Reforms Grounded in History | Eastern North Carolina Now

    Publisher's note: This article appeared on John Hood's daily column in the Carolina Journal, which, because of Author / Publisher Hood, is linked to the John Locke Foundation.

    RALEIGH     When I'm not reading public-policy tomes for work or escapist science fiction for play, any book you'll find in my hands will probably be a work of history.

    To study history is not to dwell in the past. It is, rather, to understand the present and prepare for the future. If you want to solve a problem, you must figure out its cause. And to devise a practical solution, you must know what has previously worked or failed. That doesn't mean that the generations who preceded us were smarter or wiser, and ought to be slavishly obeyed or emulated. It simply means that past generations have produced a body of empirical knowledge, often through committing egregious errors, that we ought to tap.

    Current controversies in North Carolina politics are unintelligible to those who lack familiarity with historical events, both recent ones and those in the distant past. Consider, for example, the conservative reforms advanced over the past four years by North Carolina's new Republican leaders.

    These reformers argued that the state's manifest economic and social problems required new ideas about the state's fiscal, regulatory, transportation, and education policies. Where did they get those ideas? Primarily by examining the history of successful policy reforms in other states over the past quarter-century.

    Democratic and liberal critics of the reforms in question — which include the expansion of school choice, the adoption of a flat-rate income tax, and the rigorous application of cost-benefit analysis to transportation and regulation — argue that North Carolina didn't need such sweeping policy changes to grapple with the challenges of the 21st century. Where did liberals get their ideas? From their own study of history, particularly that of North Carolina, which they argue has prospered over the decades precisely because of such policies as progressive income taxes and generous subsidies for public universities.

    To put things another way, the Left has constructed a theory of North Carolina Exceptionalism. It holds that the state has outperformed its regional peers by maintaining distinctive public policies. Some liberals express the theory by sneering at places like South Carolina and Texas. The Right has responded by challenging the theory's premise — that North Carolina has significantly outperformed the rest of the Southeast — as well as the empirical basis for the assertion that higher taxes to fund higher spending results in faster economic growth.

    Regarding the premise, look at the standard measure of gross domestic product. I recently constructed a nationwide comparison of state GDP trends as compound annual growth rates expressed in four-year increments (corresponding to the terms of North Carolina's governors). Since 1965, North Carolina's economy has grown faster than the national average, certainly, but so have the economies of South Carolina, Georgia, Florida, and most other Southeastern states. North Carolina's average growth rate during the period was 7.4 percent (in nominal dollars). The Southeast average was 7.3 percent. Georgia (7.8 percent) and Virginia (7.6 percent) grew a little faster than North Carolina. South Carolina (7.3 percent), and Tennessee (7.1 percent) grew a little slower.

    Relatively speaking, North Carolina's strongest performance occurred during the 1980s, when annual growth in the state's GDP averaged about a percentage point above that of the Southeast. During the 1970s, however, North Carolina's growth rate was about a point lower than the regional average.

    Since the late 1990s, economic growth in North Carolina has been, at best, lackluster. Which states had the strongest growth? The top 15 states were, in order: North Dakota, Wyoming, Utah, Texas, South Dakota, Alaska, Oklahoma, Montana, Nevada, Oregon, Nebraska, Colorado, Louisiana, Arizona, and Maryland. Almost all of these states have either large energy and resource-extraction industries, relatively small and low-cost state governments, or both.

    There are other economic measures to consider, and the causal relationships among the various policy and non-policy variables are complex, to say the least. Still, do you see why North Carolina's new leaders have placed a high priority on tax reduction, government efficiency, and energy exploration? Naturally, you are free to disagree with their priorities. But as you construct your contrary arguments, you'd be wise to ground them firmly in the historical record.