Considering Outliers of Economic Analysis
Alternartive's to central management's wealth divide theory of economic development
If liberalism spells individualism, Fascism spells government…
Fascism desires the State to be strong and organic, based on broad foundations of popular support. The Fascist State lays claim to rule in the economic field no less than in others; it makes its action felt throughout the length and breadth of the country by means of its corporative, social, and educational institutions, and all the political, economic, and spiritual forces of the nation, organized in their respective associations, circulate within the State. Benito Mussolini 1932
When a government takes on the role of centrally managing the economy, it does so through wealth concentration and redistribution that extends its reach to every part of society.
The government's strategy for results painted in large brushstrokes is to partner with the largest private sector businesses, to mutually reinforce the power of public and private wealth and favor a homogenized economic culture over a diversity of enterprises of varying sizes and types that accommodate the diversity within humanity.
This means that one group of people with a singular perspective asserts its will over all others, as we saw in the Governor’s report of 1976.
Longley’s board, composed of the heads of Maine’s largest industries, was not required to take an oath to uphold the Maine Constitution but the Governor's Task Force of 1976 is an extensive and detailed plan for reinventing the government of Maine according to the worldview of large industry, to be incrementally implemented over time.
The manner of speaking In the report directs the reader to believe that the only concerns about the municipal referendum are time and money, but it is hardly believable that the authors of the report did not consider that the inhabitants of the municipality might vote against their project. The board did not say the obvious part out loud relegating public choice to nonissue status, and reducing the relevant issue to the efficient use of time and money.
In 1975, A year before the establishment of Maine’s centrally managed economy, Burton A. Weisbrod published “Toward a theory of the voluntary nonprofit sector in a three-sector economy”. Weisbrod described an economy premised on three independent but complimentary sectors, the public, the private, and the nonprofit, It is not easy to find this article but many years ago I read Weisbrod’s The Non-Profit Economy, By the 1990s, the independence of the three sectors was already eroding and impurities were manifesting within the non-profit sector, with Weisbrod taking note of the advantageous accounting practices of for-profit corporations with non-profit subsidiaries.
Burton Weisbrod's 1975 article, 'Toward a theory of the voluntary non-profit sector in a three-sector economy', models non-profit organizations as suppliers of public goods which are undersupplied by government to heterogeneous populations. This article examines the implications, extensions and empirical tests of the Weisbrod theory. It also examines the theories of pure and impure altruism, the heterogeneity hypothesis, and the various 'publicness' indexes of non-profit output. The commonalities between the public good model and the trust model of non-profit organizations are also explored Jestor.
From its constitutionally occluded perspective, Longley’s board reasoned In the Governor's Task Force of 1976 that:
(with comments added by author)
2. A municipality should be defined by statute as legally equivalent to a local development corporation (conflating local government functions and private sector functions) for the purposes of allowing the MGA to guarantee municipal revenue bonds (conflating local government and state government). Current law requires a local development corporation to hold title in order for an industrial loan to be eligible for a (state) guarantee (so what! the municipal bond is the responsibility of the municipality!). This is incompatible with the requirement that the municipality hold the title to be able to issue an industrial revenue bond (once again, so what! It’s an irrelevant incompatibility between state and local governance!). This change would eliminate the need for a municipality to take an extra legal (as in constitutional?) step in the process of obtaining new industry. (emphasis by author)
Rationale The MGA represents the State's major effort in the area of capital for economic development, Recent problems have indicated a need for operational changes to improve the MGA's performance, protect the State's credit rating, and increase the MGA's contribution to the future economic development of the State.
Longley’s board advocates for a municipal bond to be guaranteed by a state agency.
Constitutional scholar Marshall J Tinkle noted Home Rule, Section 2 applies only to general obligations of municipalities and not to forms of financing that do not create municipal debt or liability" (source-The Maine Constitution: A Reference manual by Marshall J Tinkle). The responsibility is local, if a local bond were to be guaranteed by the state that would make the state liable and the local government answerable to the state, contrary to the intent of home rule.
But Longley’s board does not acknowledge the Maine Constitution.
Rationale Economic development efforts in Maine would be improved by an expanded MGA ability to issue industrial revenue bonds and to guarantee land development loans. This expanded scope would provide the MGA with additional flexibility to meet Maine's future needs for economic development, within the existing dollar limits set by the Legislature. Governor's Task Force of 1976
The fallacy within their reasoning is that the State did not at that time have geographical development authority which is the constitutional province of municipal authority and governed by home rule, that is, not until the Maine Legislature invented the “municipal corporation serving as an instrument of the state”. This innovation happened when the state took over closed military bases and turned them into city-states, after first taking a trip to Washington to change the federal base closure rules that gave first priority over closed military bases to local organizations and reassigning first priority to the state. read full story here.
The MGA (Title 10, Chapter 701: GUARANTEE AUTHORITY.) was repealed in 1984 and then it was folded into the FAME corporation created in 1985 as a state corporation authorized to receive and invest funds from any source
§964. Organization and responsibility
1. Finance Authority of Maine.
The Finance Authority of Maine is established as a body corporate and politic and a public instrumentality of the State, and the exercise by the authority of the powers conferred by this chapter shall be deemed and held to be the performance of essential governmental functions. (emphasis by author)
The Finance Authority of Maine shall be responsiblso,for the administration of the:
A. Loan Insurance Program; [PL 2003, c. 537, §13 (AMD); PL 2003, c. 537, §53 (AFF).]
FAME insures a portion of loans made through participating financial institutions. Information on how FAME assesses the eligibility of a business or project can be found in our Commercial Loan Insurance Guidelines.
B. Revenue Obligation Securities Program; [PL 1983, c. 519, §6 (NEW).]
The Revenue Obligations Securities Program provides manufacturing and 501(c)(3) borrowers with state access to tax-exempt bond financing. This program is ideally suited for a borrower who plans to arrange their own credit enhancement. Borrowers may also use FAME commercial loan insurance up to the applicable insurance limit (currently $5,250,000). source FAME website
C. Municipal Securities Approval Program; [PL 1983, c. 519, §6 (NEW).]
The Municipal Securities Approval Program is designed to encourage job creation through the expansion of the activities of 501(c)(3) organizations or manufacturers. This program provides borrowers with local access to tax-exempt bond financing and is ideally suited when the borrower proposes to arrange their own credit enhancement. source FAME website
The phrase “essential governmental function” is repeated almost as many times as the Legislature charters new corporations, forbidden by Article IV Part Third, Section 14 of the Maine Constitution providing only an exception for municipal purposes and an exception for “if the object of the corporation cannot be achieved another way”.
The phrase may be an attempt to satisfy the second exception to Article IV Part Third, section 14, but falls short as it fails to identify a specific object that can’t be done another way. The generalized phrase is used over and over again almost as often as the Legislature charters corporations by special act of legislation. It is like a word salad dressing used to obscure inconsistency with the Maine Constitution.
The purpose statement for the Financial Authority of Maine identifies that the intention is to use wealth concentration to centrally control everything. Through wealth distribution, nonprofit organizations are incorporated under the government’s chain of command and the society no longer has three sectors, it has two- the centrally managed state and the grassroots free enterprise sector. The large corporate private sector, which would otherwise be included in the free enterprise economy, has merged into the state as a partner empowered to write the law as seen in Governor Longley’s board’s report and more recently in Appendix Q, the framework for HP 1489.
Today many non-profit organizations have for-profit subsidiaries where transparency vanishes into the private sector, as it also does in public-private relationships.
Today it is the fiscally sponsored individual that serves those interests underserved by government.
The government redirects capital to targeted sectors and becomes transactional, trading tax credits, tax exemptions, and public funding of job training and/or other expenses, in exchange for jobs paying higher wages and better benefits, and higher and quantifiable personal income tax revenues going into state coffers.
The path to complete societal control unfolds incrementally into what it was always intended to be, as is seen in the evolution of the Pine Tree Zones. In 2004 the Pine Tree Zone tax exemptions were passed for low-income high-unemployed areas. In 2009 the Pine Tree Zone tax exemptions were amended to become state-wide tax exemptions for targeted areas, no longer restricted to low-income high unemployment areas. Today the Midcoast Regional Redevelopment Authority located in wealthy Southern Maine is a designated Pine Tree Zone while in Maine’s poorest county. the Washington County Development Authority is not designated as a Pine Tree Zone.
The media reports that the Pine Tree Zone were replaced this year by Dirigo Business Incentive Program, emphasising job training. The new message is that Maine no longer needs to attract jobs, it needs workers trained in targeted sector skills. The replacement program is reported as Dirigo Business Incentive Program, however, a bill search and a statute search for Dirigo Business Incentive Program, and also An Act to Modernize Maine's Business Incentive Programs, came up empty. It is my experience that when an act is publicized without proper identifying information, there is usually a something significant in the act that is not reported in the media. Could it be that the Maine Space Corporation has changed the objective from attracting jobs to this:
Note added later. I discovered that when I copied and pasted the name of the act from the linked article, extra code was inserted like this An Act to Modernize Maine’s Business Incentive Programs I deleted the extra code from the title field and then Iwas able to bring up the bill HERE-more details in my next post
§13201. Maine Space Corporation established
The Maine Space Corporation is established as a body corporate and politic to carry out the purposes of this chapter. The corporation shall leverage the State's geographic, rocketry, manufacturing and higher education assets and capabilities to establish the State as a national and international industry destination and an authority in launching small launch vehicles and small satellites into polar orbit by: [PL 2021, c. 631, §1 (NEW).]
That’s bigger than what Governor LePage targeted in 2014 when he introduced An Act to Improve Maine's Ability to Attract Major Private Investments, promoting the bill as “Open for Business Zones”, a fivefold expansion of the Pine Tree Zone tax credits accommodating businesses with 1,500 employees.
In 1984 Beldon Hulls Daniels reported business sizes up to 500+. The population of Maine in 1984 was 1,155,635. in 2014 it was 1,331,217, a population growth slightly better than 1.15 percent in thirty years. source and yet the size of busines pursued by LePage is 300% larger than in 1984.
In the 70s when Maine was growing the largest small business sector in the USA, its population growth was exceeding both New England and the USA and not by small margins: The per capita income was lower but so likely was the cost of living. Much is made about a higher income but today with the working classes barely able to afford a place to rent without subsidized developers, and the cost of rent of subsidized affordable hoiusing keyed to 30% the renter’s income, and so as income goes up so does the cost of living, by design.
LePage’s bill was portrayed as a Right To Work bill because it includes a section titled RIGHT TO REFRAIN FROM JOINING A UNION IN TRANSFORMATIONAL BUSINESS EXPANSION PROJECT, undermining the workers right to bargain, mirroring the earlier attempts by Longley’s board to remove the bond approval authority allocated to the inhabitants of the municipality by the home rule amendment.
Gov. Paul LePage outlined legislation Monday to create “Open for Business Zones,” which he says would attract major employers by providing generous tax incentives and exempting them from collective bargaining requirements – a proposal that already is drawing criticism from labor unions......... The major components would provide a 100 percent corporate tax credit for the first 10 years and a 50 percent credit for the next 10; offer sales tax exemptions and reimbursements for as long as 20 years; and offer annual reimbursement to businesses under the Regional Greenhouse Gas Initiative Trust Fund to lower energy costs. LePage: Use big incentives to attract jobs to Maine by Eric Russell, Portland Press Herald, March 10 2014 (emphasis by author)
When asked whether he would support legislation without the “right-to-work piece”, LePage said “That’s what (companies) want.”, identifying whom he serves.
Remember this, in the Beldon Hulls Daniels firm reported back in 1984?
Fully 75 percent of employment and virtually all business establishments are associated with small firms. Businesses employing between ten and ninety-nine employees are collectively the most important employers of the size groupings presented, providing about one-third of total state employment. Businesses employing between 100 and 499, and 500 or more employees are also important employers, each providing about one-quarter of total state ·employment. Microbusinesses dominate the state in terms of numbers of establishments but provide a substantially smaller amount of employment than firms in larger employment size categories, less than one-fifth of total employment
Maine Small Business Development Finance Report by Beldon Hull Daniels, Inc 1984 if blocked by Chrome- google it!
Changes from 1984-2922
Table for number of businesses by size
Table for number of employees by business size
Between 1984 and 2022 the category of businesses in Maine employing more than one hundred employees decreased in number of employees by 4.8%
in 2022 Businesses employing between 100 and 499 account for 102,816 jobs or 20% of employment - down from 25% in 1984.
Businesses employing between 500 and 999 account for 25,721 jobs or .05% of all jobs. (category not included in 1984)
Businesses employing 1000+ account for 35,805 jobs or .07 % of fall jobs in the industries category (category not included in 1984)
From 1984 to 2022 economic growth was in the same class of businesses that dominated Maine before central management took over the economy as reported in the Beldon Hulls Daniels Report of 1984
Data from Table for number of employees by business size identifies the number of businesses employing 1-99 employees in 2022 accounted for 399,904 of the workforce out of a total of 507,72t1 or 79% of the workforce
In 2022, businesses employing 1-9 employees are 108,460 or 21% of the workforce, an increase from under a fifth in the 1984 report.
Businesses employing between ten and ninety-nine employees (correlating with Beldon Hull Daniels report) at 58% of the workforce, up from a third of the workforce in 1984
The authors of the charter for the FAME corporation might argue that the growth in the same prominent employment sector that pre-existed central management is evidence that central management policies worked as a trickle down effect, according to the assertions made in the purpose statement for the FAME corporation::
§962. Purpose
……….. scroll to end………..
The authority will serve a public purpose and perform an essential governmental function in the exercise of the powers and duties conferred upon it by this chapter. Any benefits accruing to private individuals or associations, as a result of the activities of the authority, are deemed by the Legislature to be incidental to the public purposes to be achieved by the implementation of this chapter. [1985, c. 344, §5 (AMD).] (emphasis by author)
Private individuals and associations benefiting directly from the public subsidization of private industry are workers with the negotiated jobs paying higher wages and benefits, the ownership class, including shareholders, and the State via the quantifiable revenue from income taxes on the higher paid jobs.
The Maine Legislators take an oath to uphold the Maine Costitution. The Legislators betray their oaths when they fail to provide a reason why the charter of the Financial Authority of Maine satisfies an exception to Article IV Part Third Section14 of the Maine Constitution or why it can be said to be consistent with the home rule amendment. The betrayal undermines the integrity of any other purpose statementt made.
But as the old adage says , actions speak louder than words, and after nearly fifty years the evidence is in. The wealth divide has consistently expanded under central management.
The GINI rating should be the official measure of new economic development planning, targeting a generous bell curve in wealth distribution.
The GINI rating should be the official measure of new economic development planning, targeting a generous bell curve in wealth distribution.
The corporate state positions itself as the negotiator between the workforce and ownership but is weighted on the side of ownership, as is seen in the expansion of the wealth divide since Maine and other states became centrally managed economies. The bill that Paul LePage was trying to push through is typical of the method used by state governments attract large corporations.
What would Maine look like if LePage had succeeded in his ambition? If the category of businesses employing between 100 and 500 employees created 50% of the jobs in 1984, what happens when the public subsidizes the capitalization of companies employing 1500 or more employees,starting with 40% of the capital investment of major corporations? Does the state become beholden and subservient to major corporations that dominate the job market?
Or - does the state become its own major corporation that dominates the job market and all the resources of the state?
Fortunately, those corporations do not dominate our job market, but they do dominate the corporate welfare programs. Unfortunately its not much different when the state displaces private major corporations with state-run major corporations, except that state -run corporations also write the laws that govern everything.
In the centrally managed paradigm," being competitive with other states” means giving large corporations the largest subsidies.
But Maine also competes with its bordering state, New Hampshire, which does not have an income tax so there is nothing in it for the state to centrally manage the economy, and yet New Hampshire consistently beats Maine in measures of economic success, source source
New Hampshire Small Business Facts New Hampshire Small Biz Statistics
MANCHESTER, N.H. —
Here in New Hampshire, around 85% of businesses in the state are family-owned. Through hard work and collaboration with other organizations, family-owned businesses in New Hampshire have been able to flourish from generation to generation. source
The most recent NH data by business size showing the first quarter of 2023 is too much to analyse in this post but the category “None in March” pops out. The name of category is an odd one. Based on correlation with the rest of the spread sheet , I interpret it as self employed individuals who do not hire other employees. It says “None in March” to clarify that none in this category were added in March.
“None in March” is the highest wage earning category. Compare a weekly wage of $2727 for this category to $1487 weekly wage for business that employ 1000+. What’s going on here? That is the question.