Costs and Benefits: Reflections of an Oregon Economist

Professor Ed Whitelaw has been in the department of economics at the University of Oregon since 1967. A recognized expert on the state's economy, Whitelaw has written extensively about urban and regional economics, resource and environmental economics, and the economic consequences of policy decisions. He has served on advisory panels for organizations ranging from the Oregonian and the Portland Business Journal to the Northwest Power Planning Council, the U.S. Environmental Protection Agency, and the Governor's Council of Economic Advisors.

Much of your recent work focuses on the relationships among regional economic growth, environmental amenities, and natural resources. How can we most successfully balance these areas?

EW: By paying close attention to them. Historically and politically, we, as a state, tend to get seduced by the siren call of exports, whether it's two-by-fours, CDs, or wine. We forget that it is internal factors-our human capital, our education and training, as well as our natural capital, ranging from streams and rivers to the coastline to the mountains to the forest slopes-that play an enormous and determining role in the Oregon economy over time. How we deal with these things, husband them, conserve them, and use them shrewdly--that's really what determines our economic future.

You once wrote, "Growth, slow growth, no growth, the debate never goes away." Where are we with the debate now?

EW: Probably where we were when I said that! Well, actually I think we may have made some progress. I get the impression more voters are beginning to understand that with growth we get both costs and benefits and that individuals, households, firms, and governments should pay for or otherwise account for the cost they impose on others. That goes for traffic congestion, air pollution, noise, water pollution . . . the list goes on.

That's a list of what economists call externalities--things often overlooked in short-sighted accounting--isn't it?

EW: You got it.

How's Oregon stacking up to the rest of the country?

EW: Well, I still think it's a great place to live. And our unemployment rates are very low. Of course, this is a two-edged sword: more people who aren't here now will find it attractive to move here. Many of the things we value will be threatened by those who would like to share them with us. Therefore the growth, slow-growth, and no-growth debate will persist.

What role does education play in our prosperity?

EW: Education plays a complementary and pervasive role in helping the economy, in the human capital it builds through educating our kids as well as in the linkages between the researchers and teachers on our campuses and the rest of the state. By almost any yardstick you use to measure the state and its prosperity, education plays a very positive role.

How does education build capital?

EW: For economists, capital is the product of investment. It could be investment in machinery, buildings, roads, and sewers, it could be the investment we make to educate a ten-year-old elementary school kid, a twenty-year-old college student, or a fifty-year-old who is seeking some additional knowledge or training. Those are all investments that are durable, that last, and that we, as a society, can benefit from over a long period of time. In addition, there is the research, the ideas, the innovative, catalytic, stimulative role that a university can play.

How would you complete this sentence? "My biggest fear for Oregon is . . . ."

EW: The all-too-human traits of squinting, of myopia, of failing to see the forest for the trees, of failing to look beyond next November's elections, of living for today and forgetting tomorrow--all of those cliches. There isn't a quick fix, nor is there a silver bullet. It's complex, it's dynamic; and eternal vigilance is the price of prosperity.

Are you generally optimistic or pessimistic about where the state is headed economically?

EW: I confess to being a congenital optimist. In this case, however, I think there's a good chance we will blow it. By that I mean not exploit the comparative advantages we have in both our natural and our human capital. But I hope we figure it out--with time and education and thoughtful conversations, I think we might. I don't know that we will, but I think we might.

Back to INQUIRY, Fall 1997