Editor’s note: John Hood is president of the John Locke Foundation. This column is reprinted with the permission of the Carolina Journal.
RALEIGH, N.C. – It’s Final Jeopardy. The game comes down to this last question, in the category “State Economies.” Here it is:
Which of the following Sunbelt states’ economies is the least high-tech: Arizona, California, Georgia, New Mexico, North Carolina, Texas, or Virginia? Ready, go!
As most of my readers and thus players in today’s game are North Carolinians, I won’t blame you for absorbing years of boastful boosterism about our state’s supposedly high-tech economy and giving a wrong answer. The correct one is, indeed, North Carolina, according to a new study by the trade association AeA, formerly known as the American Electronics Association. Tech companies accounted for 4.4 percent of private-sector employment in North Carolina in the most recent year studied, ranking our state smack dab in the middle nationwide (25th) and below many of our competitors in the South and Southwest. Next-door neighbor Virginia has the most high-tech economy in the nation by this measure, at 8.9 percent.
Here’s a shocker: North Carolina media reporting on the A3A study didn’t accurately communicate its significant findings, choosing instead to focus attention on gross numbers of workers – which aren’t useful for interstate comparisons without an adjustment for population. By failing to put such data in perspective, the media and politicians perpetuate common misperceptions, leading in turn to muddy thinking.
For example, many people I know attribute North Carolina’s leading position in high-tech investment and employment to the state’s relatively big spending on government universities or to the creation of the Research Triangle Park. Their first error is to assume that North Carolina has a leading position to attribute to something. Their second is to assert correlations between high-tech growth and government-controlled variables that have little empirical support.
There appears to be little relationship between state subsidies for higher education and tech company expansion or success. That shouldn’t come as much of a surprise. Tech companies in Austin, Boston, and Northern Virginia are perfectly willing to hire promising graduates from UNC or make use of valuable technological breakthroughs from labs at N.C. State. I’m not saying that some students don’t prefer to take jobs in a state where they attended school, or that proximity is irrelevant to the process of technology transfer. But these effects appear to be swamped by others, and probably increasingly so in our wired world.
As for the RTP, while there is no doubt that many profitable companies have sited facilities in or near the park and employed many thousands of people, there is plenty of room for doubt that all or even most of those jobs represent a net gain for North Carolina as a whole. A concentration of firms may be good for some or many of those firms, but it’s not obvious that state economies with a more dispersed pattern of industrial investment are at a disadvantage.
I don’t mean to suggest that North Carolina isn’t home to some successful tech companies. But let’s be clear about this. North Carolina’s economy isn’t any more high-tech than is the American economy as a whole, and we’re quite a bit less high-tech than are other state economies in our fast-growing region. Couple this with the fact that North Carolina’s overall economic performance has been below-average for many years now, according to standard measures and disregarding nonsensical political rhetoric to the contrary, and you have the makings of a remedy for one of the state’s most-debilitating political illnesses.