RALEIGH – In my new book Our Best Foot Forward, I analyze the economic challenges facing North Carolina and offer a 10-point plan to promote economic growth across the state.
I should say right off the bat that my book is not a brief for anarchy or inaction. Government performs indispensable tasks that make economic success possible. It ensures law and order, protects property rights, and enforces the contracts that underlie economic transactions. Furthermore, state and local governments have long played a key role in infrastructure, education, and other services. Modern economies cannot function without these services, funded by user fees, charges, or taxes.
But many existing government programs don’t function as intended. Some of them should be left to private, voluntary action. Others require fundamental reforms that strengthen accountability for results, encourage competition and innovation, and offer consumers a choice of competing providers best able to meet their individual needs.
The 10 planks of my plan can be grouped into four categories: fiscal policy, regulation, infrastructure, and education.
Regarding fiscal reform, North Carolina must continue to collect sufficient taxes to pay for core services, but our current tax code is inefficient, unfair, and hostile to growth and investment. We need a new tax code that raises the revenue needed to fund services without discouraging business investment in physical and intellectual capital or family investment in the education and training of children – our human capital.
North Carolina must continue to protect the health and safety of its citizens, but our current regulatory code is also inefficient, unfair, and hostile to job creation. While state policymakers made a good start in regulatory reform during the 2011 legislative session, much more remains to be done. In particular, North Carolina needs to address the extent to which its laws, regulations, and rulemaking procedures place disproportionate burdens on job-creating entrepreneurs.
On infrastructure, North Carolina must continue to invest wisely and efficiently in the physical capital that makes modern economic life possible. But transportation, energy, and information networks do not necessarily require government ownership or control. Some assets, such as city streets and unlimited-access highways, are difficult to price, so government involvement may be inescapable. But for assets that lend themselves to consumer pricing, a better option would be private investment, management, or ownership. Such policies will make it less likely that North Carolina will waste scarce resources on low-priority projects or technologies preferred more by ideologues and activists than by paying customers.
For similar reasons, North Carolina must continue to invest wisely and efficiently in the human capital that makes modern economic life possible – but once again, there is no good reason to entrust the task to government monopolies. Our policymakers should learn from the experience of other states and countries that have 1) removed barriers to competition and innovation in education, 2) provided a continuum of diverse services and providers to serve the diverse needs of learners and employers, and 3) fashioned rigorous standards for judging the performance of students, educators, schools, and training programs. Most of the industrialized countries of Europe and the Pacific Rim produce a better-prepared workforce while spending only a fraction of the tax dollars North Carolina spends on education and training. Many of them also offer greater parental choice and competition in education, and focus greater attention than we do on students who are not university-bound.
These four areas of interest – taxes and spending, regulation, physical capital, and human capital – comprise the major policy recommendations in my book. In each case, I offer ideas that will make North Carolina a better place to live, work, invest, and create jobs. Most of these ideas already have proven themselves successful in other states or nations. They may sound good, and reflect the principles of free enterprise and constitutional government, but that’s not why I’m recommending them. These ideas work. They will strengthen our economic foundations and encourage invention, innovation, and profitable investment. This is not a hope. It is a prediction, based on hard evidence from other economies and from North Carolina’s own past.
Would you like to know more? I think that can be arranged.
Hood is president of the John Locke Foundation.