RALEIGH – As the latest unemployment figures make clear, North Carolina’s economy remains one of the weakest in the United States. If it were a runner in a footrace, it would be that pale, wheezing fellow near the back of the pack.
You know the guy I mean. Back in the day, he was a champion. But then he got lazy and indulged his appetites. His muscles shrank and his waistline exploded. Now, he’s just not a contender anymore – except in his own mind. He sees competitors right behind him and thinks he’s still got it, when in fact he’s about to be lapped.
Like the self-deluded runner, North Carolina’s political class has yet to adjust its regimen to reality. Rather than slimming down and toning up, most politicians in power seem to think that the way to make North Carolina competitive again is to slow down, eat more, and tie heavy weights to its ankles.
Do I exaggerate? Consider their agenda. For example, having just enacted state and local tax increases well in excess of $1 billion in 2009, they hope to pass local referenda in 2010 and 2011 to raise sales taxes again.
Most of these same politicians supported recent expansions of state regulation than have already made it more expensive to live, work, and create jobs in North Carolina. For instance, the 2007 bill setting a “renewable-portfolio” standard will raise North Carolina electric bills by hundreds of millions of dollars a year and eliminate thousands of jobs when fully implemented. Their energy itch not yet scratched, most of these same politicians support a federal cap-and-trade bill or some state regulatory equivalent to limit carbon dioxide emissions, which would slash private investment in North Carolina, shrink the state’s economic product by billions of dollars, and eliminate tens of thousands of additional jobs.
It gets worse. Many of these same politicians celebrated when the federal government inflated the currency and borrowed trillions of dollars to bail out bloated banks, insurance companies, automakers, and state governments. Then they cheered when Congress and the Obama administration began devising a federal takeover of the health-insurance market, a policy that will again raise taxes, tighten regulation, and eliminate jobs.
With each successive increase in the tax, regulatory, and debt burden, it gets harder for the economy to recover. The odds move a little more against taking new risks, investing in new companies, hiring new talent. Scarce resources flow towards less productive uses.
Take a look at the issue of transportation. It’s no secret that North Carolina’s roads and bridges are in a severe state of disrepair, and that for all the billions of dollars collected in car and gas taxes in recent years, the state has failed to invest effectively in new highway capacity. The result has been massive and costly traffic congestion. To return to our runner analogy, the state’s economy can’t keep pace because its circulatory system is clogged.
Transportation expert Dave Hartgen, a professor emeritus at UNC-Charlotte, has done more than anyone else to diagnose North Carolina’s circulatory problems and prescribe the necessary remedies. His latest work, published by the California-based Reason Foundation, estimates the future economic costs of congestion in eight major metropolitan areas, including Charlotte.
Hartgen found that unless Charlotte chooses the right transportation policies to address five problem areas in and around the city – the airport, UNCC, downtown, and two major commercial and residential developments north and south of town – the region’s economic output will be $22 billion lower than it could be.
Charlotte is hardly alone. Hartgen’s previous research for the John Locke Foundation demonstrated similar problems with transportation plans in many other North Carolina cities, from the mountains to the coast. Nor is the problem one of inadequate taxes. There’s enough money in the system. It’s just being poorly spent on projects with low rates of return, such as rural road paving and urban rail transit.
“If you focus on the projects proven to improve mobility and eliminate traffic jams,” said Reason’s Adrian Moore, “your investment will be rewarded several times over. Shorter travel times increase worker productivity, spawn more jobs and help create more shopping, entertainment and dining choices.”
So here’s my plan to get North Carolina’s economy back into the race. First, tie no more tax or regulatory weights on our ankles. Second, focus on the basics – make North Carolinians safer and better educated. Third, unclog our transportation arteries.
Let’s start winning again.
Hood is president of the John Locke Foundation