Free & Clear: November 2013

North Carolina gets some good news
By John Hood

To a journalist,” Phil Donahue once observed, “good news is often not news at all.” He may have been exaggerating, but there is no question that bad news tends to get bigger headlines than good news. “All planes land safely at airport” will never make the front page. “No politicians were arrested today” will never lead the evening newscast.

There’s no media conspiracy here. Editors and producers are just giving us what we want: the exceptional, ominous, tragic and cathartic. Still, the endless parade of accidents, blunders, disasters and downturns leads many people to form unrealistically negative perceptions of reality. Despite the occasionally horrific airplane crash, flying is the safest way to travel. Though political scandals are a staple of our news diet, the vast majority of politicians will never commit a crime.

I’m all for realistically negative perceptions of reality, by the way. Our state and nation really do face monumental economic challenges and persistent social ills. Last year, I wrote a book about North Carolina’s economy that was, in most respects, far from flattering. Citing data such as unemployment and income growth, I argued that the Tar Heel State had in recent years changed from a pacesetter of the Sunbelt economy into a perennial laggard.

I stand by the core argument of the book, Our Best Foot Forward. The state was in desperate need of pro-growth policy changes. But as a naturally upbeat person, I also included some reasons for optimism about the state’s economic future. I wrote that, until the 1990s, North Carolina had often deserved its reputation as a Dixie dynamo. Blessed with natural beauty and a pleasant climate, it has produced or attracted some of the most congenial, inventive and hardworking people on the planet. They’re still here, or on their way.

Furthermore, despite what the day-to-day headlines and news broadcasts might lead you to believe, the last year has produced many signs of progress in North Carolina. Here are five examples that may have escaped your notice:
• The annualized rate of job growth has exceeded the national average nine of the last 12 months.
• Annual growth in per capita income exceeded the national average in 2012, after trailing it in income growth seven of the previous 10 years.
• Annual growth in private-sector gross domestic product — a fundamental indicator of economic health — exceeded the national average in 2012 for the first time since the onset of the Great Recession.
• According to two recent studies, the condition of North Carolina’s highways has been improving faster than in most other states. A 2009 study by the American Society of Civil Engineers, for example, gave North Carolina a D- for road quality. This year, our roads got a C.
• The state’s public schools are more cost-effective than those of most other states. While spending less tax money per pupil than the national average for nearly all of the past three decades, our students’ performance on independent tests exceeds the national average in math and equals it in reading.

Naturally, all these bits of good news come with caveats. While North Carolina’s economy has improved markedly since mid-2011, the previous three years had been disastrous. The state had fallen into a deep hole. It will take years to climb out of this pit. Notably, despite a relatively strong trend in net jobs created over the past two years, North Carolina continues to have one of the nation’s highest unemployment rates. Continued migration to our state means that some of this unemployment is being imported as individuals and families head here in search of opportunity. In-migration is good news in the long run, but obviously the rate of job creation will have to rise to keep up with demand.

As for roads and schools, North Carolina’s performance relative to the national average may be improving, but we compete in a global market for investment, employment and innovation. Being an average American state is no longer sufficient. North Carolina is not yet competitive with the leading economies of Europe and Asia in such areas as pro-growth taxes and regulations, high-quality infrastructure and well-educated workers.

I happen to think that during the 2013 legislative session, the General Assembly and McCrory administration took tremendous leaps forward in each of these critical areas (“Standing Pat on the 3 R’s,” October). They adopted a flat tax, limited overregulation, rewrote the state’s highway-funding formula and reshaped the state’s education and training programs. I expect these bills to pay economic dividends in the months and years to come.

Am I being unrealistically optimistic? One final bit of good news is that if I’m wrong, you’ll have this written proof with which to ridicule me.

John Hood is chairman and president of the John Locke Foundation. You can reach him at jhood@johnlocke.org.