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Charles Arlinghaus: Embracing (business) climate change in NH

By CHARLES ARLINGHAUS
December 20. 2016 9:35PM


Economic development in New Hampshire matters, and fixing it is a full time job. While New Hampshire has many strengths, we have lost the attractiveness that made jobs flood to New Hampshire in the 1980s and 1990s and created a dynamic population.

Regulation and business costs keep jobs away, which stops working-age population from moving here which in turnsleads to a stagnant and aging workforce. There are ways to reverse that trend without a huge price tag.

A recent list of the best states for doing business published in Forbes ranked New Hampshire an aggressively mediocre 36th. It makes you want to find fault with the source, but if Forbes doesn’t know the best states in which to do business, then who does?

One area we’ve long talked about is the general cost of doing business. At 46th in that category, and 14 percent above the national average in business costs, we stink. And the single biggest problem is energy costs where we are among the worst in the nation and just don’t seem to care. That’s a long term project we have to start today, but there are a few things we can do with more immediate impact.

The best state for three years in a row has been Utah. Notably, Utah has spent the last few years repealing more than 400 outdated, anticompetitive and inefficient regulations. In contrast, the Granite State clocks in at a solidly pathetic 33rd in regulatory environment. We need to be more like Utah.

Administrative inertia builds itself into most regulatory agencies. They know themselves and are convinced of their own nobility, so every regulation seems well intentioned. I have long argued for a dedicated office outside the agencies for regulatory reform — a council on competitiveness to start repealing and start competing. Regardless of the model, we need to listen to the obvious angst of business on the stifling effects of regulatory underbrush and start clearing some of it away.

Another issue is right to work. Half the states have right to work laws (an anti-forced union dues law) and half don’t. But the job growth divide between them is striking. According to federal statistics, in the decade from 2002-12, employment in right to work states increased by 6.6 percent, but in the forced dues states by only 0.3 percent.

Lest you think the quality of jobs was affected, wages in the right to work states increased by 12.5 percent in that period, while they were up just 3.1 percent in the forced dues states.

Economist Richard Vedder’s review of the economic literature on the subject concluded: “The compelling preponderance of evidence suggests there is a substantial, significant and positive relationship between economic growth in a state and the presence of a right to work law.”

Nor is a right to work law anti-union. The great liberal justice and union supporter Louis Brandeis explained the dynamic: “The ideal condition for a union is to be strong and stable, and yet have in the trade outside its own ranks an appreciable number of men who are non-unionists. Such a nucleus of unorganized labor will check oppression by the unions as the unions check oppression by the employer.”

A system of checks and balances brings competition and free association together to enhance accountability. Businesses look to right to work states not because unions don’t exist, but because flexibility and competition do.

In the last decade, right to work states saw an increase in union membership of 39,000 at the same time the forced dues states saw a decline of 396,000 union members. Some of that comes from the greater economic development we discussed earlier, but some also from competition and the greater need to earn support.

There is no one silver bullet for New Hampshire to cure its economic woes. Right to work is not the only thing, nor is regulatory reform nor tax costs nor energy costs. Competition and the business climate must be fought for continually. Erosions in our economic standing don’t come all at once. Rather we lose ground inches at a time often without noticing.

There are 35 states that, according to Forbes, are better states in which to do business. That is not acceptable.

Charlie Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free market think tank based in Concord.


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