If you have an appetite for irony, consider the economic foundation of the fastest-growing sector of the Vermont personal income structure: passive income. It might be based on past personal savings, public- or private-sector-earned pensions, or so-called "insurance" programs from government, or inheritance.
Whether monies earned in financial-markets-speculation (or trading, if you prefer) as opposed to real work, are active earned or passive unearned income, is a philosophical issue beyond my pay grade, for the purposes of this column. Here's another philosophical point: isn't money just a compact form of previously created and stored energy?
And therefore, isn't the monthly trust-funder income check not much different, in origin and function, from coal or oil? Isn't it -horrors-a fossil fuel? And, if they don't dip into their principal, aren't such monetarily-funded trust-funders spending sustainably? A pair of neat little ironies, there.
All this came to mind with the recent publication of the third edition of "Rich States, Poor States", an American Legislative Exchange Council research effort which ranks the States on a variety of economic indicators ranging from growth in gross state product or Employment (deemed "good things" by ALEC writers) to property tax bBurden or unemployment (deemed "bad things" by ALEC writers) and, summarized in a Policy vs. Performance score for each state.
Vermont scored 49 out of 51.
Utah scored no. 1. In the first (2007) edition, Vermont scored a 50, and Utah no. 1.
Lots of stats, hard-to-dispute rankings, and one basic logic gap, which is only hinted at by the "Policy vs. Performance" scoring system: there was no recognition that Vermont, (with the barely possible accompaniment of Maine or Washington or Oregon) did not-at-all, as a matter of state policy, actually seek to achieve the goals measured in the ALEC study.
Compare, for example, Vermont (49) and New York (50) in the just-published study, which assumes that both jurisdictions were eagerly competing in the arenas of economic growth, job creation, capital investment, and in-migration. What if they weren't?
What if, as seems evident to your humble scribe, New York, (no. 3 in population with 19.5 million) inescapably tied to the national and global economy in every aspect from shipping and manufacturing to communications and finance, has been trying really hard (a little edu-speak, there) and deserves points for effort if not achievement in the competitive economic arena? And what if Vermont (49 in population with .6 million) and no longer a major presence in commercial agriculture, manufacturing, destination tourism, or even (see my recent "Road not Taken" column) education, is now aggressively un-interested (not dis-; quiz your high school English student on this) in growing its economy, population, wealth, or standard-of-living? ALEC's study made no such policy-intent distinction. Others have: for a tangential example, consider the formerly-published Energy User News, which typically printed a range of news and numbers and always used the last page for a detailed state-ranking stats chart, one column of which rated regulatory climate.
Vermont typically received a D, and not by accident; as the late FDR famously observed, "nothing in politics happens by accident". A state government eager to shut down a third of its electric power can't be considered, as the ALEC study does, a serious competitor in the arena of states looking for citizen prosperity via gains in production and productivity, what are still called economically Progressive ambitions, but are certainly not politically Progressive ambitions.
ALEC hasn't yet done the study which compares state-by-state success in de-industrialization, "smart-growth", local-vore-ism, more green energy and less manufacturing, passive-income growth, and, of course "sustainability".
I'd guess that the new Vermont would score close to no. 1.
Consider this contrast: a frequent letter to the editor writer in Middlebury advocates dissuading population growth, natural or inmigration, and applauds the job-seeking or tax-fleeing outmigration of recent years as a welcome population shrinkage toward "sustainable" levels. Conversely, ALEC scores net-in-migration as a "good thing", a marker for economic attractiveness, growth, and prosperity.
Michigan leads in net outmigration, at -7.9 percent of population; while Utah shows a +0.5 percent. Vermont shows a +0.2 percent, caused by, I'd guess, passive-income in-migrants slightly out-numbering active-income out-migrants, but ALEC doesn't differentiate.
In Table 6, Net Domestic Migration, the authors report on the large population gains for Florida and Arizona, the middling gains for Tennessee and Colorado, the small losses for Connecticut and Massachusetts, and the large flight from California and New York, but doesn't segregate by active vs. passive income. You can easily guess.
Consider the middle-class, working-age flight from California and Vermont. These are well-known patterns, the reverse of the retiree flow pattern into Florida and Arizona, but we don't know and can't guess the make-up, for example, of the north-to-south pattern of the shrinkage in the former Rust-Belt State numbers and the expansion in the former Appalachia. For a really good indicator, I'd propose the general direction of state K-12 enrollments.
These are all posted in the annual National Digest of Educational Statistics, a your-tax-dollars-at-work annual Federal publication, which you're not encouraged to look into by 49 of the 50 state education departments (Nebraska excepted) because its pages contain the annual NAEP test scores, and not the hired (easier) tests deployed by each of the 49 to show how "proficient" their charges have become under their tutelage. In the just-received 2009 NDES, table 34, you can see the enrollment pattern, 1990 to 2007, for each state.
Vermont is down by about ten percent from 105 thousand to 95 thousand. Wyoming is down similarly, from 98 to 87 thousand, and, I'd guess, for similar reasons: a growing passive income sector, job decline (in different sectors) and departure of active-income-earning young adults who, curiously, take their children with them when leaving. Wyoming has no business-hostility reputation: when Energy User News published its regulatory climate rankings, Wyoming typically got an A or B. WY ranks at 6 in Economic Outlook in the ALEC study, compared to Vermont's 49.
I'd guess, but don't know, that as a small-population state that could, like Vermont, adopt unspoken policies and behaviors to welcome and enlarge a passive-income economy, it doesn't want to. In fact, it ranks no. 1 among all 51 jurisdictions for Growth in Personal Income per Capita.
Final irony: both state economies, present or future, build on a fossil-fuel foundation: old energy, domestic or imported, stored in different forms and now being retrieved and spent. More on this interesting set of comparisons soon.
Retired Vermont architect Martin Harris observes Green Mountain State politics from a safe distance-Tennessee.