JLF Memo
Apr. 8th, 2011: - johnlocke.org

Featured Article

In this Issue: North Carolina should follow North Dakota's path to economic prosperity
By Dr. Michael Sanera

The current state budget crisis has led some city and county leaders to believe that more federal money is the path to economic prosperity. Witness Charlotte and Raleigh city officials salivating over the $461 million in federal rail money. DOT's claims that this spending will create 4,800 new jobs are fallacious, and DOT officials know it. The News & Observer even inflated that already bogus total to 5,000 in its editorial here. Carolina Journal TV reporter Anthony Greco explains the dishonesty behind the jobs numbers and John Hood piles on with his column here.

Joel Kotkin, executive editor at NewGeography.com, reports here that North Dakota is experiencing a boom in the middle of this economic downturn by avoiding the fads that many states, including North Carolina, are adopting. 

Dakotans didn't bet the farm, so to speak, on solar cells, high-density housing or high-speed rail.

Instead, North Dakota produced wealth for its citizens by choosing not to punish business with high taxes, extracting its energy resources, and attracting high-tech.

The biggest impetus for the good times lies with energy development. Around 650 wells were drilled last year in North Dakota, and the state Department of Mineral Resources envisions another 5,500 new wells over the next two decades. Between 2005 and 2009, oil industry revenues have tripled to $12.7 billion from $4.2 billion, creating more than 13,000 jobs.

North Carolina could follow this route to prosperity, notes Daren Bakst, JLF's Director of Legal and Regulatory Studies here.

Now that federal moratoria have been lifted, states can be the driving force for increased domestic oil and natural-gas production. In the areas currently off-limits to drilling, the United States Department of the Interior estimates that there's about 18 billion barrels of oil. Based on current numbers, this would be equivalent to 32 years' worth of imports from Saudi Arabia.

There's an estimated 76 trillion cubic feet of natural gas -- equal to 19 years' worth of natural-gas imports. Besides reducing dependence on foreign energy sources, offshore drilling would increase the supply of oil and natural gas, thereby driving down prices.


States also would directly benefit from removing obstacles to offshore drilling; they would share in the royalties from offshore leases. An estimate by the House Natural Resources Committee's Republican staff indicated that North Carolina would receive about $24 billion over a 30- to 40-year period [based on 2009 energy prices].

Kotkin also notes that North Dakota has been successful in attracting high-tech businesses.

Perhaps more surprising, North Dakota is also attracting high-tech. For years many of the state's talented graduates left home, but that brain drain is beginning to reverse. This has been critical to the success of many companies, such as Great Plains Software, which was founded in the 1980s and sold to Microsoft in 2001 for $1.1 billion. The firm has well over 1,000 employees.

Keep taxes competitive:

Taxes are moderate--the state ranks near the middle in terms of tax per capita, according to the Tax Foundation--and North Dakota is a right-to-work state, which makes it attractive to new employers, especially in manufacturing. But the state's real key to success is doing the first things first--such as producing energy, food and specialized manufactured goods for which there is a growing, world-wide market. This is what creates the employment and wealth that can support environmental protection and higher education.

Thankfully, this kind of sensible thinking is making a comeback in some other states, such as Ohio and Pennsylvania. These hard-pressed states realize that attending to basic needs--in their case, shale natural gas--could be just the elixir to resuscitate their economies.

It's too bad that this "sensible thinking" is not making a comeback in North Carolina where state and local leaders continue to be delusional about thinking that the road to prosperity is paved with federal dollars.

Click here for the Local Government Update archive.

 

Upcoming Events

Saturday, Apr. 9th, 2011 at 9:30 am- 3:30 pm
A Citizens' Constitutional Workshop in Monroe, NC
with presenters Dr. Troy Kickler & Dr. Michael Sanera
What the Founders and the State Ratification Conventions
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Monday, Apr. 11th, 2011 at 12:00 PM, Noon
A meeting of the Shaftesbury Society
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Turmoil in the Middle East:
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An Evening
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The American Political Scene

Wednesday, May. 4th, 2011 at 12:00 p.m.
A Headliner Luncheon
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Washington Update

Friday, May. 20th, 2011 at 1:00pm-4:30pm
A Citizens' Constitutional Workshop in Franklin, N.C.
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What the Founders and the State Ratification Conventions
Can Teach Us Today

Saturday, May. 21st, 2011 at 1:00pm-5:30pm
A Citizens' Constitution Workshop in Murphy, N.C.
with presenters Dr. Troy Kickler & Dr. Michael Sanera
What the Founders and the State Ratification Conventions
Can Teach Us Today

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