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N.C. State University economist and Carolina Journal columnist Mike Walden is one of North Carolina’s most-influential public intellectuals. Through print, radio, television, and personal appearances, Mike works tirelessly to educate the public about basic economic concepts and their application to the issues of the day.
{mosimage}His new book, North Carolina in the Connected Age: Challenges and Opportunities in a Globalizing Economy, represents Mike Walden at his best. You won’t find a better primer on our state’s economic past, present, and future.
The heart of the book is his discussion of what he terms the Connected Age, the period beginning in 1970 during which a combination of new technologies, expanded international trade, and demographic changes transformed N.C.’s economy. The familiar strategic triad of the state’s manufacturing base — furniture and wood products, textile and apparel, and tobacco — declined in employment and share of output during the period, for myriad reasons. As late as 1977, these industries made up 20 percent of the gross state product and nearly a quarter of total employment. By 2005, they accounted for only 7 percent of GSP and 5 percent of employment.
So what are the core private industries in today’s North Carolina economy? Mike describes a Big Five consisting of banking and finance, information technology, pharmaceuticals and other chemical products, food processing, and vehicle manufacturing. Collectively, they made up almost as much of the GSP in 2005 (17 percent) as the traditional industries did in 1977. But their share of employment is modest at 7 percent. In the labor force, the real explosion has been growth in the service sector, including health care, along with relatively rapid growth in construction and government employees.
Using data such as growth rates of employment and economic output, Mike puts these 21 regional economies into three different categories: New Economy, Transitional and Stagnant. The New Economy category includes urban regions such as the Triangle and Greater Asheville, small city regions such as Greater Boone and the Northeast, and rural regions such as the Highlands and the Far West. Transitional economies also span the spectrum from urban (e.g. Greater Greensboro) to small city (e.g. Greenville-Jacksonville) to rural (e.g. Greater Wilkes). There is only one Stagnant region, the Roanoke (Halifax, Northampton, Hertford and Bertie). That helps to explain that whole Randy Parton Theater thing.
While there are public-policy insights to be gleaned throughout North Carolina in the Connected Age, Mike provides an extended discussion of policy implications in his next-to-last chapter. His general observation is that N.C.’s fiscal house is in a tremendous state of disorder.
The cost of desired spending programs — ranging from educational improvement and infrastructure investment to universal health care — greatly exceed projected revenue from our current tax system. He describes three approaches that N.C. leaders could choose in response to the dilemma:
Finance future public services through higher general tax revenues, to be generated by hiking tax rates, broadening tax bases or adding new forms of taxation.
Finance future public services to a greater degree than the state currently does through user fees and other pricing mechanisms.
Finance future public services through productivity gains, rather than a more rapid growth through revenues.
I like Door Number 2 and Door Number 3, personally. But you don’t have to agree with me to enjoy Mike Walden’s interesting new book.
Get Connected to New Book on NC Economy
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