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Governors matter less to economy than they think

Last week's Maryland jobs report gave both gubernatorial candidates new meat to grind into sound bites.

Former Gov. Robert L. Ehrlich Jr., a Republican, could say that Maryland's unemployment rate rose for the second month in a row and that the state has lost "nearly 100,000" jobs since his Democratic opponent, Martin O'Malley, became governor in early 2007. (Actually it's about 80,000.)

O'Malley can say that Maryland's September unemployment rate of 7.5 percent is far better than the national jobless score of 9.6 percent, that Maryland has been adding jobs and that the state is emerging from the economic swamp in better shape than most others.

They're both right.

But they're both wrong if they think the information has anything to do with their leadership or should inform how anybody should vote next week. It's the economy that makes the governor, not vice versa.

Employment plunged in almost every state over the past four years. When Ehrlich notes that employment fell sharply in Maryland, too, he is merely observing that an economic disaster has hit the nation and that the law of large numbers did not create a mathematical exception for Maryland.

O'Malley and his supporters crow about the fact that Maryland isn't doing as terribly as, say, Pennsylvania (September unemployment of 9 percent) or the country as a whole.

True, there are 220,000 unemployed Marylanders, as Ehrlich notes. That's an increase of more than 10,000 since June.

But after hitting a low of 2.49 million jobs in January, Maryland-based employers have added about 36,000 positions through September, according to the latest estimates from the U.S. Labor Department. September saw a gain of 4,800 jobs after two months of declines, the Labor Department estimates.

Maryland unemployment has never gone over 8 percent during this slump. Instead of further economic deterioration, the recent increase in reported joblessness might reflect people's re-entering the employment market as economic optimism rises.

The overall Maryland picture, even if we allow for the fact that most of these readings are preliminary or approximate, is one of gradual recovery from a bottom that wasn't nearly as bad as it was in other states.

The problem for O'Malley is that his influence on any of this was negligible.

Maryland's economy has performed better because of its proximity to Washington and its reliance on jobs in health care and defense.

This state seems to have gotten a medium amount of stimulus spending per capita from last year's American Recovery and Reinvestment Act relative to that received by other states. But Maryland has benefited from its own, more-potent federal stimulus for far longer.

Two wars and billions more blown on homeland security and disaster preparedness have constituted the Maryland Welfare Act of 2001-2010, creating jobs on O'Malley's watch as well as on Ehrlich's.

Defense-base realignment is bringing tens of thousands of additional jobs. The medical industry, anchored by Baltimore's premier hospitals and enormous local spending from the National Institutes of Health, adds stability.

In the past decade Maryland has added health care jobs far out of proportion to its overall economy, benefiting from medicine's nonstop growth. Health care is one of the few American industries that never went into recession.

In this economy, a state with a substantial medical sector is blessed. A state with a substantial medical sector and tens of billions of dollars in extra federal spending is darn lucky.

And so is its governor. It's not plausible for O'Malley to claim credit for medical powerhouses established years before he was elected or for spending decided in Washington rather than Annapolis.

Politicians are rarely responsible for the economies they supervise — at least not to the extent that backers and opponents claim. Jimmy Carter was the victim of oil inflation and a loose Federal Reserve in the years before he took office. The Ronald Reagan boom resulted from falling interest rates and household formation by baby boomers. The Bill Clinton boom was all about a productivity revolution created by computers and the Internet.

Governors, wisely prohibited by the founders from making trade or monetary policy, have even less economic influence than presidents. And when they do, it takes years and often decades to make a difference.

Ehrlich makes a good point about one thing: Maryland's growth in the past decade has come largely from government jobs, not from those in the private sector. How will the state revive the private sector once the federal gusher dries up and the health care bonanza ends?

Unfortunately, if either he or O'Malley has a good answer, they have yet to express it.

jay.hancock@baltsun.com

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