Best way to sell North Carolina is to improve it

May 30, 2013 

State Commerce Secretary Sharon Decker on Wednesday gave new details of a plan to spur economic development in North Carolina that could bring down the state’s stubbornly high unemployment rate.

“Although we’ve spent a lot of money and we’ve done a lot of good work, the needle isn’t moving, so it says to me we’ve got to do things differently,” she said.

This is great news. So how are we going to move the needle? Launch a massive state infrastructure program? Give tax credits for hiring? Cut taxes on middle-income and low-income earners to stimulate demand? Put more money into education? Reverse course on Medicaid expansion and allow billions of federal dollars to flow into the state economy?

Well, no. Decker says this is the plan: Consolidate regional and state economic development agencies and have the combined effort guided by a new private, nonprofit entity called the N.C. Economic Development Partnership.

This news doesn’t seem so good. First, it starts to attack unemployment with an approach that sounds like it will eliminate a substantial number of state jobs. That’s not always a bad thing, but in the current economy it’s hard to see how it helps.

Faith in private sector

Then it invites the private sector to play a direct role in selling North Carolina to companies that might move here. This reflects Gov. Pat McCrory’s boundless faith in the private sector’s ability to do things more effectively and efficiently than government. He wants to do the same with Medicaid in the state by turning it over to HMOs. But calling in the private sector to guide government policies for reducing unemployment seems a faith misplaced. Large elements of that private sector were responsible for sending the economy into a ditch in the first place.

A further concern is that this new plan is hardly new. Public-private partnerships to consolidate economic development efforts have been a favorite innovation of governors for years. Indeed, the concept has been around long enough that its weaknesses and hazards have been exposed and at least one state is debating giving up on the idea.

A risk of conflicts

There are reasons why the state has a Department of Commerce rather than a kitchen cabinet of business people using state money and tax incentives to craft deals with private companies. The Department of Commerce works for the broad benefit of North Carolina not for the profit of companies. It operates under public disclosure laws. It’s subject to public audits. What it lacks in efficiency, it more than makes up for with transparency.

Trying to energize economic development by bringing in people who specialize in making money is often an uncomfortable and unprofitable marriage. States that have tried it have seen conflicts of interests in subsidy awards, exaggerated claims about job creation, misuse of public funds and resistance to the accountability expected of public agencies. Meanwhile, as unemployment around the nation attests, there hasn’t been an surge in job creation by making economic development less public.

There’s no stopping this change. McCrory wants it. His fellow Republicans in the General Assembly favor it. But it seems a case of fixing what isn’t broken while ignoring what is endangered.

The state’s “brand,” as the governor calls it, is in good shape. North Carolina is high on lists of best places to do business. What needs attention are the things that will continue to attract companies: good roads and transit systems, good schools and health care and a clean and appealing environment. North Carolina doesn’t need to hawk its brand; it needs to keep its commitments.

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