What every candidate for public office needs to know | Eastern North Carolina Now

    Publisher's Note: This article originally appeared in the Beaufort Observer.

    As we head into the election season we would commend to every candidate for state or local office this article by Brian Balfour of the Civitas Institute. Essentially what it does is provide the numbers to support the conclusion that for the last decade, at least (and we would suggest it goes back even further...to Jim Hunt's first term) North Carolina has followed unsound fiscal policies creating problems that have now come to rest on the shoulders of every family in North Carolina.

    Moreover, we would suggest that Beaufort County and the City of Washington have both done the same thing, in much the same ways. In Beaufort County we are seeing the folly of unsound economic development policies. Both in the county and city we are seeing government leaders trying to figure out how to replace depleted reserves and maintain levels of expenditures that were generated in boom times but now cannot be sustained in times of economic bust.

    Civitas gives you the numbers. They also give you the solution. It is euphemistically labeled the "Taxpayers Bill of Rights" or TBOR. The fundamental idea behind the TBOR is that it ties the growth in government expenditures to the real sustainable growth in the economy. In short, it evens out the peaks and troughs of boom and bust times.

    We would suggest that every candidate should study these numbers. And if they get nothing more from them it should at least be this: We simply cannot continue the failed policies of the past decade. They have not worked. Nowhere is this more evident than in what these people call "economic development." The numbers tell the story. Government cannot facilitate economic growth and development of private enterprise by trying to pick winners for special consideration. Government cannot grow private job creation by taking money away from job creators and increasing the number of government employees. And government cannot afford to finance its operations in economic down times by borrowing more money. And above all, it cannot increase expenditures when times are good and expect to be able to continue those expenditures when the economy contracts, as it always does. That is the fundamental lesson to be learned from the numbers of the last decade.

    The second most important lesson is to rethink how government promotes and retards economic growth (new) and development (existing) within the private sector--the part of the economy that produces goods and services that drive government revenues. What is clear in these numbers is that economic development incentive grants do not work on a macro level. They may benefit a select few, but overall they reduce jobs. The simple economic principle that must be understood is that when government gives select businesses incentive grants it takes that money away for other businesses that then have less resources with which to increase production. So the issue is: Which business achieves the greatest production? Inevitably, the businesses that government tends to "pick" are the ones that are relatively the less productive. This is usually true, or the applicants would not be looking for government subsidies. That is why the overwhelming majority of economic development incentive recipients never produce what is projected.

    Nowhere is this more obvious than in Beaufort County. Back when times were good Beaufort County's economic development program was afflicted with the "Bandwagon Effect." They jumped on ethanol. They pushed tourism while promoting a road/bridge that would move tourists through the county faster and easier; and worst of all invested in the "boom and bust" boatbuilding industry. And they did so at a time when the most productive industry (health care) in the county was suffering cash flow problems which eventually resulted in the loss of over $50 million of county assets. Meanwhile, almost any business in the county will tell you that they suffer from the lack of highly trained workers. Beaufort County and the City of Washington invested in buildings rather than work force development. The buildings, to a large extent, subsidized marginal enterprises that ultimately could not survive the economic downturn.

    As candidates fashion their campaigns it is imperative that they face the fact that the county, city and state must adopt new paradigms for doing business. We simply cannot afford to continue the failed policies of the past.