John Hood's Syndicated Weekly Column
RALEIGH – Lt. Gov. Walter Dalton wants a new job. President Barack Obama wants to keep his current job. The two Democrats have the same challenge, however. In order to win this fall, they have to persuade disaffected voters not to try a new direction in the executive branch.
Dalton won his short nomination contest against former Rep. Bob Etheridge by raising his statewide name recognition and counting on primary voters to remember Etheridge’s “Who Are You” debacle from two years ago. The strategy worked. But then Dalton had to retool for the general election against a much-stronger foe, Republican Pat McCrory. He had to choose a new strategy, one designed both to unify the party faithful and to draw swing voters to the cause of keeping a Democrat in the governor’s mansion.
Dalton chose poorly.
I was present at a recent National Federation of Independent Business event in Raleigh where both McCrory and Dalton made presentations. Setting aside the stylistic differences between the two men, there was a major difference in message. McCrory argued that North Carolina’s business climate was weak. Dalton argued that the state’s business climate was strong.
To support his claim, McCrory pointed to standard measures of economic performance. North Carolina has one of the highest unemployment rates in the country, for example. By contrast, Dalton supported his claim by noting that Forbes had ranked North Carolina as having the third-best climate for business and the best regulatory environment in the nation.
Do you see the problem? He was essentially asking his audience to believe Forbes magazine, not their own lying eyes. It was akin to President Obama saying “the private sector is doing fine.”
Furthermore, Dalton’s timing couldn’t have been worse. Just a few days after his NFIB speech, which got statewide press coverage, the May employment numbers came out. Our state had the largest monthly job loss in the nation. The data also showed that North Carolina’s rate of job growth has continued to lag behind the national average since the start of the Great Recession in 2007.
Building Dalton’s economic case around a magazine ranking was foolhardy. There are many different rankings of business climates, published by many different organizations. They don’t use a common methodology, so the rankings vary wildly. In evaluating state regulatory policy, for example, some rankings rely on surveys of business executives. Some rely on the existence or absence of specific classes of regulation. Some rely on estimates of compliance costs.
North Carolina tends to fare well in regulatory rankings that put a great deal of weight on our right-to-work law. But we don’t fare as well in rankings that focus on other policies such as safety rules or occupational licensing. It turns out that the Forbes ranking of regulatory climate is particularly weird. It is a catchall category that includes such factors as tax incentives, bond ratings, and transportation infrastructure. It isn’t really a measure of regulatory climate at all. Dalton should stop citing it.
More generally, suppose I told you that these statements were all true: 1) North Carolina’s unemployment rate is one of the nation’s highest, 2) our growth in jobs and income trails the national average, and 3) Forbes magazine says North Carolina has one of the nation’s best business climates.
Would your conclusion be that North Carolina’s economy is doing a lot better than you thought? Of course not. You would conclude that the Forbes ranking isn’t very useful as a predictor of economic performance. And you’d be right.
Dalton will never beat McCrory by trying to convince North Carolinians to stay the course. They don’t want to. Also, this strategy implicitly ties him to current Gov. Beverly Perdue, who happens to be one of the most unpopular governors in the United States. Dalton has been trying to distance himself from Perdue for months. But his economic message makes him sound like an incumbent, not an agent of change.
Which means it makes him sound like a loser.
Hood is president of the John Locke Foundation and author of Our Best Foot Forward, a book on North Carolina’s economy. It is available at JohnLockeStore.com.