Last week the NC Budget and Tax Center released their annual “State of Working North Carolina” report. It is a well researched and cogently argued document. Everyone who is concerned about economic policy in our state should make time to read it. In the spirit of constructive feedback–and with the hope of contributing to a needed statewide conversation–here are three thoughts on the paper.
1. The right focus As Professor Robert Reich argues, we do not exist to serve the economy; the economy exists to raise our living standards and enrich our quality of life. Accordingly any true assessment of North Carolina’s economy must focus on what is happening to everyday folks. And the “State of Working North Carolina” does appear to be grim. That conservatives can survey a landscape where ordinary people are doing even worse than in South Carolina and see a “success,” speaks volumes about where their sympathies lie.
Furthermore, the Budget and Tax Center is admirably candid about how we can help workers. Too many analysts indulge the fantasy that everyone will enter the labor market’s top echelons. But jobs in software engineering and corporate management are just out of reach for many North Carolinians. Even ardent supporters of the “New Economy”–a group in which I include myself–must listen to the report’s authors on this point.
2. A mixed-bag approach to growth “The State of Working North Carolina” deserves credit for its recognition that growth matters. Too often the left fixates how to fairly distribute the fruits of growth, missing the innate importance of growing the economy. Growth is what raises living standards for the long term, and the expansion of economic resources that growth produces provides the tax base that is needed to sustain social programs. This report distinguishes itself, positively, in connecting the progressive goal of economic justice to the nonpartisan imperative of growth.
It is a little odd that the report has relatively little to say about progressive pro-growth policies. Most of the concrete suggestions involve social welfare-type initiatives aimed at relieving economic pain. For example, there is a heavy emphasis on raising the minimum wage–a worth goal that is relatively limited in its impact. The report could have said much more about reviving the manufacturing base, driving growth through innovation, creating a generous tax credit for job-creating business investments, and other growth strategies. We can’t let the Right dominate discussions of how to grow our economy.
3. Underestimating the thorniness of some problems Despite the grim portrait it paints, this report is ultimately optimistic in tone. At times, perhaps a little too optimistic. The challenge of income inequality, for example, pits NC progressive priorities at crossways with one another. Two of our most prized new-economy industries–finance and tech–are significant drivers of income inequality, finance through executive salaries and tech through entrepreneurial mega success. Effective promotion of these sectors could thus paradoxically worsen the problem of income inequality, unless we work vigorously to make success in those industries inclusive. That is possible.
Rural hardship presents an even tougher dilemma. During Queen Elizabeth I’s reign, 95% of Englishmen lived in feudal villages. By the turn of the 18th century, one in ten of the late queen’s former subjects lived in London alone (see Bernard Baylin’s The Barbarous Years). The point of that little vignette is that urbanization has defined centuries of social development. If we are to restore some prosperity to rural North Carolina, we cannot simply hope to create a small-town version of urban success. Rural economies will play the role of a complementary niche in the 21st century. So policies that embrace that role, such as strong support for agricultural exports, are probably more promising than reinstating economic development NGO’s that never stanched the bleeding.
With this report, the Budget and Tax Center has done policy-minded North Carolinians a great service. This conversation should continue until our state’s workers awaken to a new day of prosperity and hope.
Alexander Jones is an original contributor to PoliticsNC.