Race to the bottom

by Thomas Mills, Politics NC, September 29, 2013.

John Hood recently wrote that liberals dismiss Republican’s tax cuts and deregulation as economic tools because they don’t believe in the relationship between taxes, regulation and economic development. There may be an element of truth to what he argues but he misses the larger point. While high tax rates and over-regulation may have a negative impact on economic development, that’s not the problem we have in North Carolina. And cutting taxes and regulations, and hence, services, oversight and education, to compete with our Southern neighbors at the bottom of the economic ladder is not the answer we need.

We have two North Carolinas–an urban one and a rural one. Our urban/suburban state is anchored along the I-85/I-40 corridor that stretches from the Research Triangle Park to Charlotte. We have a couple of secondary urban areas like Asheville and Wilmington. While everywhere got hit hard by the recession, RTP, The Triad and Charlotte will do just fine, especially as the financial sector recovers. Asheville and Wilmington are also getting back up.

The problem in our state is our rural sector. Many of the areas have been in a depression for over a decade. The demise of tobacco killed agriculture in eastern North Carolina and the free-marketeers gave our manufacturing jobs to China, Mexico and other countries that could provide lower taxes, lower wages and fewer worker and environmental protections. For these areas, the recession was just another hammer blow to an already reeling economy.

While there are no easy answers to the problems facing rural NC, there are certainly some bad ones. And that’s what the Republicans are trying. They’ve decided that the way to attract jobs is to make us one of those low-wage, low-tax, low-regulation states that took our jobs in the first place. As they keep saying, they want us to look more like Tennessee, South Carolina, Georgia and Alabama.

On almost every measure of quality of life issues, those states consistently fall below North Carolina. Their public schools lag far behind ours. Their public university systems aren’t even in the same league. Their life expectancy is lower and their infant mortality rates are higher. A larger portion of their citizens live in poverty. Finally, our median and per capita incomes rates are higher. By almost every measure, North Carolina is a better place to live and raise a family. So why would we want to be more like those other states?

North Carolina’s decades long commitment to education and, to a lesser degree, public health have made the difference. Our neighbors focused more on lower taxes and less regulations and have paid more in incentives to lure companies. Those are certainly economic development strategies–if we want to look more like the Third World. But why would we want to join a race to the bottom?