The cornerstone of the Democratic presidential campaign is based on an economic "miracle" in Massachusetts that may be due more to Ronald Reagan than Michael Dukakis.
Much of the Massachusetts economic recovery spanning the three terms of Gov. Dukakis can be credited to the build-up of a high-tech industry - monumentally dependent on defense spending.The proliferation of high-tech defense contractors also can be credited to venture capital provided by courageous Boston banks that were the first to accept federal research projects as collateral for loans to high-tech entrepreneurs.
Where did Michael Dukakis fit into the picture? Banking and political sources in Boston say the governor could barely utter the words to credit defense dollars for his miracle. In fact, Dukakis repeatedly turned down invitations for tours of companies working on Pentagon projects.
Dukakis is fond of saying that George Bush "never met a weapons system that he didn't like." Sources in Massachusetts make it clear that Dukakis never met a weapons system he liked, at least until his national campaign.
He has been careful to support $1 billion a year for research on "Star Wars," but at the same time has called the Strategic Defense Initiative a waste of money.
The Massachusetts "miracle" took place between 1975 and 1988 when unemployment fell from 12.3 percent to 3.7 percent - the third lowest rate in the country.
Several studies have pointed to the underpinnings of the miracle - underpinnings that Dukakis fails to mention when he promises that he can perform the same miracle nationwide.
Two of the studies come from hotbeds of Dukakis support. One was completed in May 1986 by Ronald F. Ferguson and Helen F. Ladd of the John F. Kennedy School of Government at Harvard. The second study comes from the Economic Policy Institute, a liberal Washington think tank.
The Ferguson-Ladd study says that there was a tremendous economic recovery, but notes "neither the scope nor the timing" of incentives sponsored by the Dukakis administration "supports the view that they were a catalyst in the remarkable economic turnaround of the past decade."
They note that the high-tech industry fueled by defense spending was the key industry that turned around the unemployment rate.
The most credit that Ferguson and Ladd give the Dukakis administration is that "state initiatives helped to attract growth to some depressed central cities and slow growing regions and may have helped at the margin to sustain the state's revival once it began."
The Economic Policy Institute study says when defense spending "declined after the Vietnam War, Massachusetts fell into the worst recession of any industrial state; when it doubled under Reagan, the state's economy shifted into overdrive."