston and Auburn, for example, are relentlessly positive, at least at the official level. The attitude is not accidental. Long the butt of jokes and beset by decades of economic decline, the cities decided to rebrand. Four years ago, they adopted the slogan "It's All Happening Here." Banners with the slogan went up; bumper stickers were printed; television commercials aired.
Paul Badeau, marketing director for the Lewiston-Auburn Economic Growth Council, believes the campaign is making a difference and changing attitudes about the Twin Cities. Yet Badeau cautions the slogan would have been laughed into oblivion had it not been backed by real reasons for optimism, namely on-the-ground improvements to the economy. (Lewiston and Auburn claim $400 million in investment so far this decade.) "We can't just say everything is great in Lewiston and Auburn and make it so," he says. "It had to pass the straight-face test."
Maine, as any resident knows, has tremendous assets, including impressive natural resources and a reputation for some of the hardest working citizens in the country. And there are certainly models for turning an economy around. Ireland, for example, for generations experienced economic decline and out-migration of residents. But the 1990s suddenly brought unprecedented economic success ˆ the so-called "Celtic Tiger."
Could a pessimistic drumbeat threaten such a resurgence in Maine? "If we keep hearing that we're being overtaxed and we're losing our youth and we're overweight and we're at the end of the pipeline," Conforti says, "after a while that's the story you tell yourself about who you are and where you are."
Kennedy says that eye-popping level of dissatisfaction is about double what he typically finds. "Business leaders in Maine were more pessimistic than in any state I have ever surveyed," he says. "By nature, business leaders believe the grass is greener somewhere else. Still, taking that into account, Maine was off the charts."
The survey, conducted for the Maine Economic Research Institute, reflects what many in Maine, especially newcomers, say they have noticed: a relentless negativity about the state's economy, its business climate and, worse yet, its prospects for the future. Much of Maine, it seems, does not believe its economic tomorrow will be better than its economic present ˆ a belief some worry can become self-fulfilling. Many seem convinced the economy here is as bad as it gets, that the state is wilting as others thrive. Some Mainers almost seem pleased to rank low in economic surveys, satisfied their suspicions have been confirmed.
No doubt, there is good reason for such pessimism. Some parts of the state, especially rural areas distant from York and Cumberland counties, have witnessed a decades-long, well-documented economic decline, especially in Maine's iconic industries. You know the story: Mills have closed; job growth is stagnant; fisheries have dwindled. And many business leaders seem convinced state government is indifferent to their troubles. "It's hard to remember a time when there's been economic optimism in Maine," says Charles Colgan, a former state economist. "Some of the reason people feel pessimistic i the sense that the economy really isn't going anywhere, and the statistics reflect that."
But Colgan and others suggest Maine's doom-and-gloom attitude has overtaken reality, meaning the mood is now more dour than conditions warrant. For all its struggles, after all, Maine has poverty, crime and unemployment rates that are below the national average. Its personal income growth in recent years has outpaced the national average. This is still the state that promises ˆ and mostly delivers ˆ life as the way it should be, the place harried megalopolis dwellers look enviously toward.
That was the case for William Knowles, former CEO of National Westminster Bank in New York. He retired to Harpswell with his wife more than a decade ago and finds Maine to be everything he hoped it would be. But Knowles reports he's been surprised by the "endless grousing" over the Maine economy, a pessimism he finds troubling and potentially dangerous. "I think it can feed on itself," he says.
Are demographics destiny?
If Maine is more pessimistic than other places, demographics help explain why. The state's population is remarkable in two aspects, and neither helps build internal optimism, says Peter Francese, director of demographic forecasts for the New England Economic Partnership.
First, Maine is the whitest state in the nation, according to census data. The state attracts few immigrants from south of the border ˆ or immigrants at all. Economists say the U.S. historically has been energized by a constant influx of buoyant newcomers. "There are many states, not just Maine, that would benefit enormously from increased immigration," says Francese, who also is the New Hampshire-based founder of American Demographics magazine. "[Immigrants] bring optimism. They bring youth. They bring a work ethic. And they bring the American Dream."
Census data also says Maine has the nation's oldest population ˆ and it's getting older quickly. The median age here is 40.6, a full two-years older than in 2000. Though the result is in part due to the state's low birth rate, Maine largely lacks the segment of the population that is most creative and entrepreneurial. "Young people are always more optimistic than old people," Francese says.
Maine isn't alone. The population across New England is significantly older than the national average, and a wariness about the economic future may be a regional trait. New England was once the nation's economic powerhouse, a business and banking capital that saw its prowess slip away first to New York, then to the so-called Sunbelt. "New England was the first region to industrialize and was therefore the first region to de-industrialize," says Joseph Conforti, a New England and American Studies professor at the University of Southern Maine. "That was perceived as decline, and it's a perception that has persisted."
Today, the centers of economic growth are far from New England. The South, Southwest and West are the locales with high economic confidence and vigor. Arizona alone gained 125,000 jobs in 2005, an increase of 5.3% over the previous year, while job growth last year in Maine was flat. From a distance, at least, the Sunbelt seems a cheerful place where jobs are plentiful and weather doesn't depress. "Whenever I go to the Southwest, my spirits are lifted by the light and the vistas," Conforti says. "New England is a dark place, in terms of the play of light and shortness of days. There is something that's unique to New England as a natural place that has an effect on New Englanders' outlook."
But wait a minute: Isn't the Southwest running short on water? Shouldn't that curb fiscal cheerfulness? And for all the booming found in warmer states, many face stubborn social and economic problems not challenging Maine to the same degree. The poverty rate in Maine, averaged over 2002-2004, was 12.2%, slightly below the national average. Rates were significantly higher in most of the Sunbelt. In New Mexico, for example, the three-year average was 17.5%.
During the same period, just over 10% of Mainers lacked health insurance, one of the nation's best rankings. In booming Texas, by contrast, about 25% of the population lacked coverage. The violent crime rate in Texas is six times higher than in Maine; in Florida, it's seven times higher.
There are ecological reasons for depression in booming regions too, beyond the above-mentioned shortage of water. In sunny Florida, for example, a recent study by The Center for Environmental and Urban Solutions at Florida Atlantic University laid out four likely scenarios for south Florida's near future, three of which were negative ˆ including one that saw potential for the state to become a "devastated wasteland" because of rapid and poorly planned growth. Maine has environmental problems, to be sure, but predictions it will soon be a wasteland are thankfully rare.
So why are we so pessimistic? Some believe Maine's self-image suffers because it constantly compares itself to wealthier and more urban neighbors. Newspapers often report on studies saying Mainers are New England's poorest, fattest and least-educated residents. All apparently true, but Maine does better in each of those categories than the national average.
Grumbling Mainers love nothing more than to compare the state to New Hampshire, which is tops in the nation in median household income and has the country's lowest poverty rates. It's common to link that success with the Granite State's reputation as a low-tax and business-friendly haven. Those factors no doubt play a role, but New Hampshire's success has as much to do with its location as anything else, says Francese, a resident of Exeter, N.H. He says his state essentially has grown by becoming a suburbanized part of the Boston area, and exurbs, as the towns on the metropolitan fringe are often called, are centers of wealth, growth and opportunity.
Indeed, economists note many rural areas nationally are struggling. New Hampshire's Coos County, in the state's far north, suffers the same economic problems as rural Maine (the county lost 12.3% of its population during the 1990s, for example). And the segment of Maine closest to Boston ˆ Cumberland and York counties ˆ are by most economic measures doing fine.
Mainers, however, tend to generalize, overlooking regional differences. "We look at the whole state and say the state's doing terribly," says Dave Wihry, a University of Maine economist. "But if you break it down into counties, there are some that are doing reasonably well and some that are doing terribly. You have to keep that distinction in mind."
Like many business owners in the north of the state, Robert Graves Jr., owner of the Graves Supermarket in Presque Isle, doesn't think the Maine economy looks strong from his Aroostook County vantage point. "I don't know anybody who feels we're on a strong economic upturn," he says. "We certainly don't feel that."
The pessimism effect
So what's the big deal if Mainers are particularly pessimistic? Optimism is good for business ˆ that's the conclusion of much economic research, which says those who feel good about the financial future are more likely to invest and spend money. "Optimism is posited to be at the root of many economic phenomena," write Duke University professors David Robinson and Manju Puri in their research paper, "Optimism and Economic Choice." Noting that optimistic people even work harder and retire later, the pair conclude that optimism is a critical part of economic decision-making and plays an important role in successful financial outcomes.
Pessimism, however, can have the opposite economic effect. Those who are gloomy about the economy seem less likely to invest and spend money. That disinvestment in turn can cause more pessimism. Which could lead to less investment and moreˆ well, you get the picture. "A downward spiral," is how UMaine economist Adrienne Kearney describes it. "Expectations drive everything."
Whether pessimism about Maine's economy is having an effect is unclear and difficult to measure. But some notice a troubling economic passivity. "For a state that has such a reputation for people who are entrepreneurial and clever when it comes to fixing problems," says David Vasdauskas, owner of Brunswick-based Victory Branding. "It surprises me that there isn't more of a can-do attitude about fixing the state economy."
P.D. Merrill, owner of Merrill Industries in Portland, agrees: "We don't have a clear mass commitment to a particular direction," he says. "As a result, you get everybody fighting amongst themselves and a lot of good people getting frustrated and throwing up their hands."
Meanwhile, Republican pollster Christian Potholm, a Bowdoin College professor, says his surveys suggest Mainers no longer vote based on economic issues, because they believe state leaders like the governor cannot improve the state economy in the face of global forces.
That view is contrary to the opinion of the Maine Economic Research Institute, a conservative group that claims state economic woes are largely the result of bad policy ˆ particularly high taxes. MERI is frequently accused of pushing an overly gloomy view of the state's situation, but Edward McLaughlin, the group's president, says stressing the negative is a way to affect change. "We have a tendency to look at things that are wrong," he concedes. "But you can't just be a cheerleader. If the fundamentals aren't right, you have to address that."
McLaughlin and others argue that the dangers of unrealistic optimism match the risks of pessimism. Would Maine be better off if it were an economic Don Quixote, convinced everything is rosy and slight gains are momentous achievements? Bowdoin College psychology professor Barbara Held, author of Stop Smiling Start Kvetching, a book that argues against the "tyranny of the positive attitude," believes there's value in pessimism and realistic assessment. Held says mulling what is wrong allows pragmatic planning.
"People have a right to call it like it is, and realism should be supported," she says. "I'm not against optimism. I think if you're an optimist, that's fine. But you don't need optimism to change things."
Still, some areas of Maine have emphasized the value of positive thinking ˆ with results. The cities of Lewiston and Auburn, for example, are relentlessly positive, at least at the official level. The attitude is not accidental. Long the butt of jokes and beset by decades of economic decline, the cities decided to rebrand. Four years ago, they adopted the slogan "It's All Happening Here." Banners with the slogan went up; bumper stickers were printed; television commercials aired.
Paul Badeau, marketing director for the Lewiston-Auburn Economic Growth Council, believes the campaign is making a difference and changing attitudes about the Twin Cities. Yet Badeau cautions the slogan would have been laughed into oblivion had it not been backed by real reasons for optimism, namely on-the-ground improvements to the economy. (Lewiston and Auburn claim $400 million in investment so far this decade.) "We can't just say everything is great in Lewiston and Auburn and make it so," he says. "It had to pass the straight-face test."
Maine, as any resident knows, has tremendous assets, including impressive natural resources and a reputation for some of the hardest working citizens in the country. And there are certainly models for turning an economy around. Ireland, for example, for generations experienced economic decline and out-migration of residents. But the 1990s suddenly brought unprecedented economic success ˆ the so-called "Celtic Tiger."
Could a pessimistic drumbeat threaten such a resurgence in Maine? "If we keep hearing that we're being overtaxed and we're losing our youth and we're overweight and we're at the end of the pipeline," Conforti says, "after a while that's the story you tell yourself about who you are and where you are."
Most Recent
Most Recent
Comments