by Brenée Goforth
Communications Associate, John Locke Foundation
This week, senior political analyst Mitch Kokai published an opinion piece in Carolina Journal. His piece focused on North Carolina’s ranking in the Cato Institute’s cronyism index. According to Kokai:
The cronyism index “takes into account blatantly anti-competitive regulations,” according to the freedom rankings report. They include minimum markup laws for gasoline or other products, CON requirements, certificates of convenience and necessity for home movers, bans on direct auto sales, occupational licensing rules, lax eminent domain laws, bans on direct shipment of wine, and “blue laws” for alcohol sales.
According to Jason Sorens, a scholar who helps compile “Freedom in the 50 States” rankings for Cato:
“Entry and price regulations are kind of a problem in North Carolina,” said Jason Sorens on Aug. 10 in Winston-Salem… Both Carolinas do fairly poorly on that index of cronyism, which seems to correlate with state corruption levels and seems to correlate as well with lobbyist-to-legislator ratios.”
Kokai explains that Sorens does not blame corruption on cronyism, but rather, suggests the relationship may be the other way around:
The data actually might imply “a causal path from corruption to cronyism rather than vice versa,” according to his report. But regardless of cause and effect, the research reveals a statistically significant link between two negative aspects of state government. Poor marks on cronyism also tend to go hand in hand with a higher number of lobbyists roaming legislative hallways.
North Carolina policies that hurt it on the cronyism rankings include: certificate-of-need restrictions, managed-care regulations, and strict price controls for auto and homeowners insurance. Kokai writes:
The state also sets price limits involving fuel. “There’s actually a minimum markup law for gasoline, so gas stations are not allowed to charge you too little,” Sorens said. “But there’s also an anti-price-gouging law. So if there’s a disaster, they’re not allowed to charge you too much, either.”
North Carolina ranks No. 37 on freedom from cronyism. According to Kokai, there are three overarching ways to improve the state’s rankings:
More freedom. Less corruption. Fewer lobbyists seeking deals for special interests. Those are three excellent goals.
If a concerted campaign against cronyism can promote all three, it sounds like a worthy effort.