Archives: Dr. Roy Cordato

In North Carolina and 34 other states, if you are a health care entrepreneur and you want to do anything from adding a new wing or extra beds to an existing hospital, to opening an office that offers MRI or other services, you need a “Certificate of Need” from the state. If this sounds like the kind of central planning one might find in a socialist economy – it is. In North Carolina, the central planning authority is known as the Health Planning Development Agency, part of the North Carolina Department of Health and Human Services. The role of this agency is to plan economic activity provided by medical-care facilities. This is done down to the most minute detail, circumventing the most basic function of private decision-making in a free enterprise system, i.e., the allocation of resources based on entrepreneurial insight and risk taking.

The North Carolina Global Warming Commission is tasked with examining the relationship between greenhouse gases and climate change, but only one of its 16 members so far is a climate scientist. It is also supposed to study the economic impact of climate change and policy proposals, but none of its members are economists. Rather than experts, the commissioned is stocked with representatives of environmental pressure groups and particular industries. Such a commission is unlikely to propose reasonable, scientifically sound policies — and far more likely instead to advance their own ideologies and bottom lines.

Despite record high temperatures during the month of July, North Carolina’s metropolitan areas are experiencing a third straight year of relatively few high ozone days. Unfortunately good news doesn’t sell and there are some “environmental advocates” in the state who seem intent on sounding the alarm bells regardless of the facts.

The NC House is considering a bill to raise the state’s minimum wage to $8.50 an hour. While intended to help lower-income workers earn a “living wage,” the more likely result is to boost the earnings of some non-poor workers, including many teens and seasonal workers, while increasing the unemployment rate for many poor and minority workers. Employers will not hire people whose work efforts are worth less in the market than a government-imposed wage. A better policy to boost the earnings of entry-level workers would be to address their educational deficiencies.

The NC General Assembly is considering creating a new commission to develop state policies to combat global warming. But the scientific issues involved are complex and unsettled. If North Carolina were to try to reduce greenhouse gas emissions it would have no meaningful impact on global climate or the health and well-being of North Carolinians. On the other hand it would destroy tens of thousands of jobs. In other words a greenhouse gas reuction policy would have only costs and no benefits.

State lawmakers are scheduled to meet in Raleigh today to consider a package of tax breaks and other incentives designed to lure a Dell Computers plant to North Carolina. While politicians often portray such deals as necessary to promote growth and job creation, they serve to transfer resources from existing firms, sometimes even competitors, while failing to address tax and other problems afflicting businesses of all sizes in the state. A good place to start in improving the state’s business climate would be to reduce marginal tax rates.

Some state politicians are touting the results of an Ernst & Young study that purports to rank North Carolina’s business taxes as among the lowest in the nation. But this flawed study ignores basic principles of public-finance economics and most of the taxes that influence business decisions. More accurate studies that examine all relevant taxes and all types of businesses suggest that North Carolina’s tax rates are high in regional rankings, thus discouraging economic growth.

The North Carolina Senate held a special session in mid-September to pass a bill reforming the state’s treatment of medical-malpractice issues. A key element of the legislation — instigating expert review of malpractices claims before trial and imposing a related “loser pays” rule to discourage frivolous lawsuits — would be a welcome improvement. But some of the bill’s other provisions, including price controls and subsidized insurance, are much less attractive.

The North Carolina Justice and Community Development Center released a report in May that purported to demonstrate that 60 percent of North Carolina families with children were not receiving enough income to meet a “living-income” standard. This startling statistic was the result of gross exaggerations of cost and undercounts of income, including no accounting for child support payments. Moreover, the Center’s proposed solutions would increase poverty.

State lawmakers are considering a proposed constitutional amendment to allow local governments to issue bonds without a public vote to construct convention centers, sports arenas, and other “economic development” projects. Careful research of these programs in other states reveals that they do not enhance a community’s economic growth over time. Moreover, they weaken governmental accountability to a voting public that does not favor subsidizing private businesses.