RALEIGH – Of all the challenges that facing North Carolinians – regarding economic development, education, transportation, and other issues – perhaps the most serious is that the state’s political class is insular, arrogant, and woefully misinformed.
There’s one talent that you can say North Carolina has long exhibited: boosterism. Call it salesmanship, call it blarney, or call it bunkum – a word actually derived from the name of our own Buncombe County, from which hailed the 19th century congressman and infamous humbug Felix Walker. I don’t know why so many North Carolina politicians have been good at this. It’s just so. And in recent decades, they’ve been so persuasive in selling the rest of the country on the notion of a superior North Carolina model for economic growth that they’ve come to believe it themselves.
Look for evidence that North Carolina has something “right” that other states, particularly in the South, have “wrong,” and you’ll come up largely empty-handed. I’ve already pointed out that data on job creation and income growth since 1990 depict a North Carolina economy less successful than its neighbors, particularly towards the end of the trend. My colleague Chad Adams followed up with a more light-hearted comparison of the differing policies of North and South Carolina.
But wrongheaded notions about North Carolina as economic leader aren’t new. They’re not artifacts of today’s partisan politics. They’ve been a staple of political debate, legislative deliberation, and, I’m sad to say, mainstream journalism and history for at least half a century. When you read most accounts of North Carolina history, you get some version of the following story.
Up through the late 1940s, North Carolina was an economic backwater. The “Rip Van Winkle State” during much of the 19th century, it took a leap forward when some “progressive” politicians came into power and boosted government spending on education in the late 19th and early 20th centuries. Then came the moderate-to-conservative Shelby Dynasty, beginning with the election of Gov. Max Gardner in 1928. While making some tough decisions during the Depression, it wasn’t “progressive” enough. It ended with the 1948 defeat of gubernatorial candidate Charles Johnson, the dynasty’s more-conservative man, by Kerr Scott, the more-“progressive” leader of a faction he called the “Branchhead Boys” (a reference to farmers living upstream of the state’s river systems).
Scott got the state moving again with higher taxes and bond issues to fund improvements in roads, schools, and rural infrastructure. A little later, Gov. Luther Hodges helped launch the Research Triangle Park, which would revolutionize North Carolina’s economy. Subsequent governors expanded the University of North Carolina system, the community colleges, and state subsidies of emerging industries such as microelectronics and biotechnology. Because North Carolina’s leaders were more willing to spend taxpayer dollars on public investments than were leaders of other Southern states, the state’s tax burden did, indeed, come to surpass most of them – but it was worth it because North Carolinians received a generous return in jobs and incomes.
Except that, well, North Carolina’s economic outcomes were not superior to those of its neighbors and peers during this period, as far as I can tell. One way to look at relative economic performance is to measure per-capita income as a share of the national average. North Carolina did show major improvement in this measure from 1950 (when per-capita income was 71 percent of the national average) to 2005 (90 percent). However, our neighboring states all experienced larger improvements during the same time-frame – 20 percentage points in Georgia (to 90 percent in 2005), 21 points in South Carolina (to 82 percent), 22 points in Tennessee (to 90 percent), and 26 points in Virginia (to 109 percent).
Using a more general measure, gross domestic product by state (what used to be gross state product), North Carolina’s growth from 1963 to 2005 was slower than that of Georgia, South Carolina, and Virginia, and only modestly higher than in Tennessee.
I’m not saying that some of North Carolina’s growth in public spending since 1950 hasn’t been valuable, both for economic and other reasons, but it is a logical fallacy to suggest that our state has done something unique that has resulted in uniquely robust economic growth. The second premise, uniquely robust growth, appears unfounded. I’m not convinced that the first premise is true, either – most states appear to have done pretty much the same things during this period, more or less, despite the persistent myth of North Carolina Exceptionalism. If anything, North Carolina’s recent policy choices have involved somewhat higher taxes, somewhat more spending, and somewhat worse economic outcomes than our neighbors’, suggesting that a different theory about what makes state economies prosper might be better fit the facts than the one favored by our current bunkum-peddlers, in and out of office.
In any event, North Carolina’s leaders should be looking to other states to see what they are doing that we can emulate. Unfortunately, few perceive the need. Because they’ve read boosterism disguised as history, plus a couple of annual surveys that show big-business consultants around the country do particularly like scamming incentive goodies from credulous Tar Heel governments, our leaders think North Carolina is already tops.
Yes, we are – but not on lists we should want to top. We have the worst tax climate for business in the South, for example, according to the Tax Foundation. Yippee.
Hood is president of the John Locke Foundation.