Exclusive interview with NH business leader Sean Mahoney

Sean Mahoney

Sean Mahoney: In the past decade, the closest analogy to the current economic downturn would have been the period following the internet bubble bursting and the economic damage caused by the tragedy of 9-11.   Most observers of market history accurately described the dramatic increase in dot-com valuations as an unsustainable bubble. Likewise, the housing bubble that has burst in the last twelve months was also unsustainable, having ridden a wave of 15 years of continual growth. The difference between the ’01 downturn and the ’08 downturn is that that this housing downturn has impacted every household, rather than participants in the internet the travel-related sectors in the ’01 recession.  This is arguably the broadest financial crisis since the 1930s. 

NowHampshire.com: Have you experienced weakness in your publishing business?

Sean Mahoney: Our advertising revenues are down slightly, but our advertisers continue to recognize the value of our publications in reaching their target audience. The event side of our business has actually increased year-over-year.  Unlike the newspaper sector, our business is not heavily reliant on classified, real estate or help wanted advertising, all of which are gravitating rapidly to the internet.

NowHampshire.com: Are there bright spots to come out of this financial crisis?

Sean Mahoney: Given the number of job losses, foreclosures, and declining 401(k) values, it’s hard to see any silver linings.  However, as a result of this crisis, many of the financial instruments behind the calamity on Wall Street, particularly credit default swaps, are unlikely to re-appear on the scene anytime soon. We can hope that there will be more prudence on behalf of investors in the financial markets and the speculative housing market going forward.  Once the recession is inevitably over, American companies should emerge leaner and more capable of competing in the global marketplace.

NowHampshire.com: Do you believe that NH still has an advantage or “leg up” on other states as a result of lower costs, taxes and regulations?

Sean Mahoney: New Hampshire continues to lead the other Northeastern states in terms of state gross domestic product increases and employment levels. It is among the friendliest to small business.  NH’s economy is dominated by small businesses, which create 75% of all new jobs, so it is vitally important that NH policymakers continue to fight against any broad-based tax and higher business taxes, both of which would discourage businesses from locating in NH.   

NowHampshire.com: The New England Economic Partnership recently released a study saying that New England stood to lose up to 250,000 jobs and experience 8% unemployment by the end of the decade.  What steps can the Granite State take to ensure it survives this economic recession?

Sean Mahoney: Lower taxes and regulation equate to greater job growth, so maintaining the New Hampshire advantage is vital to our state’s economic health.  Much of the state’s employment is in high-tech, financial services and manufacturing, all of which support are good-paying jobs.  Encouraging business start-ups and fostering a pro-economic development agenda will ensure that these jobs remain and grow in New Hampshire.

NowHampshire.com: New Hampshire actually managed to weather the storm better than our neighbors during the last two economic downturns (’91 & ’01). Do you think that will apply again this time? Why or why not?

Sean Mahoney: I do believe that the Granite State economy will hold up better than other regions.  So far during this recession, New Hampshire has fared better than most other US states, and it has not suffered the same dislocations it did in prior recessions.  First, New Hampshire’s housing market is not built on speculation and did not become as overheated as places like Nevada, California and Florida.  Second, the memories of the painful recession of ’91 is still on the minds of New Hampshire’s banking community and as a whole, NH-based bankers have been more conservative in their lending standards and loan structures than they were during the ’91 downturn.  Third, NH’s economy is broadly diversified across a spectrum of industries, thereby reducing our reliance on any one industry sector.

NowHampshire.com: What actions can the Obama Administration take to get the economy back on track?

Sean Mahoney: The Obama administration should declare a moratorium on private-sector bailouts. Congress hasn’t been forthcoming to the American public about the long-term impact these bailouts will have on the nation’s long-term health.  Further, these bailouts have a chilling effect on free markets, as they eliminate what economists refer to as moral hazard.  The bailouts create a bad precedent for the future, which may lead investors and managers to the wrong-headed conclusion that shareholder-owned companies can be “too big to fail”. If the new administration is serious about creating badly-needed jobs, it should cut taxes across the board to stimulate capital investment and create new job opportunities in the private sector.