John Locke Update / Research Brief

How Charlotte’s Economy is Helped by Republicans Being Unconventional

posted on in Fiscal Insight, Law & Regulation, Spending & Taxes
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Carolina Journal reports that while the 2020 Republican National Convention in Charlotte would gain international attention and could boost the city’s profile in intangible ways, it’s unlikely it would “provide a major economic boost to the city.” If it didn’t, it shouldn’t be a surprise. Even though mega-events tout large economic-impact numbers to officials and media, their actual effects are often mixed.

But that’s not to say Republicans can’t do great things for Charlotte or haven’t.

CJ reports:

“The political parties tout the big economic impacts because they want to attract cities to bid,” [Eric Heberlig, a UNC-Charlotte political science professor and co-author of the book American Cities and the Politics of Party Conventions] said. Economic impact studies are done after national party conventions. “In all but a few instances, it’s very positive,” their research showed.

But compared to the size of a large city’s economy, even a successful four-day event is “pretty much a drop in the bucket,” Heberlig said.

Economic impact studies done for mega-events, new stadium builds, industries seeking to justify tax incentives or other government favors, etc., always find positive numbers. They’re built to crank out big plus signs, as I have long argued. So has my colleague Dr. Roy Cordato, author of a definitive paper on the subject helpfully titled “Economic Impact Studies: The Missing Ingredient Is Economics.”

The bigger the “economic impact” number generated, the happier the political decision-makers. Media like them, too. And as we saw in 2016, they can also be weaponized for political squabbles. Remember two years ago how media were pronouncing the near-death of Charlotte’s economy — with vicious aftershocks to be felt statewide — over losing the NBA All-Star game?

Election-year politicking combined with economic-impact gullibility drove the doom-and-gloom predictions in 2016 over the loss of a basketball game. The fatuous figure of $100 million “lost” was bandied about by media as if it were handed down from On High rather than extracted from, well, Somewhere Below. Recall that Dallas was supposed to reap $152 million from its NBA All-Star game; the reality was much closer to zero.

Readers here understood how absurd those fears were, given how massive North Carolina’s economy is. The world’s 30th largest economy isn’t disrupted by playing or not playing a ballgame, nor by hosting or not hosting a large event.

Proven ways government policies can improve the economy

What drives our economy is the free enterprise by a free people, the amount, frequency, and volume of economic decisions people are able to make here. There’s no way to observe these things in real time, so highly visible spectacles such as mega-events, stadium builds, and incentivized ribbon-cutting ceremonies tend to serve as their proxies. They are poor substitutes.

Policymakers looking for the best way to use their powers in government best to improve the economy should focus on removing government impediments: red tape, punitive taxes, bureaucratic bottlenecks, overspending leading to tax increases, economic incentives and cronyism leading to market distortions.

The overarching idea is freedom.

Under Republican leadership over the past few years, North Carolina has seen more policy choices freeing people from government impediments to our collective benefit:

North Carolina’s leaders have cut taxes, spending, and red tape. Those are empirically backed policies, so it is no wonder that as the state has lowered the cost of doing business here in general, we’ve seen greater growth, jobs, and investment.

It’s worked so well that now North Carolina is considered a national model for tax reform.

Those reforms work like economic incentives, but not at the expense of the rest of the taxpayers, existing businesses, and job seekers. So it’s not a shell game.

What this means for Charlotte and the state’s economy is this: Republicans have done much more good for Charlotte’s economy over the past few years than a mere convention ever could. They did it by getting government out of North Carolinians’ way and letting them “dream heroic dreams,” as Ronald Reagan described the free enterprise of a free people in his first inaugural address:

If we look to the answer as to why for so many years we achieved so much, prospered as no other people on Earth, it was because here in this land we unleashed the energy and individual genius of man to a greater extent than has ever been done before. Freedom and the dignity of the individual have been more available and assured here than in any other place on Earth. The price for this freedom at times has been high, but we have never been unwilling to pay that price.

It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government. It is time for us to realize that we’re too great a nation to limit ourselves to small dreams.

A vision for 2020

Republicans can continue to do good for Charlotte and the rest of the state by restoring more freedom to the people of North Carolina. By passing stronger reforms that get rid of more red tape, reducing tax burdens even further, and holding the line against spending and cronyism, they would introduce 2020 convention-goers to a city and a state shining the way for the nation to follow — and dream big.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. As director of regulatory studies and research editor at the John Locke Foundation, Jon gets in the weeds of all kinds of policy… ...

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