State's Next Governor Must Reverse Economic Slide
The following op-ed appeared in The Seattle Times (original link here).
December 13th, 2004
State's Next Governor Must Reverse Economic Slide
By James J. Na
Special to The Times
Rossi or Gregoire? More than a month after the election, we still do not know who Washington's next governor will be. But while Republicans and Democrats continue to battle over the final count, it is not premature to think about where the next governor will take the state. After all, January is rapidly approaching — the business of governing cannot wait too long.
And one thing is clear: Despite reported signs of a recovery, the next governor of Washington will inherit significant and fundamental economic problems.
Consider Washington's export picture. The state, particularly the Puget Sound area, is considered to be the most trade-dependent region in the country. According to the Washington Public Ports Association, about a quarter of jobs in Washington are tied to exports, and such jobs pay 46 percent more than the state average.
Further, U.S. Commerce Department figures show that the state is the fourth-largest exporter among the 50 states, lagging only behind much larger Texas, California and New York.
Unfortunately, the same data for 1999 to 2003 indicate that Washington's exports fell badly.
Washington state Democrats like to blame the Bush administration for this economic malaise. Yet, during this period, 38 other states managed to increase their exports. Topping the list are eight "red" states led by Texas, which increased exports by nearly $17 billion, while those for Washington fell by $2.5 billion.
In fact, only the "blue" states of Illinois and California suffered greater losses in exports, placing Washington 48th among the states in export growth.
Nor were Boeing's delivery troubles to blame — even as its total aircraft deliveries fell, Boeing's exports increased thanks to more robust demand overseas. For example, Boeing exported 70 percent of its production in 2002 as opposed to 50 percent the year before, and foreign buyers also bought more-expensive aircraft.
As was reported last year, Washington's exports, when excluding strong aircraft sales overseas, declined by an appalling 8 percent over the previous year.
And export growth is not the only area where Washington trails the rest of the country. In 2003, its average annualized unemployment rate was the 48th worst in the country. The state also lagged behind the national average in small-business growth while the red states of Georgia, Florida and Texas posted the top numbers.
One answer to why Washington performed so poorly in comparison to other states can be found in its state government and regulatory policies. The Fraser Institute's "Economic Freedom of North America 2004 Annual Report" shows that Washington placed, perhaps not coincidentally, 48th among the 50 states in economic freedom as measured by low government interference. Eight of the top 10 "free" states, including Colorado, Tennessee, Texas and Georgia, are red states.
Similarly, while the Beacon Hill Institute's "Metro Area and State Competitiveness Report" last year rated Washington high in openness, technology and infrastructure, it ranked the state 38th in government regulatory and fiscal policies. (Seattle placed first in openness and infrastructure, but 49th in regulatory and fiscal policy among major metro areas.) Again, eight of the top 10 performers were red states, including Alaska, Virginia, Missouri and Texas.
In other words, the state of Washington suffers from substantial government regulations on personal economic choice and markets that, in turn, degrade business activity and exports. This lack of economic freedom discourages business and job growth and, in fact, encourages existing businesses and jobs to leave the state. Washington's recent corporate emigrants to red states include Airborne/DHL (to Florida and Arizona), Internap Network Services (to Georgia) and Penford Corporation (to Colorado).
Indeed, the real blame for this state's export troubles — and by extension, its economic problems — cannot be laid on the other Washington, the Bush administration or Boeing. The responsibility belongs with Olympia. The top priority for the next governor — whether it is Rossi or Gregoire — must be to work with the state Legislature to improve the overall economic freedom of the state by reducing government interference on economic activities.
To do otherwise is to perpetuate Washington state's regulatory quagmire. Unless there is serious statewide reform to reduce government overregulation and further improve the business climate, Washingtonians will continue to watch in frustration as more businesses and jobs relocate to economically more competitive red states.
December 13th, 2004
State's Next Governor Must Reverse Economic Slide
By James J. Na
Special to The Times
Rossi or Gregoire? More than a month after the election, we still do not know who Washington's next governor will be. But while Republicans and Democrats continue to battle over the final count, it is not premature to think about where the next governor will take the state. After all, January is rapidly approaching — the business of governing cannot wait too long.
And one thing is clear: Despite reported signs of a recovery, the next governor of Washington will inherit significant and fundamental economic problems.
Consider Washington's export picture. The state, particularly the Puget Sound area, is considered to be the most trade-dependent region in the country. According to the Washington Public Ports Association, about a quarter of jobs in Washington are tied to exports, and such jobs pay 46 percent more than the state average.
Further, U.S. Commerce Department figures show that the state is the fourth-largest exporter among the 50 states, lagging only behind much larger Texas, California and New York.
Unfortunately, the same data for 1999 to 2003 indicate that Washington's exports fell badly.
Washington state Democrats like to blame the Bush administration for this economic malaise. Yet, during this period, 38 other states managed to increase their exports. Topping the list are eight "red" states led by Texas, which increased exports by nearly $17 billion, while those for Washington fell by $2.5 billion.
In fact, only the "blue" states of Illinois and California suffered greater losses in exports, placing Washington 48th among the states in export growth.
Nor were Boeing's delivery troubles to blame — even as its total aircraft deliveries fell, Boeing's exports increased thanks to more robust demand overseas. For example, Boeing exported 70 percent of its production in 2002 as opposed to 50 percent the year before, and foreign buyers also bought more-expensive aircraft.
As was reported last year, Washington's exports, when excluding strong aircraft sales overseas, declined by an appalling 8 percent over the previous year.
And export growth is not the only area where Washington trails the rest of the country. In 2003, its average annualized unemployment rate was the 48th worst in the country. The state also lagged behind the national average in small-business growth while the red states of Georgia, Florida and Texas posted the top numbers.
One answer to why Washington performed so poorly in comparison to other states can be found in its state government and regulatory policies. The Fraser Institute's "Economic Freedom of North America 2004 Annual Report" shows that Washington placed, perhaps not coincidentally, 48th among the 50 states in economic freedom as measured by low government interference. Eight of the top 10 "free" states, including Colorado, Tennessee, Texas and Georgia, are red states.
Similarly, while the Beacon Hill Institute's "Metro Area and State Competitiveness Report" last year rated Washington high in openness, technology and infrastructure, it ranked the state 38th in government regulatory and fiscal policies. (Seattle placed first in openness and infrastructure, but 49th in regulatory and fiscal policy among major metro areas.) Again, eight of the top 10 performers were red states, including Alaska, Virginia, Missouri and Texas.
In other words, the state of Washington suffers from substantial government regulations on personal economic choice and markets that, in turn, degrade business activity and exports. This lack of economic freedom discourages business and job growth and, in fact, encourages existing businesses and jobs to leave the state. Washington's recent corporate emigrants to red states include Airborne/DHL (to Florida and Arizona), Internap Network Services (to Georgia) and Penford Corporation (to Colorado).
Indeed, the real blame for this state's export troubles — and by extension, its economic problems — cannot be laid on the other Washington, the Bush administration or Boeing. The responsibility belongs with Olympia. The top priority for the next governor — whether it is Rossi or Gregoire — must be to work with the state Legislature to improve the overall economic freedom of the state by reducing government interference on economic activities.
To do otherwise is to perpetuate Washington state's regulatory quagmire. Unless there is serious statewide reform to reduce government overregulation and further improve the business climate, Washingtonians will continue to watch in frustration as more businesses and jobs relocate to economically more competitive red states.
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Humm, I see Government regulations are the blame. Lets have more Ford Pintos that blow up on impact, Lets have Foods and medicines in packages that can be tampered with, Lets have unlimited smelter pollution, lets repeal arsnic and asbestos guidelines.
All are government regulations. Business have proven over and over again they are incapble of self policing. Hey lets go back to using water guns to sluce ore out of the country side, or all single hull tankers in Puget sound.
Just wish one time we could get a balanced idea from all the NO-Govenment, Pro-Business supporters. We do need some protection from unsafe-unsound business practices......
Posted by
Anonymous |
13/12/04 11:40
Who said anything about corporate self-policing? What about letting consumers decide?
I would imagine that an exploding car would turn off customers and not sell very well (not to mention the inevitable liability issues).
Are cars exploding and people dying of water poisoning by droves in Texas, Virginia and other red states that are more successful in attracting businesses?
Posted by
James J. Na |
13/12/04 12:02
First off... I'm having a hard time telling one bought and paid for republican from another bought and paid for democrat. So let's call them all republicrats so we are at least on common ground.
Until We, the People, start turning this plutocratic republic of states into a democratic democracy of human beings... we will continue as subservient wage-slaves to Wall Street's Washington DC... the best government that money can buy.
And subsequently, as long as special interests are dictating the rules in Olympia... we middle-class Washingtonians will merely continue in an ever downward spiral to the bottom of the barrel.
Posted by
David Pauling |
13/12/04 13:07
I read your article in the Times. I don't know about the rest of your statistics, but at least two of the three companies you cite as driven away by lack of economic freedom (Airborne and InterNap) were actually acquired and moved in a consolidation by the acquiror. As with most tripe coming out of the Discovery Institute, you are long on rhetoric and short on facts.
Posted by
Steve |
13/12/04 13:44
Steve:
I am well-aware of the acquisitions. So what? They still chose to "consolidate" to red states. In fact, Airborne/DHL even moved its IT center to Arizona (Florida is the corporate base now) rather than keeping it in Seattle.
You don't know (or care) about the stats, because they are right. The bit about "tripe... from Discovery" is just a cheap shot, ad-hominem attack.
Posted by
James J. Na |
13/12/04 15:25
To Quote one of your own fellows;
Advocates of sound economic policy have too many times allowed themselves to be bullied by loudmouths who claim compassion, yet cause misery.
I have noticed most business are only out for the self-centered motives. The RED states allowing and encouraging mass migration to provide sub-living wage jobs, and greater corporate profits for the few. This is what is enticing companies away from states that take a more sound approach to the economy.
As per your previous comment that the customer is always right. I put it to you the customer is most always wrong. What you should be saying is that the business is always right.
Also this battle between blue and red states seems to be another tool in the Multi-National business arsenel to divide the US.
If the Discovery Institute really believed your assumptions they themselves would be on the fast track to move. If the DI was in Arizona you could get administrative help for a lot lower pay scale. In the new business model every dollar counts.
Who cares that police, fire, or any other service costs money.
Posted by
Anonymous |
13/12/04 16:37
" I put it to you the customer is most always wrong."
The customer is always the customer though.
If they refuse to do business with you what are you going to do about it?
Posted by
BobO |
13/12/04 20:24
I don't see the problem, these companies moving actual help. The Puget Sound area can not continue to handle the influx of people, it is ruining the life style. Traffic is out of control, due to the lack of space real estate values have sky rocketed. If the existing companies would hire the locals, there would be no need to import labor from overseas or other States. Improving the so called business climate at the expense of the lifestyle is stupid.
Posted by
Anonymous |
13/12/04 23:41
James - do you believe in evolution? Or is just a theory like deregulation creates jobs?
http://www.evergreenpolitics.com/ep/2004/12/seattle_times_p.html
Posted by
Anonymous |
14/12/04 00:01
"I put it to you the customer is most always wrong."
That's a great business model - the customer does not know what he wants, so we will make what we think he should want. Er, isn't that kind of what communist central planning was all about? That a handful of elites knows what the consumers want better than a free market?
"Also this battle between blue and red states seems to be another tool in the Multi-National business arsenel to divide the US."
No. We have always been a federal system of many sovereign states. This diversity of political and economic environments allow for competition, which in turn graphically demonstrates which environment is superior. Corporate relocations are a symptom not the cause of such a system.
"James - do you believe in evolution? Or is just a theory like deregulation creates jobs?"
1. What's that got to do with economics?
2. For the record, I am neither a supporter of creationism or intelligent design.
3. There IS a big difference between creationism and intelligent design. You'd know that if you read anything the Discovery people ACTUALLY write rather than what others say about them in the mainstream media.
4. Check this:
http://www.evergreenpolitics.com/ep/2004/12/please_debunk_t.html
" I think we debunk it first by pointing to the fact that these folks are creationists..."
First of all, I am not a creationist as I wrote before. But beside that point, you "debunk" an economic idea by attacking the person's spiritual beliefs or his ideas on biology?
That's called an ad hominem (fallacy) attack, pure and simple, and you'd know that too if you took logic 101. "Claptrap" and "right-wing wacko" are a nice touch too.
"Someone with more economics credentials than me should debunk this piece of claptrap from the Discovery Institute..."
If you lack the economic credentials and cannot formulate an intelligent critique of your own, I suggest that you refrain from criticism or go do some studying first, instead of fishing for the "right answer" from someone answer to fit your pre-existing stereotype.
Posted by
James J. Na |
16/12/04 07:56
In reading the above comments it appears to me the central point is being skewed. As a small businessman for the last 29 years and 8 years in our new endeavor I can vouch for the claim that the State of Washington is not conducive to the establishment and survival of a small business. As only one case in point. The B & O tax is charged on gross revenues, therefore an emerging business has to pay the tax whether or not there are any profits involved and in addition, a contractor has to pay the full amount and any sub-contractors are required to do the same in what to me is double taxation. I could list more actions that discourage or even cause the failure of businesses but will let this suffice.
Posted by
Anonymous |
14/1/05 06:54
There was a time when communities would seek counsel from the elders. More experience usually translated into lessons learned. Having picked up a pearl of wisdom here and there over the years, I am now able to share a thought or two. The main lesson is to never stop learning. Seeking other points of view and new ideas like visiting your blog are steps in the right direction. Finding what is ultimately important leads one to appreciate actuality, efficiency and mindfulness. Helping others to see some of the forest through the trees is its own reward. discernment
Posted by
OHenry |
7/1/06 12:32