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State government should learn to get out of the way

With Oregon languishing in recession, it is tempting to think that government can create jobs by targeting and subsidizing the right industries and firms. This explains the current efforts to promote bioscience, 'sustainable' industry and sports franchises, and the efforts of the Economic and Community Development Department to subsidize new businesses.

Unfortunately, the track record of such job creation efforts is miserable, for obvious reasons. First, state government is not particularly astute at picking winners. From the idle, $50 million Pacific Aircraft Maintenance Corp. facility at Portland International Airport to a decade of failed Japanese stimulus efforts, there is little evidence that government is good at business. Rather, it ends up being a source of 'sucker money' for bad business ideas that the private sector, with good reason, won't embrace.

Second, the competition among states and communities for solid industry jobs is fierce. Consequently, the public subsidies needed to prevail in this competition often cost more jobs than they create.

We are better off figuring out how to get out of the way of business. We need to reconsider our restrictions on land for industry and homes and streamline our thicket of slow permit processes. We need to reduce the cost of health insurance mandates, minimum and 'prevailing wage' policies, system development charges and other social burdens we have placed on business.

Government has ignored its basic mission of providing a conducive business environment. Primary education policy is beholden to the public school bureaucracies instead of parent and student needs, so Oregon has high dropout rates and a weaker labor force than it should. And the massive Public Employees Retirement System, Oregon Health Plan, and highway and bridge problems risk making Oregon's future tax environment a deterrent to business if not handled aggressively.

Jobs will come if we get out of the way.

Randall Pozdena is the managing director of ECONorthwest, an economics and finance consulting firm. He is a former professor and vice president of the Federal Reserve Bank of San Francisco. The opinions expressed here are his own. He lives in Cedar Mill.