Get out of the way

THROUGHOUT ITS HISTORY, Massachusetts has faced daunting natural disadvantages. In the Colonial era, the state had neither sugar nor tobacco, then the commodities most in demand. By 1800, Boston’s port could no longer compete with New York harbor in depth or access to the country’s rich interior. In the 20th century, the state’s climate and erstwhile dependence on manufacturing seemed to doom it to be the eastern anchor of the Rust Belt.

But the Commonwealth’s history is also a story of how skilled innovators have continually reinvented the region’s economy to overcome such disadvantages. And since Massachusetts continues to perch on America’s cold, northeastern edge, the state must continue to reinvent itself if our idea-based productivity is going to continue to overcome our inhospitable climate and aging infrastructure.

The economic heat from the last reinvention—the transition from manufacturing to finance and technology between 1970 and 2000—is now cooling. According to the Division of Unemployment Assistance, state employment peaked in 2001, with 40,000 fewer people employed today than five years ago. Biotechnology may be the source of our next rebirth, but at the moment there is no guarantee that even miraculous medical discoveries will translate into large-scale employment, or even profits.

When Governor Romney was elected, Massachusetts faced the short-term challenges of an economic downturn and a fiscal crisis. These called for a firm hand on the budget. Today, we face the longer-term challenge of ensuring the state’s future economic vitality by reinventing ourselves once again.

To meet this challenge, we need a governor who recognizes that private entrepreneurs will be the region’s re-inventors, but also that government has a role in making the state a fertile place for innovation. As innovation is hard to micromanage, the best policy is to attract smart people and get out of their way. This is not laissez-faire, but rather a robust program for public action aimed at attracting and supporting innovators.

Education is the place to start. Better schools produce skilled children and attract skilled parents—and skilled people, in turn, attract firms and start new ones. But attracting the skilled doesn’t stop with schools; it extends to basic public services, such as transportation and policing, that improve the quality of life and attract workers from around the world. The next governor should also listen to the business community and be responsive to its desires, within reason.

Even more importantly, we need a governor who can steer clear of the obstacles to innovation each of the major political parties tends to put up. For the Democrats, these are onerous business regulations as well as a penchant for economic populism. Boston is still recovering from the upper middle class exodus associated with James Michael Curley’s use of taxes, selective spending, and rhetoric to wage war against the prosperous. Talent is too mobile to put up with such abuse.

The threat to innovation often posed by Republicans is tacit support for local communities that restrict development unreasonably. Local land-use controls are responsible for high housing prices and declining state population, as skilled workers get pushed to our Sunbelt competitors, like North Carolina’s research triangle.

To reinvent Massachusetts once more, the next governor will have to avoid merely walking the party line—and bring our state’s spirit of innovation to its highest office.

Edward L. Glaeser is Glimp Professor of Economics and director of the Rappaport Institute at Harvard.