RALEIGH – As I noted many times in the past, North Carolina’s economy is struggling with a number of burdens imposed by our government – including high marginal taxes, an onerous regulatory climate, and mediocre public services.
That doesn’t mean that our state lacks appeal to potential employers and entrepreneurs. Obviously, there are states in worse economic shape than we are. Michigan is a good example, and one to which plenty of former Michigan residents now living in the Tar Heel State will readily attest.
Interestingly, in defending the current political class, the Left is happy to cite national studies of business climate when they give North Carolina a good grade. But why, pray tell, would any studies yield good grades for our state? On the specifics, the Left tends to grow silent.
For example, while our tax burden exceeds the national average, North Carolina’s other costs of doing business are often lower than average. That helps offset the damage done by excessive taxes. We’ve traditionally had relatively low energy prices, for example. And partly because of our right-to-work law, rates of labor unionization are low in North Carolina, thus helping to increase our appeal to labor-intensive industries.
Now, what happens to be on the policy agenda for the Left? Raising North Carolina’s energy and labor costs, naturally.
Liberals want to pass climate-change legislation and other air-quality regulations that would dramatically raise the cost of generating energy. That’s a tax not just on households but also on businesses, particularly manufacturers and other heavy users of energy.
And liberals want to strengthen the hand of labor unions – by weakening our right-to-work law, introducing formal collective bargaining in the public sector, and getting rid of the secret ballot in union elections. Whatever you might think of the merits of these ideas, there is no realistic scenario in which they would not have the effect of raising the cost of employing North Carolinians, thus reducing the likelihood that North Carolinians will remain employed.
The Left wants to have it both ways: insisting that North Carolina’s business climate is fine while advocating policy changes that would clearly worsen our business climate.
My view is that, depending on which study you choose, you can show the overall cost and attractiveness of doing business in North Carolina as better than average, about average, or worse than average. The wide range of findings is attributable to a large degree on how the various factors are weighted in the study. Put a larger weight on hard tax and regulatory costs, and North Carolina looks worse. Put a larger weight on energy, land, labor, and litigation costs, and North Carolina looks better.
What you’ll never find, no matter how you massage the data, is that it would benefit the economy of North Carolina to enact the policy agenda of the Left.
Hood is president of the John Locke Foundation.