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Other Opinions: What can state do to help ailing economy?

Back when the book "Dow 36,000'' hit the stores in 1999, you could find intelligent people who believed the economy would no longer have down cycles. The no-cycle theory eventually burst along with the tech bubble that prompted it.

The state and nation are struggling through another economic downturn today, and you could see the stress in the faces of the 200 businesspeople who gathered Wednesday in St. Paul for a Minnesota Chamber of Commerce conference on the state's economy. If they came looking to be cheered by quick solutions, they left disappointed.

Again and again they heard from economists and opinion leaders from across the political spectrum: No, state government can't pull Minnesota out of the current economic malaise, although passing a bonding bill and funding needed road and bridge construction would eventually provide a modest boost. What state government can do is ensure that its policies position the state for growth in future economic cycles.

State Demographer Tom Gillaspy kicked off the conference with a mostly sobering look at the demographics that will shape the state's future. In the long term, Gillaspy said, Minnesota will grow, but as boomers retire its labor force will expand more slowly. That could mean slower economic growth unless productivity increases. The keys to optimizing worker productivity, the demographer pointed out, are technology and machinery, public infrastructure and a well-educated, highly skilled workforce. With a huge backlog of road and bridge needs and some disturbing trends in graduation rates, two of those keys pose major challenges for Minnesota.

Other factors play a role, of course, including corporate tax rates. But keeping commerce moving on our roads and ensuring that Minnesota has the kind of workforce that will attract and retain growing businesses is essential.

There's also the issue of creating a level playing field for business, which means limiting incentives that might help one company and region but hurt a competitor or simply move jobs from location to location. Case in point: JOBZ, the state job zones initiative that recently drew a highly critical review from state Auditor Jim Nobles. Among the fundamental flaws he found was this: Nearly seven in 10 companies that received tax breaks would have expanded even without them.

One bright spot stood out at Wednesday's event. Many forecasters predict the U.S. economy will pick up during the second half of 2008, according to panelist Art Rolnick, senior vice president and director of research at the Federal Reserve Bank of Minneapolis. For Minnesota and the nation, that change in the economic cycle can't come soon enough. -- Minneapolis Star Tribune