As the N.C. General Assembly returns to Raleigh this week for the short session it is necessary for state law makers to begin thinking about the state’s future in new ways.
The economic impact of the COVID-19 pandemic is so significant that the state’s leadership, executive and legislative, will have to address major changes in the coming weeks if the state’s economy is to recover. This effort can and should lead to a new approach in state laws and regulations.
A recent Wall Street Journal article by Sam Walker made note of this opportunity in an article entitled “Getting the Restart Right: How to Lead When Nobody Has a Map.” So far the state, under the leadership of Governor Cooper has, as the phrase goes, “kicked the can down the road.” But now that the legislature is back in session there is an opportunity to re-think and re-imagine the state’s future.
Mr. Walker states in his article “… the coronavirus has been a baptism in crisis management…deep down, however, we all know that the real leadership test is yet to come.”
And that leadership, the presence or the lack thereof, will be on display as the governor and legislators begin their conversations in the weeks ahead.
North Carolina has undergone massive economic changes over the past 150 years but its laws and regulations have not kept pace. Until the mid-1970’s North Carolina relied on tobacco, textiles and furniture for its primary economic engine. Beginning in the 1950’s government and business leaders sensed a change in economic forces and refocused the state’s economy on science, technology and banking which positioned the state well for the 21st century.
Unfortunately, state governance has barely kept pace with the economic changes and in most cases has resulted in only nuancing arcane laws and regulations that continue to restrain innovation and increase costs for both entrepreneurs and end users. The economic impact of the state mandated business closures and sequestration has exposed the state’s weak points that must be corrected if we are to recover quickly.
One example is the state’s Certificate of Need regulations restricting expansion of medical services. Currently the state has relaxed some of these restrictions to allow hospitals to open up more beds for fear of being overwhelmed by patients suffering from the COVID-19 virus. But the removal of this restriction is only temporary and we assume will be reinstituted once the crisis is past. This is just one of hundreds of regulatory shackles that are negatively impacting the state’s economic future.
According to economists, the rapid decline in the state’s economy resulting from government mandated business closures will hamper growth for the next two years and possibly well in to the remainder of the decade.
In response to this dire economic prediction the legislature and the governor need to assess the economic strengths of the state and determine how the state can facilitate expansion of those businesses that are providing economic leadership and opportunities, and in the process remove those legal structures that are impeding financial opportunities.
These changes will involve corporate and individual tax regulations, licensing restrictions and the state’s willingness to eliminate unnecessary incentive packages that unfairly determine winners and losers in a capitalist economy.
A crisis such as the COVID-19 pandemic can, if the general assembly accepts it, be a cathartic or cleansing process to allow for new vision for the state. Mr. Walker’s article notes that “returning to the familiar would be a mistake.”
Quoting the 15th century Italian philosopher-diplomat, Niccolo Machiavelli, “The great majority of mankind are satisfied with appearances, as though they were realities,” the columnist concludes with “…business, as we knew it, cannot be recovered. It will need to be reinvented.”
As legislators and the governor convene in the weeks ahead, we will see if they have the fortitude and foresight to lead forward with reinvention or prefer to “return to the familiar.” This challenge brings to mind the state motto- “Esse Quam Videri” which translates “To be rather than to seem.”