Preening is not rebuttal

By John Hood | Oct 23, 2013

RALEIGH — After the 2010 elections put North Carolina’s legislature in the hands of Republicans for the first time in more than a century, state policy began a turn to the Right — that much is indisputable.

In 2011, the General Assembly rejected then-Gov. Bev Perdue’s call to extend a sales-tax increase costing taxpayers more than $800 million a year, with a disproportionately heavy burden on lower-income families. Instead, conservative lawmakers allowed the sales tax rate to fall, balanced the budget with spending reduction and government reorganization, and began reforming the state’s tort system and regulatory process.

After Gov. Pat McCrory’s election in 2012, a strengthened conservative majority replaced the state’s anti-competitive income tax with a Flat Tax, enacted further regulatory reforms, phased out teacher tenure, strengthened school accountability and vocational education, expanded parental choice and competition in education, reformed the state’s unemployment-insurance system, and reshaped the Department of Transportation.

North Carolina’s new conservative leaders enacted these policies with the expectation that they will promote job creation and economic growth. They had good reasons for such an expectation. In each case, there is sound empirical support for the choices they made.

Of course, that doesn’t necessarily mean that each policy will, in the end, produce the expected benefits. If problems were easy to solve, they’d have been solved a long time ago. At the very least, however, lawmakers acting in good faith ought to have been challenged on the merits of their proposals, not attacked as idiots or accused of actively trying to destroy North Carolina’s governmental institutions and middle class.

Unfortunately, such behavior was too much to ask from a panicked, embittered Left. While some liberal lawmakers, activists, and commentators did engage in substantive debate, many others resorted to character assassination and ludicrous conspiracy theories. They peddled misinformation to inexperienced or credulous reporters. They compared their opponents to segregationists and neo-Nazis. The result was the circus atmosphere of a university sit-in, not a conversation among grown-ups.

Perhaps it was just too challenging to construct substantive responses to empirical evidence supporting North Carolina’s new conservative policies. For example, liberal critics said that instead of reforming and reducing North Carolina taxes, lawmakers should have increased state spending on education, infrastructure, Medicaid, and other programs, even if higher taxes were needed.

What does the empirical evidence say? Of the hundreds of peer-reviewed studies published on these subjects since 1992, nearly two-thirds show a positive link between lower taxes and economic growth. But only 38 percent show positive economic effects from higher spending on education and only 44 percent show positive effects from higher infrastructure spending. There is virtually no evidence for such effects from higher spending on Medicaid or other public-assistance programs.

Speaking of which, a new study from economists at the New York Fed used an innovative technique for testing the effects of unemployment-insurance benefits on the labor market. They examined counties on the borders of states with differing UI policies. Because the economies of adjoining counties are otherwise similar, such a model has a good chance of isolating the effects of state policy from other causal factors.

What the Fed researchers found is that extending unemployment-insurance benefits results in higher levels of unemployment. In fact, “most of the persistent increase in unemployment during the Great Recession can be accounted for by the unprecedented extensions of unemployment benefit eligibility,” they found. While extended benefits tend to discourage recipients from accepting available jobs, the much-bigger problem is that extended benefits discourage the creation of new jobs — by holding wages above the market-clearing rate, for example, or signaling to potential employers that payroll taxes will be rising in the future.

A reasonable interpretation of this and related econometric research is that by reducing the average duration of UI benefits, the North Carolina legislature has increased the incentive for employers to create jobs and for workers to fill them.

Personal attacks and adolescent preening won’t rebut these insights. If they want to be taken seriously, liberals need to do their homework and come up with better arguments.

Hood is president of the John Locke Foundation.

Comments (1)
Posted by: Charles Zimmerman | Oct 25, 2013 11:40

             hood is his own worst enemy. his "opinions" as president of the John Locke Foundation are by and large polar opposite of John Locke himself who put forth the notion that since we are all descendants of the first creation we are all equal in our rights and since God created this earth for all mankind that each should have equal opportunity to enjoy it and that if someone is not using all they claim to possess, anyone else may then use it. Locke was no supporter of "trickle-down". Rightfully so.

         hood claims that previous Gov. Bev Purdue's extention of a sale's tax increase was rejected by the republicans because it would hurt lower income families but yet praises a flater tax that has the same effect! Pure hypocrisy! Sales tax on expenditures directly affect the purchaser. They are progressive in that the more purchased the more the tax is, causing a greater share to be paid by the larger spenders. But of course those that consume the most would want a lower tax. Taxes based on consumption are by nature a "flat-tax". Income based taxes are entirely different. A flat income tax does not take into consideration that the primary responsability of OUR secular government is to equally protect "all persons" from oppressive intolerance whereby too much wealth/power is concentrated in too few hands. Nor to prevent "inherent bondsmen". To that end just as each taxpayer earns primarily in direct proportion to their ability, so too should they pay to support OUR shared governance. Even more so should inheritance taxes be collected. Society should not be burdoned with the ill-effects of those that have/do not work nor properly contribute to its existence or otherwise hoarde wealth to themselves by simple inheritence. Equal oportunity requires the playing field be leveled. This most certainly results in "income redistribution". As it should. Liberty once acquired by OUR birth, ain't free. 

        But of course any empirical evidence would conclude that lowering taxes would promote buisness. Any moron could easily tell you that. Unfortunetly right-wing anti-government ill-liberal anarcists spend money to support their opinion when they could have asked anyone at no cost whatsoever as to whether lowering taxes would bennefit buisness. It is a no-brainer quite well embraced by "Bed time for Bonzo" b-movie star earstwhile aldulterer who fathered a child out of wedlock,  "ronnie rayguns", whose "no man in the house" welfare law destroyed many an American family and as a result of his anti-progressive economic policies, the greatest transfer of wealth from OUR lower and middle classes to the top occurred. But of course hood and his ilk want more of the same. They don't have all OUR money yet.

          Bill Clinton's reversal of "rayguns" tax breaks for the wealthy is quite clear "empirical evidence" of what works. As well as President Obama's retiring of tax breaks for the top as of the first of this year.

            We the people have a responsability to provide a proper education to OUR prosperity. It costs what it costs. Just not provide education for one generation and see what happens.

              We the people have a long history of caring for US. We have chosen to adopt certain and particular programs to acheive what individuals by and large cannot. Universal coverage. Medicaid and other agreed to public assisstance programs cost what they cost to acheive their stated goals. Denying funds denies the ability to satisfy original intent, besides the more obvious affect of human loss.

              As a retired Owner/operator, I can quite well apprecite that it requires a great deal of maintainence to properly maintain OUR roads and infrastructure, let alone make improvements. Again! Any idiot can tell you that. Mcrory himself can quite well addressed the highway situation around Charlotte, if hood would care to consult someone who successfully addressed the issue. 

             As to unemployment insurance.  Again, another program We the people chose to implement for the betterment of US. Whether or not someone choses to continue to recieve UI is more a determination of whether their job returned verses acquiring a different not neccessary better job especially if there is a loss of income verses the original job. In areas with little opportunity, any lay-offs can have extreme effects leading to desperate results like gee, I don't know, loss of home, belongings family, etc and increase in crime! A main goal of UI is to prevent such effects while allowing the person time to acquire job similar to one lost. Of course minimum wage pushers want access to a large base of potential emplyees as their workforce is continually revolving. Reducing UI bennefits can most certainly harm those immediatly affected. I see no incentive for employers to create more jobs. Either there is a need for a job or there is not.

    "trickle-down" is a license to steal from the less off in the hopes the "employers" will miracuously give back the job of their dreams. Like most gambles it has not paid off for those in hope of a job. Just redistribution of wealth in a very ill-liberal manner.


          Chuck Zimmerman




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