Early in this year’s Legislative session, some lawmakers, businesspeople, and state officials became alarmed by the remarks an economist made during a Senate committee hearing.

The economist, Tom Kavet, noted that while the Department of Tourism and Marketing’s budget  had gone down over the past few years, — to $3.6 million from $5.1 million in 2002 — more tourists were visiting the state.

Kavet never suggested doing away with the Tourism and Marketing, though he did doubt that its activities had “significant near-term impact,” setting off worries that the Department’s funding was in danger.

“It got some people a little excited,” said Rep. Heidi Scheuermann, a Republican from tourist-dependent Stowe,

So Scheuermann, the Vermont Chamber of Commerce, the ski industry and the Department itself went to work to make sure that its budget wasn’t cut.

They succeeded. For now at least (pending possible further cuts because of the “Challenges for Change” process) Tourism and Marketing gets the same $3.6 million for Fiscal Year 2011 as for 2010.

So the “Crisis” – well, the argument – is over, at least for now. But the question has not been answered.

Make that two questions: Does the advertising done by Tourism and Marketing really bring more tourists to Vermont? And even if it does, should the taxpayers be paying for it? After all, ski resorts, golf courses, restaurants, marinas and the like are private, for-profit businesses. Most private, for-profit businesses pay for their own advertising and promotion. Why shouldn’t tourist businesses?

Without a doubt the answer to that first question is not a definite no. Advertising works; otherwise businesses would not spend billions of dollars a year to convince people to buy their product or their brand.

And that’s what Tourism and Marketing does, said Bruce Hyde, who heads the Department.

“We’re really the brand managers,” he said. “We saturate the media as best as we can with the Vermont message. Nobody else is doing that.”

And there is at least some evidence that it works. Erica Housekeeper, the Department spokesperson said (by email) that Tourism and Marketing’s web site “received an average of 66,600 unique visitors per month…and we see a bump in web traffic when we launch an advertising campaign.”

Probably more visitors to the web site means more visitors to the state. But “probably” does not qualify as data. It’s not as though the “Vermont brand” is unknown around the country. Perhaps many people, bombarded by promotion from every state and many countries, have to be reminded from time to time of Vermont’s existence as well as its charms.

But “perhaps” does not qualify as data, either.

In fact, one seeking data confirming that Tourism and Marketing promotions bring more visitors to the state will seek endlessly, and still probably not find.

Even confirming the effectiveness of the tourist promotion would not conclusively prove that the $3.6 million was well spent. It would depend on which criteria were used to make the judgment: That the extra visitors (the ones who wouldn’t have come anyway, without the Department’s promotions) had spent so much on hotels, restaurants, and gasoline that the tax revenue added up to $3.6 million? Or that their visits created enough additional jobs that the take from those taxes was $3.6 million?

Not that Vermont is going to abolish its Tourism and Marketing Department, which would be an act of unilateral disarmament. All the other states have similar agencies, and almost all of them spend far more than does Vermont.

“We arguably have the smallest state budget for tourism,” Hyde said, even though Vermont is “one of the states most dependant on tourism.”

Even with a lower budget and a staff that has dropped to nine from 20, the Department seems to be doing a good job. Maybe tourism has gone up even as the Department spends less money because it’s grown more efficient and innovative. Tourism and Marketing doesn’t just promote Vermont, Hyde said. Its web site provides a full-service, one-stop vacation planner for would-be visitors.

“It’s a free service for the entire industry,” he said.

Bringing up that second question. Why doesn’t the industry provide that service for itself? A lot of other businesses would like the state to do their promoting for them, too. Just to take one example out of thin air: suppose the state financed the promotion for start-up news web sites, especially those run by a proprietor who is uncommonly inept at the task?

Who knows? The web site might prosper so much that the proprietor could hire a local unemployed person as a part-time researcher. Presto! Job creation. Economic development.

OK, that’s neither a complaint nor a suggestion. Just an example to demonstrate that the state selectively showers its subsidies on favored industries.

Scheuermann calls that kind of thinking “short-sighted,” because “government entities support anything else with regard to people having jobs, to make sure that people are able to pay their bills and able to go to college.”

Except for the “anything else” part, she’s right. To maintain a healthy economy, government does support many private enterprises with direct or indirect subsidies. The difference with the tourism industry is that the subsidy is direct – a state agency picking up the tab for one of its major expenditures – rather than the more common tax breaks (though the state also forks over cash to some other businesses).

We’re not talking about a lot of money here; were the Department shut down entirely, the money saved would chop less than half-a-cent off the statewide school property tax rate.

But hidden in this discussion is an interesting – and indisputable – conclusion. There’s a lot of talk in this state (and country) about whether the government does too much and spends too much. This discussion about subsidizing Vermont’s tourist industry proves who really believes the government is doing and spending too much:

Nobody. Not if it’s doing and spending on them and theirs.

Sometimes the most important questions are the ones that don’t get asked, even by reporters, whose job it is to ask that next question.

Usually this failure to ask is more inadvertent than deliberate, and nothing in today’s post should be interpreted as criticism of any reporter. The first example, in fact, comes from a good story by reporter John Briggs on the front page of last Monday’s Burlington Free Press headlined, “Frustration grows over downtown scene.”

The story was about how panhandlers in and around Burlington’s Church Street Marketplace are harassing passers-by and angering store and restaurant owners who want those passers-by to shop and eat at their establishments.

No one has been hurt, but, Briggs wrote, merchants say the situation has become “unpleasant…and may seem threatening to potential shoppers and tourists.”

If anything, Briggs exercised excessive journalistic caution in attributing that conclusion to the merchants. The panhandling, often aggressive and vulgar, simply is unpleasant, and might well seem threatening, especially to women, children,  the frail or the elderly.

As a result, city officials are considering various steps, including passage of laws against blocking the sidewalks. The city council has already passed an ordinance prohibiting smoking in or near parks or recreation areas.

The story did an especially good job in dealing with the political and sociological tensions surrounding the dispute. The panhandlers, many if not most of them drug addicts, homeless, unemployed and perhaps unemployable, have their defenders and advocates who claim the business owners, and the council members working with them (merchants vote; street people do not) are indifferent to the plight of the poor and dispossessed.

Quite possible. And those poor and dispossessed are their fellow citizens whose humanity need not be belittled. But the needs of the non-poor, non-dispossessed should also be taken into account. Forget the merchants for a minute, who obviously have an economic self-interest here, and just consider all the folks – just regular folks, not particularly rich or poor or influential or even important (except in the sense that everyone is important )– who are walking along the sidewalks to shop, eat, sightsee or just meander.

They ought to be able to do this without being assailed by assertive drifters who clog the sidewalk and shout obscenities. This is not a free speech issue. Anyone has the right to set up a soapbox in the park outside City Hall and proclaim the most unpopular opinion imaginable. To the passer-by offended by that opinion, the only response – or at least the only American response – is: Who cares? Be offended. It’s the price for living in a free society.

But sidewalks are, as their name suggests, for walking, and those using them as they were intended to be used have a reasonable expectation that they will be neither impeded nor insulted. Regular folks have rights, too.

Reporter Briggs also did a good job pointing out that the problem had gotten worse because of the recession and because the local agencies that help addicts, the mentally ill and the homeless were stretched to their capacities and beyond. But now comes the question not asked:

Isn’t this what happens when the state cuts its social service budget?

At this point, that question can’t be answered definitively. It would take a great deal of research to make a direct connection between those budget cuts and the increase in the number of troubled panhandlers in downtown Burlington.

But for the last two years, the Legislature, prodded by Gov. Jim Douglas, has cut the budget of the Human Services Agency to hold down taxes and to maintain spending on schools, transportation, and other functions. They did this despite warnings from, among others, law enforcement officials (including Burlington Police Chief Michael Schirling) that the result would be more troubled or homeless people on city streets, creating problems that would have to be dealt with by local governments.

These cops seem to have had a point.

The other question wasn’t asked up at Morses Line.

This was last month, in another perfectly good Free Press story, this one by Matt Sutkoski, about the dispute between the Rainville family and the Department of Homeland Security’s effort (apparently about to be abandoned) to take part of the family’s farmland to expand a little-used border crossing station.

Among the sources quoted was a spokesman for the government agency who explained that no major improvements to the facility at Morses Line had been made for 70 years, and that the crossing station  “fails to provide the tools we need to guard against the threats to our national security.”

The question which should have been asked there was: Our What?

Because officials at DHS and its various sub-agencies have been throwing around that “national security” explanation almost every time there’s any debate about Canadian border policies. But the examples they give are invariably about attempted drug smuggling or foreigners trying to sneak into the U.S. to get a job or find a relative.

Stopping those activities is part of DHS’s job. But they have nothing to do with “national security.” The nation’s security is not threatened by a pot (or even heroin) peddler or an illegal farm worker. “National security” deals with threats to…well, the security of the nation, from foreign powers or – these days – from terrorists.

Since September 11, 2001, not a single terrorist seems to have entered the United States from Canada, and there is little reason to think a terrorist could get into Canada any more easily than he or she could come directly to the U.S.

“There’s lot of misunderstanding on the relationship between borders and terrorism,” said Edward Alden, a senior fellow at the Council on Foreign Relations in Washington.

Since 2001, Alden said, “there have been about 25 terrorist plots inside the US, involving 58 individuals. Thirty were US-born citizens, 11 were naturalized citizens, one had dual citizenship. Nine were legal immigrants or visa holders. Only six were here illegally and maybe one more, from the Middle East.”

Furthermore, he said, “illegally” meant only that they had overstayed their visas, not that they had snuck across a border.

“For the vast majority of incidents, the border was completely irrelevant,” he said.

There’s no guarantee that someday a terrorist won’t try to sneak over the border from Canada, as Ahmed Ressam, the so-called “Millennium Bomber” tried to do in 1999. He was caught at a border crossing station in Washington State. But that was before September 11, 2001. Since then, Canadian authorities have tightened their surveillance of refugee applicants, which was Ressam’s status at the time.

But like other anti-terrorism experts, Alden said that far more important than watching the Canadian border was working cooperatively with Canadian intelligence agencies.

“The level of intelligence  sharing with Canadian authorities is the best we have with any country,” he said. “It’s a very , very close and cooperative one. The US and Canada are trying to do the same things to keep these people out of North America altogether. They use similar systems to try to screen overseas passengers.”

If, as now seems likely, the Morses Line border station is closed, something will be lost; there will be less coming and going across the border for both business and social reasons.

That’s too bad. It has nothing to do with national security.

The head of a statewide business organization claims that the state’s “bureaucratic, arbitrary, time-consuming and expensive regulatory system” weakens the state’s “business climate.”

A small businessman argues that the high cost of workers compensation makes for a poor business climate.

Citing the ratings of business magazines, a legislative candidate laments the state’s standing “as one of the worst states in the nation for job growth and business climate.”

A pro-business think tank reports that the state has “one of the most difficult business climates in the nation,” and a pro-business journal notes that the state has “a well-documented bad business climate.”

No surprise, right? Vermont’s “poor business climate” has become a statewide mantra, and is already a factor in this year’s governor’s race.

Except that the above examples are from, in order: New Jersey, California, Wisconsin, Washington (State, not D.C.), and Maryland.

No doubt all these states have their economic problems, as do the other 45. It may be significant, though, that they are among the more prosperous states. Maryland and New Jersey have the highest median household incomes in the county. California isn’t far behind. Before the start of the Great Recession, Washington had the tenth highest per capita income in the country. Wisconsin had the 20^th largest economy, just about what it ought to have considering its population.

So why all the complaints about the “poor business climate”?

Because in almost every state, some (though not all) business leaders and their supporters in politics and academia complain abut the “business climate.”

They’d be fools not to. It’s a good argument for getting what business leaders often want: less regulation and lower taxes. Most business leaders are more wealthy than not, meaning that in state’s with (relatively) progressive income taxes their tax bills are (relatively) high (though, in Vermont at least, lower than they were a decade or two ago).

As to regulations, many of them are at least a big pain in the neck (forms to fill out and all that) and often a profit-reducing cost.

Furthermore, many businessmen think that they do not need most of the services financed by their and everyone else’s taxes. As it happens, they are at least partly wrong here. This year the Legislature approved more transportation spending than ever, according to House Speaker Shap Smith. Business interests did not complain. Roads are, among other things, a subsidy to businesses; the taxes they pay are a lot less than it would cost to build and maintain their own highway systems.

Schools are a subsidy to business, too. Vermont schools may be expensive, but firms would spend a lot more if they had to teach all their workers how to read, write, and do arithmetic.

Just because complaints about “business climate” are heard in almost every state does not make them totally invalid. In most states, a few costs could probably be cut and a few regulations eased to lubricate economic activity without harming workers, consumers, the needy, or the environment.

But not much. Otherwise, those costs would have been cut, those regulations eased. Almost all of them exist because they provide goods, services, and protection that people want.

What the near-universality of the “poor business climate” slogan does mean is that the phrase is meaningless. It is self-interested bumper-sticker drivel that does not deserve to be taken seriously.

Neither do the “studies” by some pro-business “think tanks” or business magazines that purport to rank states according to their “business climate.” These rankings are based on extraordinarily selective criteria, as if the studies were designed to promote a policy agenda rather than to examine the subject honestly. They were.

The studies do take into account a state’s spending, taxes, regulations, and labor union strength. They tend to ignore the state’s health care, education system, recreation and cultural amenities, and other factors which attract the educated, higher-income people who have money to spend, and are therefore good for business.

Among academic economists, who acknowledge that, as one of them put it, “exactly what constitutes a good business climate is not entirely clear,” there is no agreement on whether state taxes, regulations, and labor union power (weak in Vermont) have any discernible impact on economic activity at all.

“Considerable empirical evidence suggests that state and local taxes do not significantly impact the geographic distribution of economic activity,” noted economists Bruce L. Benson of Florida State University and Ronald N. Johnson of Montana State at the outset of an article in the journal Economic Inquiry hIn general, the consensus among economists who have carefully studied the data is that if these factors do affect a state’s economic performance, they do so minimally, and are therefore easily offset by the positive outcomes (good schools, parks, health care, etc.) taxes and regulations provide.

In Vermont, for instance, where the term is bandied about almost daily, the “poor business climate” argument faces an obvious challenge. If the business climate is so poor, how come the economy is relatively so good?

The “relatively” is emphasized because right now Vermont’s economy is not good at all. But that’s only because the national (and in fact the global) economy is not good at all. But compared to most other states – and especially most other states in its region – Vermont’s economy is somewhat better.

Its unemployment rate, though higher than it was a couple of years ago, is lower than the national or regional average. So is its poverty rate and its home foreclosure rate. Vermont seems to be coming out of the recession somewhat faster than most other states, based on the unemployment and job creation numbers.

That doesn’t mean that, from the perspective of some businesspeople, state laws and taxes are not a serious problem. But it obviously isn’t a big problem for all of them, or they wouldn’t be hiring more workers and planning new facilities, as many of them are.

Vermont’s regulations probably have their greatest impact on builders and developers. All states have environmental restrictions, but Vermont’s are among the most stringent. That helps explain why builders, developers, and realtors are among the most vocal critics of the state’s business climate.

But those regulations help other businesses, such as the software developers discussed in Friday’s post.   The regulations help attract affluent, educated, newcomers to the state, and John Canning of the Vermont Software Developers Alliance said that’s good for the software business.

The bottom line, to put it in business terms, is that objective examination of the “poor business climate” claim can not even define the term, much less find persuasive evidence of its existence in any state. Vermont, like the rest of America, is pro-business, and would be foolish to be otherwise. Everybody benefits from a strong economy, which in turn depends on the healthy profitability of businesses.

The “poor business climate” moan is just the whine-of-choice of some segments of the business community and the politicians pandering to them. In fairness to that community, they are hardly the only whiners these days. But as members of the wealthiest and most powerful faction in the land, they have less excuse.