Does North Carolina have a lot to learn from other states and countries?

Just about everyone active in state politics would say yes to this question, depending on the issue being discussed. Conservatives want North Carolina to emulate the pro-growth tax policies of states with healthier economies. Liberals want North Carolina to raise its education spending per pupil to the national average.

Each group has its favorite set of countries from which to borrow ideas, as well. In the health care debate, liberals frequently point to Canada as a model for government-monopoly health insurance – or even to the United Kingdom for full-blown socialized medicine. Conservatives prefer models based on private insurance and patient power, such as those in Switzerland and Singapore.

In my May column for Business North Carolina magazine, I write about the “grass is also greener” phenomenon in state politics by citing the example of the Netherlands:

Libertarians praise the country for its relatively lax social regulations on drugs and prostitution. Liberals admiringly observe that it provides universal health care (via a two-tiered system of government insurance and private supplemental plans) and imposes strict gun control. Conservatives favorably note that the education system has had extensive parental choice and competition for nearly a century, with more than two-thirds of Dutch students attending what we would call private or charter schools, compared with only about 10 percent of American students. Per-pupil costs are about 20 percent less than they are in North Carolina’s system while student achievement is much higher, especially in math. The Dutch tax system is friendlier to economic growth and investment than ours, with an effective capital-gains tax rate on corporate equities of 25 percent, about half the U.S. rate (figuring in taxes at all levels and the effect of corporate and individual levies).

Depending on your ideology, you may see broad tufts of green in particular Dutch policies. But there are weeds if you look closely. The Dutch certainly don’t think they have everything right. Their legislators are considering laws to discourage foreign involvement in the domestic drug and sex trades. Large-scale immigration is putting tremendous pressure on its welfare state, including its health-care and education systems, where some Muslim students are using tax money to attend schools that teach extremist ideology. Despite favorable tax policies, the Dutch economy suffered along with most Western economies after the onset of the Great Recession and has experienced contraction of its gross domestic product four of the past six quarters. As for crime, the Netherlands has one of Europe’s lowest gun-ownership rates and one of its highest murder rates. In 2011, it was the site of a horrific shooting that killed seven people.

My point was not to dismiss the idea of borrowing ideas from other places. I do it all the time. But we need to keep a couple of things in mind. First, utopia doesn’t exist. That’s what the word literally means: “nowhere.” If you are involved in North Carolina politics because you want to create a perfect government for a perfect state, you need to cultivate other interests in which you are likely to find more satisfaction. In the real world, perfection is impossible. Things that look good on paper, or from afar, might not work in practice. At the same time, ideas that strike you as unwise or silly but that get implemented anyway over your objection may turn out to be successful. Keep your mind open and your expectations in check.

My second point is that anecdotes can be interesting and illustrative but they do not constitute evidence for the success or failure of a given public policy. Always demand comparative statistics. Even if a problem gets better after a certain policy is adopted, don’t conclude it must have worked. Look for the trend line before the policy was adopted. In many cases, you’ll find that the problem was getting better anyway. False positives are common in policy analysis.

In other words, look before you leap.


Hood is president of the John Locke Foundation and author of Our Best Foot Forward: An Investment Strategy for North Carolina’s Economic Recovery, published by JLF in 2012.