Paul Romer of New York University’s Stern School of Business last week won the Nobel Prize in economics for being able to connect the power of ideas to economic growth. His model stresses the need to create and support an environment that puts the sharing of ideas at the center of any collaborative effort. Governments, he notes, can serve as catalysts for this growth.
His efforts don’t win the applause of free market economists, who have long chided the role of government in any growth-related venture. But Mr. Romer was awarded his prize because his conclusions are beyond dispute. Governments don’t do the work, but they can subsidize the objective and the broader the initiative the more likely it is that other ideas are discovered.
It’s the understanding that gives Mr. Romer the hope that the Herculean efforts required to deal with climate change are within our grasp. There are 7.4 billion of us and if properly guided there is little we can’t do, he says.
But being “properly guided” is the challenge. It’s easier to be consumed by the frivolous than the substantive. Particularly on the national stage.
Mr. Romer’s belief, however, applies to us at all levels. It’s an issue of establishing priorities, and then following through.
Do we establish priorities in Vermont?
We do, but they are mostly kept within their agency, or department-related silos. We don’t cross one another’s turf very often. And it would be difficult to point out a central economic development related goal that involves the government leading the way, or incenting others to do the work.
The week before last, MassMutual Life Insurance gave the University of Vermont a $5 million gift to the school’s Complex Systems Center. The money is to be used to bolster the school’s data science and analysis efforts, with the first objective being to study “longevity and wellness, algorithmic fairness and measurement methodology for large-scale social systems.”
Anything that focuses on wellness has a potential effect on healthcare costs, so how can that be applied to the state as a whole? Is there a connection between UVM’s Complex Systems Center and the Agency of Human Services, for example? And could a tiny fraction of the agency’s billion-dollar budget be used in partnership with UVM, all devoted to the same health care cause?
Vermont has two basic economies — the greater Chittenden County area and the rest of the state. If solving problems — Romer-style — involves incentives and collaboration, how are we using that model to bring economic development ideas to rural Vermont?
Here’s what Mr. Romer said when discussing climate change and the formidable challenge posed by the report released last week by the United Nations: “One problem today is that people think protecting the environment will be so costly and so hard that they want to ignore the problem and pretend it doesn’t exist. Humans are capable of amazing accomplishments if we set our minds to it.”
He’s right. But we have to be led. We have to be convinced that a problem exists. And once convinced, we need to own it as our own and it needs to be approached as a public/private partnership.
Mr. Romer makes the point that solving problems is also an issue of scale. The more people who are involved, the better the odds of success. In Vermont, for example, solving problems can’t be the responsibility of the governor, or the president of UVM, of the Vermont Business Roundtable. It takes a broad coalition, and it takes the support of state government to sustain it.
We’ve never done this. We’re reactive, not proactive. We don’t have a government that leads aggressively or seeks to build coalitions devoted to solving problems. We don’t have a private sector that is inclined to look beyond its narrow needs. It’s the combination of both, Mr. Romer argues, that makes beneficial outcomes possible.
In Vermont, we have all the parts; we just need to put them together. What Mr. Romer is telling us is that’s the only way forward.
Emerson Lynn
St. Albans Messenger