Opinion: Daily Journal

Politics isn’t always the answer

Since the beginning of this year, there have been no net new jobs created in North Carolina.

In fact, using the latest data from the monthly survey of employers, there were about 2,200 fewer filled jobs in North Carolina in May than there were in December. In an era of intense politicization, it’s surprising that this trend has yet to get a great deal of attention.

If job creation had slowed to a crawl or stopped nationwide since January 1, you can be sure Democrats would be blaming Donald Trump and the Republican Congress. If job creation had slowed to a crawl or stopped last year, you can be sure Republicans would have done the same to Barack Obama — and linked Hillary Clinton to his failures.

And here in North Carolina, let’s be honest, if during the first five months of the administration of former Republican Gov. Pat McCrory, there had been no net job creation in the state, we would have heard a lot about that from partisan Democrats, left-wing activists, and the media outlets predisposed to magnify their message.

Make no mistake: I don’t think critics of Gov. Roy Cooper are falling down on the job. They shouldn’t be blaming him for the last several months of lackluster employment reports. Liberals shouldn’t be blaming the Republican-led General Assembly, either. Turning every piece of good or bad news into a political bludgeon generates only headaches and bruises, not constructive dialogue.

What governors and legislators decide to do can affect a state’s economy, to be sure. But these effects take time to manifest themselves, and aren’t typically large enough by themselves to explain fully a month-to-month or even year-to-year change in an economy’s trajectory.

In the long run, fiscal conservatives would say, states that keep taxes and regulations comparatively low while providing basic services will tend to experience stronger economic growth than the average. Fiscal liberals would respond that states that spend more on education, infrastructure, and other state programs will tend to grow faster.

Based on the empirical evidence to date, fiscal conservatives have the better argument here (primarily because state government expenditures currently appear to have diminishing returns — and after a certain point, arguably already reached, the incremental improvement in government services will be smaller than the increment of economic cost imposed by taxes). But neither model can or should be tested on the basis of only a few months of data.

What ought to worry North Carolina leaders, regardless of party or ideology, is that the labor market and other indicators are suggesting a recent weakening of the state’s economic momentum. During 2016, by contrast, the rate of job creation in North Carolina exceeded the national and regional averages.

Rather than attempting to explain these events in political terms, policymakers should interpret them as an argument for caution as they enact a new state budget. By all accounts, lawmakers have done so. The House-Senate budget deal will include substantial deposits into North Carolina’s savings reserves, as a hedge against the possibility that a near-term recession might eat into revenue collections while jacking up spending on Medicaid and other programs.

Cooper previously criticized the legislature’s plan to “squirrel away” this year’s surplus rather than spending it. He missed the mark on that, but was on firmer ground when he argued that the Senate’s original tax-cut package would have created too much fiscal risk in the out years.

Perhaps the past few months of soft job numbers in North Carolina will be followed by a surge in hiring later in the year. That’s happened before. Perhaps other economic indicators will trend upward. Still, better safe than sorry.

Political differences are large, persistent, and consequential. I certainly don’t think there is anything wrong with robust debate about how best to promote capital formation, business starts, job creation, and income growth in North Carolina. But not every economic question has a political answer. Believe it or not, sometimes politicians deserve neither credit nor blame for what happens.



  • ProudlyUnaffiliated

    Clown Cooper _is_ to blame. He has set a dreadful tone and sent all the wrong messages to everyone. NC looked like it was on a very promising economic course and, now, Cooper shows no signs of being committed to improving this state for business, people, or the environment. Cooper is a partisan hack who is 100% focused on regaining Dem power back, nothing else, this is obvious. I suggest businesses should hunker down and wait him out, NC’s great improvement is on hold now.

  • Kerry Wilt

    Good read John. So many factors such as fuel prices, USD strength and other “uncontrollables” play a role no matter who is governing. A state can and should control debt. Why would anyone move to Illinois and create a family debt of ~$65k starting day one? I am a conservative but support better pay for teachers because we know it is broken. Eliminating cars inspections for newer cars and spinning off ABC stores are controllable and will create jobs in the long run.