As everybody knows, Vermont has a bad business climate.

Everybody knows it because everybody’s been told it early and often. Politicians, led by none other than Gov. Jim Douglas, regularly bemoan the hostility visited upon businesspersons and entrepreneurs. The business leaders themselves rarely miss a chance to proclaim that were only Vermont’s regulations weaker and its taxes lower, especially on the wealthy (meaning, often, them) they would employ far more workers. Even more rarely do most newspapers and TV stations fail to report those contentions, or to cite “studies” asserting that Vermont’s economy is stifled – if not strangled – by state policies.

It’s almost unanimous.

Oh, except for the actual data.

They (the data) say Vermont is one of the more affluent states, with an economy that grows (and, these days, shrinks) roughly in concert with the rest of the country and/or the region. They say that the state’s economy has its problems, but so do all the others states, and raise the question of why, if Vermont’s business climate is so bad, business in Vermont (until the Recession) isn’t.

Now comes a new report indicating that the business climate couldn’t be that bad because (again until the Recession) Vermont’s economy was quite healthy, another way of saying that business was good.

Better, according to several measurements, than in most other states, including those where taxes are lower and regulations looser.

For instance, according to the report, The Vermont Job Gap Study, Phase 10, Part 1, from 1998 to 2007 Vermont’s rate of job growth was the highest in New England, the 17^th highest in the country, and higher than five of the nine states which have no personal income tax, including neighboring New Hampshire.

During those same years, the study shows, the per capita Gross State Product, grew (in inflation adjusted terms) faster in Vermont than in 45 other states.

“If Vermont was ‘anti-business,’” the report said, “we would not see this result.”

Not that everything is economic peaches-and-cream here, the study acknowledges. Vermont lost manufacturing jobs during those years. But so did 43 other states, 35 of them at a faster rate.

For at least two reasons, this study should be viewed with some skepticism. The first reason is that all studies should be so viewed, in accordance with The General Law of Studies: Every study reaches the conclusion its studier wished to conclude before he/she obtained his/her first datum.

The second reason has to do with its pedigree. The study was written by Doug Hoffer, the Burlington-based policy analyst whose politics are decidedly left of center, on behalf of the Peace and Justice Center, whose politics might be to the left of Hoffer.

In addition, Hoffer used economic statistics from something known as the National Establishment Time Series, not from the standard U.S. Government sources, the Census Bureau or the Bureau of Labor Statistics.

But it isn’t as though the NETS is some kind of Marxist cabal. It’s associated with the Dun & Bradstreet financial services empire, putting it smack dab in the Wall Street mainstream. Firms that subscribe to it base some of their business decisions on its information.

Hoffer said the NETS statistics are better for assessing a state’s economy. Their samples are much larger, he said. In addition, BLS employment figurers are based on payroll surveys, which omit many single practitioners, who are quite common in Vermont.

(For instance, the News Guy probably would not be considered an employed person by the BLS, but might be by NETS. Which appraisal is more accurate will be left to others).

There is no indication that Hoffer cherry-picked either his numbers or the dates he used to make Vermont look better. Not much happened in Vermont between 1998 and 2007 that did not happen in the rest of the country. And his findings are consistent with those of other studies, including (see below) some undertaken by those on the other side of the political spectrum.

So the data – the actual, empirically testable evidence – leads to the conclusion that a business can thrive and prosper in Vermont about as well as in most other states. This is not to say that there are no problems facing businesses in the state, some of them worse here than elsewhere. For many firms, Vermont is far from raw materials and big markets. Some companies have trouble finding enough qualified workers. The state is small, rural, and atypical, all in an economic climate that confers advantages on metropolitan areas, dense population centers, and standardization.

But what about the argument from politicians and some business leaders that Vermont does have a poor business climate? It has to be based on something.

It is. But it is not based on data. Take a look at the presentations made last year to the Blue Ribbon Tax Structure Commission by the Lake Champlain Regional Chamber of Commerce and the Greater Burlington Industrial Corporation.

They are not insubstantial. They are full of facts, suggestions, anecdotes, proposals, and assessments, some of which are undeniably correct and some of which are debatable. But they make no statistical case that Vermont’s economy is weaker than any other state’s.

Then there are several business-sponsored studies reporting that many business executives in the state (and a few outside it) find Vermont “unfriendly” to business. But with one exception, these are not based on data either, but on the impressions of the business executives surveyed.

Some of their specific complaints are no doubt legitimate. But any survey of business people, or lawyers, or teachers, or (let’s not omit) journalists is going to elicit complaints, because (a) ours is a culture of victimization whose real motto is “woe is me and mine;” (b) under the “squeaky wheel gets the grease” rule, they’d be fools not to complain.

Besides, some of these surveys are weird. Take the one by the very conservative American Legislative Exchange Council which put Vermont next-to-last for pro-business policies between 1997 and 2007 (similar to Hoffer’s time period). But in those years, the study had to concede, personal income per capita grew by 61.2 percent in Vermont, the seventh highest in the country.

Most residents of most states would love to have such a poor business climate.

In fairness, many Vermont business leaders do not complain about state policy. Among the business organizations here is the liberal Vermont Businesses for Social Responsibility. Not every business leader always agrees with the lobbyists from the Chamber, the Business Roundtable, and the GBIC. Nor do those organizations contend that the state’s business climate is all that terrible.

“This can become a sort of self-fulfilling prophecy,” said Tom Torti, head of the Lake Champlain Regional Chamber. “You play with fire when you say things are always bad.”

And Seth Bowden, the Director of Business Development for the GBIC, said his organization is “not trying to make a case that we have a bad business environment. Every state has got its pluses and minuses.” Bowden even said Vermont may have been wise in “trying to control growth in particular ways,” though he added that “sometimes that doesn’t work out for some of the businesses.”

It isn’t that neither man had complaints about the state’s economic policy. Not surprisingly, those complaints had to do with taxes, and here the business community is not entirely without statistical evidence. Though even the Tax Foundation has given up arguing that Vermonters shoulder the highest state and local tax burden in the country, there is no doubt that taxes here are higher and more progressive than in most other states.

There is substantial doubt, though, that the current tax structure is bad for business, especially when there is so much evidence that business isn’t bad, or wasn’t before the Recession, and is still not as bad as in many other states.

The tax angle, however, deserves a separate discussion. Tune in Friday.

First, a little housekeeping: Readers who clicked in early Wednesday morning saw the old post from Monday on the site. Sorry. The demons who, it seems, occasionally usurp control at Word Press, disobeyed their orders to publish a new post at a few minutes after midnight.

Plans for subjugating these demons are afoot. Meanwhile, be assured that every Monday Wednesday, and Friday, the News guy will either: (a) have a new post; or (b) make known that there will not be a new post, and also explain why. So if you click in early and find nothing but the old post, you will know that the demons have been active again. Click in again an hour or so later. (And let me know, via email or Face Book; see below).

Had you done so Wednesday, you would have not only read about how almost all Vermonters want the budget cut, just not the parts they like, but also:  praise (really) for the Burlington Free Press; news of a special Thursday posting, which in turn revealed the News Guy’s liaison with the VT Digger web site.

Finally, several readers have noted that they wanted to get in touch via email but the News Guy’s email address is not on the site. They’re right. The address is not immediately visible. But just click on “send a news tip” under “pages.” The message will get through, and it doesn’t matter that it isn’t really a news tip. We won’t tell the demons. Or try via Face Book,

Now on to today’s post…

Diogenes (painting by Jean-Leon Gerome)

Vermonters who choose to peruse the news might be yearning these days for the reincarnation of Diogenes of Sinope, who lived some 2,400 years ago and was famous for walking around Athens with a lantern vainly searching for an honest man (Sorry, ladies, women didn’t count back then).

First and most famously were the statements, some under oath, by top officials of Entergy, that there were no pipes containing radioactive material underneath the Vermont Yankee nuclear power plant it owns and operates in Vernon.

Statements uncorrected until an underground pipe at the plant began leaking radioactive material, at which point Entergy officials conceded that there was one such pipe, or maybe a few, or as it turns out 47 and maybe counting.

Then we have the new study by a couple of New Hampshire economists, the subject of a good story in Saturday’s Burlington Free Press by the Associated Press’s Lisa Rathke, that our ski resorts seem to hype the weekend snowfall outlook.

Economists Jonathan Zinman and Eric Zitzewitz, skiers themselves, found that ski resorts (not just in Vermont) reported more snow on weekends than during the week, and substantially more than the nearby weather stations reported.

Sacre bleu! If we can’t trust ski resorts, whom can we trust?

(Perhaps no one. Remember this adage first heard from a Roman Catholic priest: “love many, trust few, always paddle your own canoe”).

The ski resorts, needless to say, deny any mendacity, noting that it wouldn’t make sense because it would enrage more skiers than it would attract, and pointing out that there’s nothing unusual about ski slopes, which tend to be up there in the altitude department, getting more snow than the nearest weather station.

Rathke dutifully reports their side of the story. Zinman and Zitzewitz, however, have actual empirical evidence on their side of this argument. Their conclusion is based not on the difference between snowfall at the weather station and (reported) snowfall at the ski slope, but on the difference between reported snowfall during the week and on the weekend. The weekends, or course, are when the resorts can sell more tickets, and when they report 23 percent more snow than they do for Monday through Friday.

Obviously, there is no comparison in the importance of these two examples of…well let’s just say shortage of candor. Vermont Yankee provides a third of the state’s power. Whether to relicense it for another 20 years is perhaps the thorniest public policy question before the body politic. That goop leaking from its underground pipes can be toxic.

Skiing is fun. These days, as the AP story noted, there are “apps” for determining how much it snowed, where. Besides, the skier who gets fooled by the resort’s snow report has him or her self partly to blame. Why believe someone who wants to sell you tickets? You want weather info? Try the National Weather Service, or, in Vermont, the Lyndon State College Meteorology Department. It isn’t that government agencies and colleges never lie. It’s that in this case their only interest is getting the weather right.

In another sense, though, the same phenomenon lies beneath the lack of candor from both Vermont Yankee and the ski resorts. The cynical explanation of that phenomenon is to go back to Diogenes (often called “Diogenes the Cynic”) and conclude that had he managed to stay alive these two millennia plus, he’d still be travelling around with that cotton-picking lamp looking for an honest person, as we would now say, and never finding him or her.

The reality may be more nuanced. On Vermont Public Radio’s Vermont Edition last Friday, Rep. Pat O’Donnell, the Republican who represents Vernon, said she trusts the Vermont Yankee officials because she knows them and considers them honest.

There’s no reason to doubt that she feels that way, or that, on one level at least, she’s right. Let’s stipulate that each of the Vermont Yankee officials is, as a person, a decent and honorable person. Let’s make the same stipulation for the ski resort promotion folks who handed out those snow reports.

But in neither case was any of these persons acting as a person. They were acting as part of a corporate entity.

Don’t misunderstand. This is no populist rant against for-profit corporations, which are necessary in the modern world. This is “corporate” in its more generic definition – two or more people (two or more anythings, really) “united or combined into one body,” as the dictionary says.

It makes no difference whether that “body” is a utility company, a university, a foundation, a government, or the church-run food bank serving the poor. Once a person becomes part of one of those bodies, the person is no longer acting as a person, however honorable he or she may be as a person. He or she is acting on behalf of the corporate entity.

It isn’t the job of a ski area employee to tell the truth. It’s to get people to rent a room, buy ski tickets, eat in the restaurant, drink at the bar. Nor is it the job of Vermont Yankee officials to tell the truth. Their job is to advance the interests of Vermont Yankee.

In the latter case, they may have retarded the company’s interest by not being forthcoming about the pipes. But that’s a detail. The point here is that when it comes to believing anyone speaking in the interests of his or her corporate body, the wise citizen will love as he or she chooses, trust almost no one, and either paddle his own canoe or measure her own snow depth, or both.

BAGS

To illustrate how difficult it is likely to be to reduce the cost of public education in Vermont without also reducing the quality of same, please allow a local example or two.

These postings come to you from Barton, up in the Northeast Kingdom, where 153 children attend the Barton Academy and Grade School, not surprisingly referred to as BAGS by some, a standard kindergarten-through-eighth grade school.

For years, the school employed a professional, highly regarded school librarian, and the pupils had regular access to the library, where they could look up information, browse the shelves, get help selecting a book.

At the end of the last school year, she retired. To save money, the school decided not to replace her, at least for this year. Instead, the head of the computer room would do double duty at the library. By all accounts, she’s doing a great job. She’s capable, energetic, dedicated.

But she’s not a librarian. And because she has other duties, the pupils don’t have quite as much access to or guidance in the library as they did last year, and for many years before.

The decision not to replace the librarian was reasonable. That’s one less FTE (full-time equivalent) employee whose salary and benefits have to be financed by the taxpayers. In a tight economy, with school officials reluctant (as they should be) to raise taxes, leaving that position vacant is, at least debatably, the right choice.

But here is what is not debatable: A school with a fully functioning library presided over by a professional librarian is better than a school without them. It isn’t that BAGS isn’t a good school. Principal George Vanna said the library is “not boarded up” and is open almost as much as it was last year. The younger pupils still get their story hours. But Vanna also acknowledged that he’d rather have a librarian, even if only a part-timer. Maybe next year, he said.

In other words, saving money reduced educational quality. Perhaps not by much. Perhaps saving the money justified the reduction. But reduction it was.

As it almost was up the road at Lake Region High School, where the board decided to save money by cutting both the music program and the Spanish language program from full-time to half-time.

Again, a decision quite reasonable under the circumstances. But – again – a school with full-time music and Spanish instruction is better than a school with half-time music and Spanish instruction. Better enough to be worth the $68,000 needed to keep both programs fully functioning? Who knows? Either way, Lake Region would be a slightly worse school after the cuts (which were partially rescinded earlier this week after a public outcry; the board will try to keep both programs full-time).

The point here is not to express opposition to any of these cutbacks. In fact, it’s hard to see how anyone who served on a school board wouldn’t at least seriously consider approving those cost-saving steps. Whether those programs were worth the money is a legitimate question. But there is no question at all that they were worth something. So eliminating, reducing, or diluting them eliminates, reduces, or dilutes…something, a something which has value.

A lesson worth remembering as Vermont thinks about holding down school spending. In addition to Gov. Jim Douglas’s renewed call to “freeze” school budgets (not much more likely to be heeded than last year), Education Commissioner Armando Vilaseca is campaigning to reduce the number of supervisory unions and school districts, and even lots of Democrats speak openly about urging schools to consolidate. In Montpelier, at least, the established point of view seems to be that, in the current Washington health care jargon, something has to be done to “bend the curve” on school spending.

Making it all the more important to be wary of the commonly-heard claim by partisans on all sides that it is possible to cut costs without cutting quality. In theory, it may be. In practice, as the above examples demonstrate, it’s somewhere between hard and impossible.

Besides, some of the cost-cutting steps might not cut costs all that much. Vilaseca recently wrote of his supervisory union consolidation plan that, “my staff and I estimate this would save the state several million dollars a year.”

Kind of vague. Asked for elaboration, Education Department spokesperson Jill Remick supplied a Department study indicating that consolidation in Essex could save more than $600,000, or almost 25 percent, in personnel costs.

To put all this in some perspective, former Rutland Northeast Supervisory Union Superintendent Bill Mathis, who is skeptical about most of the cost-cutting proposals, pointed out (and Education Department statistics confirmed) that only 2.4 percent of the roughly $1.3 billion Vermont spends on public education (not including federal aid) goes to these central administration expenses.

“Let’s say we combined and saved one third of the money,” he said. “That’s less than one percent.”

Not a compelling case against consolidation. Less than one percent of $1.3 billion can be several million bucks. But Mathis’s larger point has merit. Almost everyone agrees that the big driver of school costs is the number of paid employees in and around the classroom, not the central offices. For several reasons (which will be examined in subsequent posts) Vermont has a lot them – teachers, teaching aides, counselors, librarians, technologists. The quickest way – if not the only way – to “bend the curve” of school spending is to have fewer of these educators.

Raising the threat of worse schools. A little-mentioned factor in this discussion is the real question of whether that “established point of view” in Montpelier is all that established among the electorate. Last year there was no “taxpayers revolt” against school spending at town and school meetings, as relatively few school budgets were rejected. With the lingering recession, it would be no surprise if more were defeated this year even though, in response to falling enrollments, schools around the state are cutting back.

Nobody likes high property taxes, but those were not a bunch of raging liberals who pressured the Lake Region School Board (raging liberals are not plentiful in this precinct) to put back the money for Spanish and music classes. A few made clear that if it took higher taxes to preserve today’s level of educational quality, then taxes should be higher.

Quite possible a minority outlook. But nobody’s really taken a poll on the matter, and there was the comment not long ago by one man whose politics are relatively centrist and who has no children in the public schools. When someone pointed out that Vermont spends a lot of money on education, he asked, “where else should we spend a lot of money?”,