by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
When politicians announce "job-creation" bills, they typically mean bills that redirect private resources (i.e., "public" resources that have only become public by taking from the private sector either currently through taxation or in the future by deficit spending) to targeted "winner" businesses or government employment. Such bills create jobs by sleight-of-hand — they focus eyes on the new jobs, while relying on people not to consider the jobs lost owing to the redirection of resources. Those costs are unseen, anyway, as economic thinkers from Hazlitt through Bastiat have noted.
Any "job creation" bill must start from the basic understanding that legislation creates jobs the way roads create cars. The bill’s proper role is to make the environment more suitable to job creation. The road exists to speed vehicular commerce along more smoothly and easily. A real job-creation bill would do the same for commerce in general.
A bill is not a job-creation bill if it moves resources from one set of risk-takers and entrepreneurs, or from the general public now or in the future, to give to favored others. The "winners" of the scheme may contribute to creating jobs on their side of the equation, but the other side sees lost opportunities that typically exceed the gains. Nor is it a job-creation bill if it creates job growth in the state’s regulatory apparatus. The costs of greater regulation stifle industry, job creation, and investment, as even abortionists know.
Job-creation bills on two different fronts
This week has witnessed two promising, actual job-creation bills in the North Carolina General Assembly. Both chambers have passed historic tax reform, which awaits the governor’s signature. The initial reviews are quite promising. The Tax Foundation said the reforms would move North Carolina from 44th all the way to 17th in their rankings of state tax climates. Economist Brent Lane of UNC’s Frank Hawkins Kenan Institute of Private Enterprise told Triangle Business Journal that it would benefit individuals as well as business. Patrick Gleason of Americans for Tax Reform said North Carolina’s reform package this year is so significant that it "blew the other states away." Forbes trumpeted the bill as providing retirees "three new tax reasons to retire to North Carolina."
Only the most doctrinaire devotees of the theory that the state’s economy grows by outsiders’ perception of its "progressive image" could object, after carefully ignoring the returns when said image was yet intact. What that theory lacks in empirical evidence or peer-reviewed studies, it makes up for in vociferous, ipse dixit editorials.
The other job-creation bill is the Regulatory Reform Act of 2013, an omnibus bill making several minor, technical reforms along with a few significant ones. The 59-section bill passed the Senate Rules committee this morning. Notably, it includes a three-tiered periodic review process with sunset provisions that, even by itself, would represent a significant reform.
Other noteworthy features include studying occupational licensing boards, repealing a rule that imposes California regulatory standards upon heavy-duty vehicles leased or registered in North Carolina, streamlining the rulemaking process, allowing general public disclosure of the fluid compounds used in hydraulic fracturing fluid without the state taking ownership of or compromising proprietary compounds designated as trade secrets, and combining the Division of Water Quality and the Division of Water Resources into a single agency to be called the Division of Water Resources.
The job-creation promise of those two bills can be inferred not just from economic studies, but from the "boots on the ground" in job creation here. Surveys of North Carolina business leaders conducted by the John Locke Foundation consistently found that the state’s tax burden was the No. 1 factor reducing the state’s competitiveness. They also found that the state’s regulatory burden was a growing impediment — quickly ranking second only to taxes.
In summary, the General Assembly could deliver a one-two punch for job creation in one week, as they strike blows for tax reform and possibly regulatory reform, too.
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