Sunday, January 15, 2017

To Thrive

Gross Domestic Product – that’s what we call the barometer of our economy. Kind of a weird moniker if you ask me.
Lately, I have been thinking about wealth disparity, happiness and the government. My libertarian friends want to unleash the economic potential of every American by removing the regulations in banking, work place rules and environmental laws. Initiatives like raising the minimum wage, incentives for buying electric cars or anything the consumer protection bureau wants done are, in their opinion, killing free enterprise. I have different thoughts. I have begun to look at all government rules from the perspective of whether or not they allow people to thrive. People – not industries.

Automatically assuming that all government regulation is bad is not only unhelpful, it frames the discussion in a way that presents a false choice – government or no government. In reality, government is essential to a well-run capitalist system. Government protects the property of capitalists and “regulation” is the framework in which their businesses function. Without it, there would be chaos.

 So let’s look at a simple, small industry to illustrate my point – beer. According to the Craft Brewers Association, “by the end of the 1970’s, the beer industry had consolidated to only 44 brewing companies. Industry experts predicted that soon there would only be five brewing companies in the United States”. But then something happened – home brewing, brew pubs, and small craft brewers began to flourish. In October 1983 in Portland Maine, David and Karen Geary began the first craft brewery on the East Coast. Since then, the industry has made slow but steady progress. In 2012, Heather Sanborn of Rising Tide Brewery, used her skills as a lawyer to have a law passed in the Maine Legislature that allow breweries to charge for samples at the brewery. This was a simple change in a “regulation” that had a profound effect on the craft beer industry in Maine. Today in the city of Portland, there are 14 breweries, 5 distilleries and a meadery (honey wine).  There are two brew bus tour companies, two “beer reporters” who review small batch releases, numerous restaurants that specialize in beer (one with 40 taps) and three brew festivals a year. The explosion of business can be directly tied to Sanborns’ law. Libertarians will argue that she “reduced” the regulations, but that is a false premise. As I said before, there is a framework in place (government), the trick is to tweak the framework to allow people (not industries) to thrive.

Because of this new law, there are dozens of entrepreneurs living out their dreams. Understand, I don’t think brewing is going to save America – or even Maine -  from globalization or the robots that are taking over manufacturing. But I look at this small industry and think of all the mortgages that are paid with beer revenue. And more importantly, I see how it affects the community.  We are proud of our beer. Many Mainers, myself included, would not buy a beer made in another state unless there was no other option.

Buying Local – this concept is supposed to be rather wooly headed according to the Cato Institute. Here in Portland, we have an obscenely flourishing independent restaurant industry. We have restaurant barons - Jason Loring (Rhum, Slab and Nosh), Dana Street (Street & Co., Fore Street and Scales), and Harding Lee Smith (the five “room” restaurants) to name just a few. Different than any other place in America that I know of, we have a franchise ghetto over near the Mall. If you want to go to Applebee’s, you go there. Local is an obsession with most Mainers. The direct result of this wooly headed concept is a state with 1.33 million and a city of just over 66,000, with some of the best food, best coffee, best beer and best liquor made in America. And most importantly, it has a wealth of business owners making their dreams come true.

This richly complex community causes other, more GDP sensitive businesses (IDEXX, Jackson and Bigelow Labs) to start businesses and stay here in Maine. I heard a story from Jean Hoffman, founder of Putney Inc., about being pressured by the investment bankers to move her business to Boston because that was where the talent pool she needed would be. She told them to go suck eggs. She was never at a loss for quality employees. A few years later she sold the business to Dechra for 200 million dollars. She then gave a substantial amount of her earnings to her employees in bonuses – every one of them.

To Thrive
1) to grow vigorously :  flourish
2)to gain in wealth or possessions :  prosper
3)to progress toward or realize a goal despite or because of circumstances.
People – not industries.

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