State Economic Challenges Can Be Met

12/23/2006

Paul Munnis


In spite of Mr. Bush crowing about a great national economy we have our problems. The good numbers that he is citing are largely the results of devaluing of the dollar, inflation, and market manipulation. On top of that various measurement indexes are cited which are actually meaningless measures of economic performance such as the Dow Average that only measure about 30 companies many of whom are multinationals.


It is now clear that the U.S. economy has slowed from 3.5 percent to about 2% since the summer of 2006. There is more evidence that we are sliding towards recession and that could quickly translate into “stagflation.”


There is some sense that the Fed can adjust interest rates and thus control the economy. History does not favor that viewpoint and often the Fed over-corrects, under-corrects, or is just too darn late in correcting.


Given these uncertainties I have some suggestions for Minnesota legislators.


First, concentrate on job creation in Minnesota. These jobs can come from the public or the private sector and should be value-add jobs that have good longevity.


Second, create tax credits and value-add offers to businesses seeking to relocate in Minnesota.


Third, invest in producing, on a consistent basis, an educated workforce.


Fourth, aim to produce better results than the U.S. economy by a factor of 50% or better.


In other words, use the State macro economic levers to create a top notch business and job climate here in Minnesota.


In doing this we need to concentrate on revitalizing the Port of Duluth so as to attract more shipping, we need to keep investing in agriculture. We need to attract businesses in the high tech sectors of Medicine and Biology. We also need to revitalize our State nursing homes, our state leisure and vacation industry, and our camping and recreation facilities plus our water use facilities for swimming and boating.


We are essentially arguing – “build it and they will come.”


Recessions do not last forever. While the rest of America is hurting for jobs and suffering a slow economy, we should be building, investing, and improving while enjoying the jobs that come from that. When the recession ends we will be in a position to capitalize on our investment and surge ahead even more.


The skeptic thinks – “great but where does the money come from for this?”


The answer is from the sale of State Bonds. Minnesota needs to establish State Transportation Bonds, State School Bonds, and overhaul our offerings of State Investment and Revenue Bonds and concentrate on selling low denomination bonds to the public at a rate competitive with bank saving rates. We need concentrated marketing efforts on these products in addition to creating new bond types. Since they will be tax exempt or at least tax reduced savings accounts then people will buy them because they are a good deal. They should be directed at pension funds in both the public and private sector as safe and good yieding investments.


Also, I continue to advocate for tolls on Interstate highways in Minnesota. When I encouraged this and it was then tried as an experiment in the Twin Cities it worked well and it is a nice cash-cow for Minnesota right now. The State Transportation Department needs to charge for Interstate Trucking and cross-state transit on our major roads and bridges. Doing so will produce plenty of revenue and that revenue can then be used to further assure the State Bond safety and to pay for capital improvement projects like waterways, roads and bridges. Rural Minnesota must benefit from this effort.


We encourage the legislature to view the anti-tax movement as a self-serving, scrooge mentality pushed by a group of free-loaders and that is causing our state infrastructure to regress while damaging our economy.


We should not be afraid of becoming the best State in the Union to live, work, and play in.